The joys of restructuring, efficiency and cost-cutting

cost-cutting

How much do those words strike fear into the hearts of the average executive?

Why?

Shouldn’t we be enthusiastic about organisations that are willing to change? Experience has always shown we have to constantly adapt to survive‎. And many companies now try to get ahead of that requirement, and make changes proactively so as to thrive.

That’s what restructuring, efficiency and cost-cutting is all about.

In fact, if you’re not actively making these changes … well, maybe you should worry about that.

Between analysts, the media, investors, customers and suppliers there are lots of people out there speculating about your business. Probably more than the people in your business. So what are you doing to stay ahead of the market and ahead of the speculators?

We are very interested to see the UK’s Management Consultancies Association‎(MCA) reporting in 2014 that consulting revenues were up in the UK. And they are up particularly in restructuring, efficiency and cost-cutting. They rose ahead of the broader economy. For some that might seem wrong, but it’s really an indication of ambition and change.

And we see growth in consulting fees as a leading indicator of broader growth in the economy. Because when businesses are adapting and adjusting in a proactive way (which tends to involve getting external advice) then you can be sure the ambitions and strategies are projecting growth.

‎Three thoughts on the changing consulting market and on ‘restructuring, efficiency and cost-cutting'(1) :

1. ‎Growth is coming in unexpected places

‎The MCA show retail and wholesale as being areas of significant growth. Which the still-wounded High Streets might seem to belie. But growth in the retail sector has always been backed by innovation, and there is a lot of innovation online and on the High Street at the moment. Lots. Like Tiger stores, and their movable, format, and the increasing number of independent cafes with great coffee, and heartfelt, home-cooked food.

Similarly Support Services and Water / Waste businesses are growing rapidly too. What do they know, what do they see, that others don’t yet?

2. It’s less about the strategic plan and more about implementation

Research shows that is where consulting is going at the moment. And we would wholeheartedly back that up. The ability to design good strategies is important, and there are many people who wish to do this. But our experience suggest that most strategies are good strategies. It is in the implementation where strategies tend to fail. That is why we are not surprised to see a greater emphasis on implementation.

That’s also the focus of what we do: successfully implement change.

3. Good implementation support is hard to find

Having said all that, we know that businesses still struggle to implement change effectively. We see it regularly. The value promised by change programmes – restructuring, efficiency and cost-cutting – is illusive. More often than not the changes aren’t delivered.

Delivering value in implementation requires strong change management support. Leaders need to be engaged. The direction of travel needs to be clearly communicated. Plans need to be coordinated. And more.

Restructuring, efficiency and cost-cutting are serious endeavours. They are needed to make business grow. They help ensure every sector is able to grow and people can continue to prosper. But they need consultancy support and they need to be implemented properly.

/df

(1) With acknowledgement and thanks to the MCA’s UK Consulting Industry Statistics 2014

Five trends that will shape 2015

2015

LONDON, 01 February 2015 — At the start of each new year most people’s mind will occasionally wander towards the possibilities of the future. And weigh up the successes and failures of the past.

However, it is possible to look forward and ‎project the future changes and challenges. And by looking at past experience and future opportunities you can help shape the future by supporting or mitigating trends.

Here’s my list of things to look out for in this coming year.

1. Everyone needs change

It’s been a long century so far. Wars and recessions. We know that the economy and ‎business-as-usual has changed forever. We know that the new normal isn’t yet clear. The future shape of markets can’t be 100% predicted. The east-west, north-south divides are not fully drawn… they’re certainly not what we expected.

But if you ask people working in business, particularly younger people they’ll say the same thing:

“Bring it on!”

People need change. Change brings opportunity. Few people see us going backwards. But forwards is yet to become clear.  And that doesn’t seem to matter. The organisations that will attract the best talent are the ones challenging the orthodoxy. The companies that investors will follow are those best able to manage change — those who court it. The best leaders will be those with the greatest change capability.

2. Beware the dragon’s tail

What we do know is that fewer big businesses and fewer big investors are controlling more and more of the controllable assets in big economies.

The Qataris alone have come home from a shopping spree that includes Paris St-Germain football club, Harrods, a lovely corner house on Regent’s Park, and this week a chunk of IAG, the owner of British Airways.

How will they manage all these? What will they do with them? Who knows?

The concentration of ownership and power in a few places means that many things on the edges, or even in the centre‎, will find themselves more easily affected by unrelated events. In a large business unrelated parts will be brought together. Shell will sell its service stations in Africa and Australia to help focus resources on its investments in Russia, for example.

When many different assets are owned by one big animal — the dragon of the title — the movements at one end can influence anything in its way at the other — the tail will sweep away things in its path because the head has moved directions.

Who can see BA and Qatari Airways merging? Not me, but you wouldn’t want to bet against it now. And how’s that different for Google, Microsoft, Time-Warner, ‎or dozens and dozens more?

3. Systems and processes ahead of people

We may be partly responsible, but there is a consistent and growing effort to ensure that managers are better equipped to manage.  And for big businesses to focus on their people: how are they feeling? Do they have the tools they need to deliver? Are they engaged?

And while that is good, and an improvement on 20 years ago, there are some basic changes that we see falling behind: the systems and processes that allow the organisation to operate.

Really effective systems and processes, if properly managed through change, will make a good business into a great business.  I am always struck when I visit businesses like General Electric, Coca-Cola or Disney as to how much time they spend thinking about their systems and processes.  They question them, change them, improve them all the time.  Many other companies simply adapt to their systems and processes and then try to forget they are there – even while people are crying out for system and process improvement.

This year we can address these gaps.

4. Retrenching expansion 

Like a teenager with too many broken hearts, this year business leaders won’t rush to grow their businesses, even as business is growing. The past seven years have been bruising.  Those who remember what their organisation was like before 2008 know that they can’t afford to go back to that level of internal cost or rush to expand.  Growth in revenues, even growth in profit, will not necessarily result in increased spending, investment or teams being allowed to increase.

Companies will continue to see top and bottom line growth, but without the confidence to allow their organisations to spend or hire more.

5. The year of the plan

If that sounds like many diverse factors and influences affecting the way we work, it’s because it is.  And they all move at different speeds and potentially have very different effects.

You may say that some of these won’t affect your business and that could be true, but do you know for certain what will, when and how much?

Maybe not.

And that’s part of the reason why we have declared 2015 to be the Year of the Plan. Effective planning can make all the difference between success and failure. Yet it is frequently overlooked in major change programmes.

Now is the time to plan.  We can help.

/df

P.S. Able and How are hosting a series of tips, tutorials and webinars throughout the year – all designed to help you plan your organisation’s success in 2015. You can find out more by visiting www.yearoftheplan.com. We’ll also be posting updates on our LinkedIn and Twitter and we welcome your comments and feedback.

Tesco: strategy, implementation, brand and sports metaphors

LONDON — ‎In America they call is being ‘an armchair quarterback’. I’m fond of the term back-seat-driver. I think there are more.

 

Yesterday for UK football fans the sight Glaswegian misery that is Sir Alex Ferguson ‎sitting in a Man City armchair watching his old team Man United lose was enough to make everyone in the building feel about 2 inches tall.

 

Today it’s Terry Leahy’s turn. His contribution to the Tesco debate is to say that his successor at the controversy-hit food retailer is a bit rubbish. And, perhaps more importantly, not Leahy.

 

Although reports on Leahy today come from a call organised by one bank for other financial analysts, the contents are still sharp and stinging. You know that the parts of that discussion that have emerged in black and white are either planned, or they should have been. And the handbags between old and new CEO seem likely to help no one.

 

Strategy and implementation

 

Sir Terry says that Tesco has pursued the wrong strategy. In commerce that is the equivalent of a schoolyard invocation‎ on someone’s mother. Your strategy is what you are there for. And it’s also the easiest target. Those close to Tesco talk about the extent to which the business was limping into its final days of Leahy’s 16 year reign. Exhausted, angry and over-stretched. A new and more coherent strategy may have been just what they needed, or it may not.

 

However, blaming strategy‎ is somewhat akin to blaming the Manager for poor play on the field. The strategy needed to be effectively implemented for it to be successful. And over the last 5 years Tesco has started to lose its ability to implement. When that happens then very little can go right.

 

Donut brands

 

Leahy also levels the accusation at his successor that the business has failed to protect its core. And is instead focusing too much on things for which it is not know. “What it is, is a very big brand in the centre of the market, and clearly if you’re weak in the centre you can get attacked from all sides,” Leahy said.

 

And it is a compelling picture. How to manage and profit from your brand is a major issues for many great companies. And one that many of our clients are also taken with. However, Sir Terry was famously known for the Tesco venture into America that went horribly wrong. And the business in the UK has expanded so quickly in recent times that the modest management provided from 1950s offices in Cheshunt hasn’t been able to keep up. Like the city of Atlanta, the centre had probably become so unliveable that everyone flocked to the suburbs.

 

Keep moving

 

Businesses like Tesco, in vital and dynamic markets that don’t slow down and constantly change, need to be forever agile. There’s no hanging around. You may need to keep adjusting and fine-tuning the strategy‎. But you have to keep implementing. You cannot stand still.

 

Similarly you have to approach your brand more like a crumpet than a donut. Keep your focus broad but with space for air to get in‎ at every part. The brand strength is definitely at the centre but can most easily burn value at the edges. And it needs to be open and receptive enough to accommodate whatever comes its way.

 

Sir Terry surely set out to cheer on his old business. And his ‘quiet’ chat with analysts was undoubtedly set out in good faith. The issues the business face are institutional and need the support of everyone: team, Manager and spectators.

Scotland, referenda, business units and change management

 

LONDON — Clearly there is a disturbance in The Force. Our old ‘sovereigntist’ leader of Quebec, Jacques Parizeau, has called it out thus:

“Sovereigntists today stand before a field of ruin,” Mr. Parizeau said in excerpts obtained by Radio-Canada. “There is confusion in their spirits that I have not seen in a very […]

Delivering organisational change across the silos

 

An illuminating article in TIME magazine recently looked at the problems of insular management and poor accountability in large organisations, using GM’s ignition-switch problems as a case study.

The article struck a chord with us, as it would with anyone who has had experience of working with large and established businesses. […]

How the Tube strike ‎could improve the productivity and profitability of businesses

 

ON A LONDON BUS — Today is another day in which the stoic and phlegmatic Briton will stand patiently at packed bus stops. Being there with far more people than any bus can carry‎ won’t dissuade them. Until the fourth or fifth bus passes, full, at which point they’ll pause […]

Managing change in a world that is both changing and is not

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LONDON — With every day comes a new mix of the hurtling pace of change and the underlying “sameness” of everyday life.

And while change is so prevalent in business discussions that people blush to say it is a constant, there remains a fundamental, underlying constancy about what we know to be familar too.

The future is here and it’s pretty amazing. […]

A different approach to building leadership capability for change

We all know that leadership is key to successful change, and organisations are increasingly paying attention to building leadership capability for this purpose. Most organisations develop this through general leadership programmes. These programmes can be effective in explaining the key theories and models and offering some practical tips. However, a real focus on change leadership is often overlooked.

Our clients often […]

Our unique proposition

LONDON — When organisations set out to improve their operations they can project how the changes will add real value to their business. However in most cases they do not achieve all the benefits that the changes promised. This is the story in almost every business in operation. Strategies don’t reach the heights they intended. New […]

Putting the people stamp on change

We have often said that ‘how’ we implement change is as important as ‘what’ we are changing.  So we were interested to attend an Association for Project Managers (APM) event around enabling change.  Here are some of our observations:

Neil Ennis, Network Transformation Director at The Post Office, has a challenge. […]