Breaking the cycle

For many SMEs experiencing growth and market opportunity, there are a number of attendant growing pains which can make the whole process feel uncomfortable for management and team members alike. They should be feeling a buzz from success; instead they are engaged in an endless round of fire-fighting. I think this can be characterised as follows:

• Everybody is very busy all of the time and it feels as though the machine is constantly running hot.

• Operational processes are “high-touch” meaning that a lot of manual intervention is required simply to execute them or to manage the numerous exceptions they throw out.

• There is a general mistrust of data within the organisation and a lack of understanding of where much of it comes from.

• There is a lot of spreadsheet wizardry created by Julie or Joe who left three years ago…

• There is a culture of hero delivery and a track record of irons being pulled from the fire. This becomes part of the business folklore and, understandably, people gain a sense of satisfaction being a part of those stories.

How do we get to this position as SMEs? As I indicated earlier, it is a function of growth and I would go as far as to say it is almost inevitable. Businesses rarely know with certainty when growth is going to happen (until it has happened!), so they rarely spend money (that they don’t have yet) changing their operations and infrastructure in readiness for the step change that may not come. There will almost always be a lag effect here.

Usually, there is a legacy of systems and processes from the early days which were good enough and made sense when we were turning over £40m, but don’t work for a £150m business. Not only do they fail to facilitate growth, they actually hinder your efforts. Also, the balance between the creative license accorded to your people (which serves you well in many respects) and the sustainability or cost-effectiveness of your practices has not been adjusted. Cleary, this is a delicate operation to undertake as you absolutely do not want to kill creativity and initiative. But to achieve profitable growth and long-term relevance in your markets, a change has to be made. Furthermore, people-churn often starts to bite as the team runs hard often just to stand still or to survive the week. Subconsciously at least, most people are aware that they do not want to be in that position long-term and so they leave. The people who replace them often struggle to pick up the trail of bread crumbs.

What to do then?

The first thing to say is that there are no easy answers and that any solution will require effort and probably some degree of pain. It’s as well to be clear-sighted about that before you start trying. Equally, though, without the growth and the opportunity, you would not be in this position – so there is definitely a bright side for you to look on!

My proposed answer will focus on people.

• Make people aware of the challenge. It is perfectly understandable that employees and even leaders within an organisation cannot always abstract themselves from it and analyse what is going on. They probably don’t have the time and may not have the experience to comparatively judge. Take the time to make sure that people understand the context and the current position of the business. The message may have to be presented in different ways to different audiences and will probably need to be repeated multiple times. Do not underestimate this task.

• Channel creativity towards meaningful objectives. What does this mean? Simply put, instead of allowing people to be endlessly creative with processes, give them a structure that removes the need to solve problems in the mundane and remind them where they should be adding value – be that on the next generation of products, product quality, supplier chain risk management, the marketing message, customer service, whatever…just not internal processes that should be locked down and adhered to.

• I think it is almost always true that any deep and broad change has to be visibly and consistently driven from the top of an organisation. Leaders need to be directly engaged and human in their approach to take teams on non-trivial journeys.

• Support your people through the change. This will be a tough period for individuals and for your people collectively. They will be challenged to think very differently and to break long-standing habits. They may need all sorts of support to achieve the aim and there should be recognition that things may go awry from time to time – and that’s OK as long as we are all honest about what’s happening.

• Structure the transformation. It’s fashionable now to scoff at the “T” word, but what we are describing here is just that - a transformation. To be successful, you need a delivery process that includes plans, tasks, ownership, accountability, celebrated milestones etc. This will not happen organically or as a side project. It needs resource, sponsorship and an approach.

Only after all of this, would I dive into the detail of business processes, solutions, data, automation, analytics etc. These are the things ultimately that will deliver the tangible value, but they are all entirely dependent on the cultural shift and sponsorship described above.