It is fair to say that at some point in our lives we have either said or been in the company of someone who spoke about the pace of change and how everything moves so quickly in current times. Again, I think it is fair to say that we all know people who seem to keep up with the pace of change and equally those who are slower to adapt. These observations are true not only of individuals but also of businesses.
The Fortune 500 is a ranking of the top 500 American companies. It is ranked on their total revenue in a given year. It is based solely on sales value and does not consider other things such as the company's market value. Edgar P Smith, a fortune editor came up with the idea of ranking the companies in the mid 1950's and it has been created every year since. The top-ranking company for 2017 was Walmart with almost half a trillion US Dollars in sales. These businesses are heralded as the 'Captains of Industry' and yet in the same way as individuals in society there are those that have grasped the need for change and more importantly understood how to adapt and have either held their position in the market place or increased their market share and there are those who failed to innovate or recognize the change, or the pace of change, in what was driving some companies forward and what was causing others to stagnate and in a lot of cases go bankrupt and cease to exist. Now it is not unusual that companies will fail but what is somewhat staggering is, between the year 2000 and the year 2013, the number of Fortune 500 companies, these Captains of Industry that failed and were either merged, taken over, went bankrupt or who's profitability was so much reduced that the no longer were listed on the Fortune 500. Brian Solis wrote in an article entitled 'The Rise of Digital Darwinism', "Over 40 percent of the companies that were at the top of the Fortune 500 in 2000 were no longer there in 2010." http://www.briansolis.com/2012/02/sorry-were-closed-the-rise-of-digital-darwinism/ 'A digital divide exists between the businesses that have built a digital business model and everyone else.' [Disrupting Digital Business: Create an Authentic Experience in the Peer-to-Peer Economy - R Wang] Companies that have failed to adapt and embrace the digital age are the ones that have failed. This it not only true of those that are technology based. Companies that have changed from being driven by product sales and after care customer service to being people to people and customer experience are the ones who have stayed healthy and grown. Nike are a perfect example of this. In 2000 they were 197th on the Fortune list and at this stage they were focused on sales of sporting goods but by 2013 they were in 126th place and had changed to focusing on customer experience. They had introduced free apps and programs that integrated with computer programs and a range of gym running machines to track progress. These programs offer the customer a complete social experience where they can compete against friends, comment on other consumers and Nike products which the consumer can purchase direct from the company.
Arguably one of the greatest innovators of modern times is Steve Jobs. On his return to Apple as CEO in 1997 he recognised that that they needed to change their business model and even took the bold step of scraping products like the Newton that did not fit into his new model and vision of focusing on customer experience and looking to design products that would offer the ultimate experience for consumers. Jobs famously retorted about why someone would want a palm computer with a stylus. 'Nobody wants a stylus……Were going to use the best pointing device in the world. We're going to use a pointing device were all born with, were born with ten of them, were going to use our fingers.' [Steve Jobs Mac World San Francisco] In 2008, a year after the launch of the iPhone Jobs summed up perfectly how businesses need to operate to stay strong and prosper in the digital age focusing on each individual customer and their experience. "Our DNA is as a consumer company. For that individual customer who's voting thumbs up or thumbs down. That's who we think about and we think that our job is to take responsibility for the complete user experience. And if it's not up to par, it' our fault plain and simple." [Steve Jobs interview with Betsey Morris, Fortune magazine editor Feb 2008]
Compare the success of Apple to Blackberry. In 2007 Blackberry had more than half the market share of mobile phone sales in the US. The primary mode of communication on mobiles in the business world was using their BBM texting service. When the iPhone was launched in June 2007 Blackberry ignored the touch screen technology thinking they would remain the standard people would want. This failure to innovate caused them to stagnate and by 2014 they had slumped to having only 0.8% smartphone market share. [figures from International Data Corporation, IDC.com]
The companies that have succeeded have never stood still. They have continued to evolve and look to the future. These changes in business strategy of the companies that remain as Captains of Industry are not just actions taken to get through a particularly turbulent time in their history but the actions of decision makers within them to understand that the rate of change requires them to be in step with it. So, whether it is a company such as Apple who are driving the technological change or one such as Nike who are adapting and buying into the concept each have unlocked new dimensions of revenue and profitability which would never have been reached by staying the course. Making such changes requires both the foresight to know that existing strategies are ill-suited for future opportunities and the discipline to enact fundamental shifts in corporate focus. [https://www.chargify.com/blog/6-companies-that-succeeded-by-changing-their-business-model/]
Clearly lessons can be learnt from such companies and others that have sprung up in the digital age, such as Netflix and Uber. These lessons need to be taken into account to help a company face the 21st Century marketplace and the exponential change in our lives as consumers. To stay in step with this change I believe business leaders need to think exponentially rather than linearly as has always been the norm. Some CEO's and business owners are comfortable with linear thinking, for example looking to grow the business by 5% or cut costs/increase production by the same amount. To achieve this, they may order more products in advance or in bulk, or they may embark on an advertising campaign such as newspaper/radio ads and maybe even some advertising using social media. Changing to exponential thinking is not just a case of doing things the same way and multiplying the numbers. To achieve the increases experienced by businesses succeeding in the digital age requires digital marketing where investments are low, but returns can be substantial. By focusing on customer experience and the results of what they experience you can create a tool that grows the business.
In order to bring about the environment for businesses to be successful in making this type of transition a strategy is needed. This strategy must give the company a plan of what they need to do to ensure that all staff members are included in the change and clear directions are given to everyone. John P Kotter is world renowned for change management and his 8-Step plan for leading change has been replicated by other change managers and this is why I would put forward his 8 step plan to help change an organisation to face the 21st Century marketplace.
The first step of this 8-Step plan is to Create a Sense of Urgency. We live in a turbulently changing world where companies are constantly forced to change their businesses models. This is a need for change rather than a want for change. It is imperative that businesses understand this difference, as it determines the success of the change. This leads into the second step of the model which is to Build a Guiding Coalition. Leading the change process alone is a challenging task and this creates a need for a powerful coalition, to provide direction and achieve the desired goal. To maximise the effect of this coalition it should include people with a range of skills and experiences from across all areas of the organisation. The purpose of such a coalition would be to effectively communicate messages across the organisation and delegate tasks accordingly. The members of the coalition can have a positive influence on each other and drive one another to work harder creating a more successful change.
For a Strategic Vision and Initiatives defines the third step of the plan. Creating a strategic vision that encapsulates the end goal is the best way to gain support from the whole organisation. The vision must be easy to understand so that all members of the hierarchy have a clear vision of the change planned so everyone can help aid the change. This is linked to the forth step which is to Enlist a Volunteer Army. The business can only take full benefit of the change if everyone is to buy in. There will not be a problem with the abundance of good ideas but instead the fact that people are not convinced to implement them. Strong support of all good ideas is required in order to stop ideas being shot down.
The fifth step is to Enable Action by Removing Barriers. Up to now all the steps build the strength of the change, however it now important to remove the barriers in the change. Inadequate processes and weak individuals need removed from the change in order for it to move forward at the fast pace that is required. The sixth step is to Generate Short Term Wins. If goals are too long term it can lead to individuals believing their efforts are not paying off. Short term goals will assist everyone to see the benefits of the changes in place. By celebrating the wins and having rewards for them will keep everyone motivated and focused on the plan.
To Sustain Acceleration is the penultimate step of this plan. Becoming complacent with the change can seriously decrease the rate of change. Therefore, goals must constantly be set, and their results strategically analysed in order to keep the change accelerating. Hiring, promoting, and developing employees who can implement the vision will further accelerate the change. The final step of this plan is to Institute Change. The change must become a fundamental part of the company's long-term plan. Therefore, keeping everyone on board is essential and new employees should be encouraged to implement change and those who do should be rewarded. This will ensure that the change is visible in every organisational aspect and remains a core focus of the company throughout.
In this Essay I have identified and extracted the success factors which are crucial to change within companies. As a change agent I have outlined the 8 step plan which I believe will work effectively. By following closely to the easy step by step model there will be sufficient change within company in order to keep up with the exponential growth of the market and enable the company to face the challenges associated with the 21st century marketplace.
Although the fundamentals of the company will remain the same in increasing sales and decreasing costs the reason that the change is needed is to stop the company becoming defunct or falling behind in the marketplace.
This 8 step model was designed by Dr. Kotter who is a New York Times bestselling author world renowned for his knowledge and expertise of leadership and change. The 8 step model that Kotter created to help businesses in the world of change has been used and adapted by many other experts in the business world such as Ray Wang. Wang adapted Kotter's model to further create his own 5 step model which has also proved very successful in the ever changing world of business.
Companies who do not take the holistic approach required to see change through are more likely to fail at any change implemented. However, by following the 8-Step Process outlined by Dr. Kotter, organisations can avoid failure and improve their ability to change and hence chances of success both today and in the future. Without this ability to adapt continuously, organisations cannot thrive in an ever-changing world.
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