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Cave Henricks Communications
The last 20 years of my career have revolved around one simple belief: that even the best companies can become better. I have had the privilege of working alongside CEOs of some truly stellar companies.
Great leaders are men and women with vision; individuals who know exactly the direction an organization should strive toward and who have the skills to take it there. They are positive and passionate, decisive and direct. They are genuinely interested in those around them and have the ability to motivate and inspire. They have an impeccable sense of timing. They pick and choose the right battles to fight. Great leaders are associated with growth and success.
Great leaders want their companies to become less complex and more profitable in a way that is fast, does not distract from the prime focus of the business, produces very significant results, and has the complete buy-in of the organization. A worthy and ambitious goal, and with the proper guidance and discipline, one that is completely achievable.
The 8 Barriers
Every company I have worked with in the last twenty years, large or small, no matter the industry, whether industry leader or industry laggard, is plagued with the same eight barriers. Breaking these barriers is how excellent companies avoid dumb things.
- Avoiding Controversy
- Poor Use of Time
- Reluctance to Change
- Organizational Silos
- Management Blockers
- Incorrect Information and Bad Assumptions
- Size Matters
- Existing Processes
These barriers are the reasons companies keep on making the same mistakes, and why ideas for improvement remain hidden or don’t get implemented. When these barriers get broken, companies can achieve sustainable, lasting improvement.
There are two types of natural barriers in every company. Structural barriers exist because of the way all companies are organized and do business. Behavioral barriers have their roots in human nature and the way people interact with each other. All of them, individually and collectively, prevent employees from taking actions that are in the best interests of the company and thwart leaders in their quest to make their organizations perform better. Because the barriers are natural, all 8 exist in every company and unless the company intervenes to break them down they will remain.
The Solutions Lie Within!
One of the goals of a good change process is to reduce complexity. Ironically, many companies make any change process itself overly complicated, by bringing in vast teams of outsiders, forming numerous committees, and applying neither deadlines nor discipline. The basis of the approach that I have used for more than two decades is actually pretty simple: your employees know the thousands of things that should be done.
I go into companies and put a process in place that allows employees from every part and layer of the company to submit their ideas for change.
What always surprises people is the number of ideas that employees come up with–and how good they are. Typically 80% of the impact comes from less than 20% of the ideas but employees suggestions for change will come flooding in as soon as the barriers that are holding them back are broken down. Ideas range from the very large strategic business ideas to small ideas that change the way a process works. These smaller ideas are equally important, and you cannot lose sight of them because they contribute hugely to reducing complexity. They may be small by dollar amount—if their value is even measurable—but the ideas are not small to the people who suggest them, particularly if they are going to change the way customers are served or employees do their everyday jobs.
There are 12 principles which any good change process needs to apply in order to break down the 8 barriers:
- The process is personally led by the CEO and supported by senior management.
- The entire organization is engaged—not merely involved—in the change process.
- The process is guided by a sprinkling of superstars from within the organization who are willing to challenge the status quo.
- There are no targets for the company as a whole or for individual groups within it.
- The ideas are owned by the people responsible for implementing them.
- Ideas are easy to put into the process but hard to remove.
- Consideration of ideas is based on facts and analysis, not opinion.
- Consensus is built so that everyone who will be affected by a change must agree with it before it is made. (This is the real secret to removing barriers).
- There is a focus on increasing revenue, not only reducing expenses.
- The process of removing the barriers will not disrupt normal business.
- Anything less than 100 percent implementation is not acceptable.
- The change process is about culture change; this is not simply a matter of completing a project.
Once the barriers are broken down using these 12 principles, thousands of ideas to improve the company will emerge.
As a rule of thumb, I expect to see on average one raw idea surfaced per employee; I have worked with a company that had just over 2,000 employees as well as one with slightly fewer than 300,000—and many sizes in between. Over the years, I have witnessed literally hundreds of thousands of ideas surfacing. The minimum has been 2,000 at one of the smallest clients to 150,000 ideas during the first half of a project at a large global company.
Of course, these are the raw ideas. The number of approved ideas is fewer; it ranges from 600 to 4,000. This range is surprisingly narrow, given that I work with companies of all sizes. Companies, no matter their size, seem to approve roughly the same number of ideas (2,000 on average); what changes is the size of an idea’s impact. The larger the company, the greater the impact of an individual idea.
One client surfaced 1,200 ideas just for improving the way its call centers were managed. The ideas were simple enough that the company implemented them at a rate of 60 a week. They included such minor changes as giving customer service representatives a drop-down menu to get to the screen relevant to the client’s issue instead of having to scroll to the appropriate screen.
Every company has some interesting statistics that leave you shaking your head—and can point to opportunity for change. At least two companies I have worked with had more active laptops than they had people—1.4 laptops per person was the highest ratio I have seen. Yet another company had more BlackBerrys than it had people. And one large bank had four times more internal passwords than it had employees. Why does this matter? Because the passwords were tracked on a database and frequently changed—all of which required monitoring and work.
By far the most staggering result of a good change process is the financial impact. It is one of the measures of success and one that cannot be argued with. I calculate financial impact by taking the total of the results and measuring it as a percentage of the previous year’s profits. On average this number is 25 percent—company’s profits increase by an average of 25 percent. For most companies this is a huge number. Across the projects I have worked on, the results have been an increase inpretax profits of $37 million a year at the smallest company to $5 billion a year at the largest. The percentage is independent of the size of the company or the industry; a health care insurance company achieves exactly the same results as a food manufacturer.