Organizing The Chaos of Change1 Jul, 2012 By: Jennie Fisher imageSource
There is no doubt our industry is facing change, and many of our dealers are transforming their businesses or have plans to transform their businesses to maintain sustainability. Transforming a business can feel chaotic. There is uncertainty, the human instinct to resist change, and the complexity of juggling present and future states.
We’ve been privileged to work with many dealers going through change. These dealers have successfully transitioned their businesses – some have done so multiple times! They have changed from transactional box-selling companies to MPS-selling companies. And several have transformed into full Managed Service Providers.
Even GreatAmerica has first-hand experience implementing new business models, most recently with the launch of Collabrance, our Master Managed Service Provider business for dealers. Photizo has coined the phrase Stage 4 to identify the pinnacle of what service providers should aspire to attain. But getting there isn’t easy.
How do these companies make the changes within their organizations? What are the keys to a successful transition? Dealers are taking different approaches to evolve their business models, and we have taken note of some of the guiding themes of getting there.
Have a Darn Good Reason
If you were at Photizo’s MPS Transform event in Orlando in May, you might have heard Kevin DeYoung, President & CEO of QualPath, headquartered in Pompano Beach, Florida discuss the challenges he overcame when he successfully transitioned his dealership into a MPS model. And what was his number one piece of advice for other dealers seeking to transition their businesses? “Have a darn good reason to change.” We couldn’t agree more. Believing MPS or Managed IT, or document management is “sexy” or exciting cannot be the reason for change. You must understand the business model, the financial implications, the opportunity cost of not changing, and fully understand your “fit” in the market. For Kevin DeYoung, his ‘darn good reason’ to transform his business was “to have a relevant enterprise for the future.” He had read the Photizo analysis in 2010, which forecast 50% of the resellers in North America would be acquired or be out of business by 2013 due to their inability to be successful with MPS.
Be a Committed C-level Champion
Closely tied with a darn good reason to change is the absolute commitment from the owner principal or C-level executive to drive the transformation. New models will undoubtedly run into challenges and there will be failures along the way. Without a leader who can provide extreme passion and a well-communicated vision of what success can bring, the initiative may fail since others will often not drive hard enough. There is a natural fear of being associated with something unsuccessful. However, if the leader properly communicates the passion and vision, it motivates the team & helps them realize they are part of a substantial positive impact on the business!
Develop a Business Plan
When planning for change, take time to develop a business plan to help ensure your success and reduce risks of the unknown. The process of creating a business plan will help you think through every aspect of your business strategy. Every month or quarter you revisit the plan and see if you made the correct staffing decisions and grew the customer base in line with your projections. Whether you hit your targets or not, you can use the review to figure out what went right and what went wrong. I recommend appending a “lessons learned” each quarter. Even a mature business should append a “lessons learned” to their business plan at the end of each
fiscal year. It can be invaluable for future strategic planning.
Align Your Leadership Team With Your Vision
It’s imperative the leadership team buys into the new company vision. When senior leadership resists change, it can hinder success and lead to failure. A strong, committed leader (see above) will help ensure the vision is carried out through the organization. New ideas or initiatives always face a gauntlet of challenges. An organization’s natural resistance to change is only one of its challenges. There will be
very tangible obstacles that cannot be
overcome without credible executives fueling
the passion and determination to make it successful. A less credible leader may run up against others in the organization with higher credibility who can make reasonable arguments that dilute or fatally change the initiative. An owner/principal or high ranking credible leader can work with others by properly setting a stage that anticipates hurdles and responds with viable solutions along the way.
An example of this scenario is as follows: “Let’s start with the premise that we are going to do this, so let’s focus our effort in how to best get it accomplished.” A less credible leader can never effectively have that conversation. If you can build the expectation that “we’re going to spend time as a team focused on the future,” you will motivate people to be excited and embrace change, rather than resist it. That said, if a leader cannot get a member of the team to align with the vision of where the company needs to go, a change in leadership may be required.
Be Willing to Fail
Gary Thomas of Thomas Office Machines in Muncie, Indiana, transitioned his office equipment dealership into an MPS model six years ago. At the time, he and several other dealers attended educational sessions on developing an MPS business model. Two months after completing the class, his service manager was the only one out of all the participating dealerships to have made changes within his service department. Why? Gary says that he thinks he empowered his people to make decisions in alignment with the new vision of the company, even if that meant making a decision and failing. “That empowerment of failure being an acceptable outcome allows your people to take action and reach success faster. They will be willing to make changes, rather than doing nothing, or going back to their old, comfortable ways,” says Thomas.
Define the End Game & Work Backward
When Kevin DeYoung led QualPath from a product to services model, he decided what his end game, or end result, needed to be, and backed into the result. Only after making the MPS sale a reality a number of times, did he start to analyze and put efficiencies into the process. “In MPS, you can have reps that break process and still have a successful deal, but that’s usually a ‘happy accident’. I’m a big believer in the rule of threes. I wanted to see the initial process work successfully at least three times before trying to make it more efficient and increasing my margins,” said DeYoung. Sales reps often want to compress the sales cycle. But if compressing the sales cycle means skipping steps in the process, it is rarely successful. “When we were first trying to sell MPS, we had to learn that selling a service is predicated on trust. We had to listen better. We had to understand our customer’s problems and do thorough audits and reviews and that just takes time. As we added efficiencies to what worked, we had to respect the longer sales cycle of a service business,” added DeYoung.
Execute. Execute. Execute.
You can talk to your peers, hire consultants, attend educational seminars, research the market (all viable ideas when planning a transformation), but even when availed with the best secrets in the industry, you must execute. Once the details of the initiative are understood, assembling a small team to champion various components or steps is critical. The initiative leader does not often have the detailed knowledge or time to lead all aspects, but the leader can work through the selected team to track the progress. Scheduling regular meetings, with preset goals for each step, is a great way to sustain inspired participation and keep things moving properly. It also provides accountability to those owning the various components or steps. You and your team need to be held accountable for executing on the plan, learning from mistakes, and taking corrective measures, if necessary.
Chaos can actually be healthy for organizations. If there is no chaos, your company may be stagnant and on the road to nowhere. Managing the chaos of change takes passion, planning, commitment and the right
people. But if thought out and executed well, the future rewards will be worth it!
Innovative Adaptive Change
“Can you take a business process and turn it into an electronic workflow process?”
While at the recent Transform event, Photizo CEO Ed Crowley, spoke with imageSource Editor-in-Chief Sand Sinclair, where Crowley insists that there is a process, and that there are key tools associated with it for tangible value. He cites an interesting example below on how one company addressed thinking “outside the box” and found a service that added both value and revenue:
A reprographics company contracted by the largest office company in Calgary, Canada, was hired to do the printing of blueprints for them. A site was set up where people could access the blueprints to print them as needed, or if they preferred, could download them to their own CAD system or program where they could make changes, then “check” them back in. Of course they charged to print and charged to access the digital blueprint, whatever the choice. Notably, there was a huge volume of blueprints, but what the reprographics company found out was, though 1,000 blueprints were actually printed out - the electronically accessed blueprints skyrocketed higher due to people repeatedly checking them in and out, regardless of paying to access them on a per usage basis. Besides being more convenient for the users, the digitally accessed revenue margin was much higher in volume over printing them.
“This is what I call ‘innovative adaptation’ at work,” says Crowley. “As page volumes decline, you must look at ways to progress forward.”