How To Renovate A Business

by: Doug Michaelides

Renovations

When an organization stumbles, hard-driving executives look for radical solutions.  It’s a crisis!  There can be no half-measures!  A complete overhaul is needed!  Yet when trying to fix a business, you shouldn’t actually be looking for radical change, you should be looking for radical improvement – these are very different things.

It’s better to focus on the leverage of the change rather than it’s scale because with any change comes risk.  An organization is a complex human system, so it is difficult to predict all the ramifications of a significant change.  For example, when moving from a centralized operating model to a decentralized one, you intend to improve client focus but risk losing economies of scale.  You expect to gain entrepreneurial focus but may create conflict between competing business units.  It’s easy, in the process of fixing one thing, to break another.

Most executives feel compelled to act decisively to fix a problem but may downplay the hard to predict risks of their actions.  It’s easier to move fast on the known problem than waste precious time speculating about the unknown side effects of the proposed “fix”.  That’s when the baby may get tossed out with the bathwater.

Businesses are often non-linear systems – a small change in input can result in significant changes in output.  Perversely, major changes in input can sometimes achieve almost nothing good at all.  So managers should ask themselves, what’s the smallest change that can be made to yield the greatest improvement?

Sometimes radical changes are in order.  The business landscape is littered with organizations whose roofs fell in because they didn’t have the foresight to undertake extensive renovations.  But if you have something good to preserve in your business, and a little time to get things done, it might be better to start by judiciously moving a few walls rather than completely gutting the building. Some people worry about throwing out the baby with the bathwater.  I say when renovating the bathroom, avoid knocking down the whole house!

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