Back in the dim and distant past, when I was at university, I remember studying the theories of Schumpeter. You might already be familiar with Schumpeter’s work, but if you’re not, he theorised that innovation was at the heart of competitive advantage. It would be possible for nimble new entrants to overtake slow and established companies, as new companies can innovate and respond more quickly as they don’t have the ‘baggage’ that larger companies have. This brings to mind the idea of large, immovable “dinosaur” companies who can’t innovate or respond to their customers or their environment. These companies have systems and processes that are inflexible, rigid and take forever to amend. I’m sure we’ve all had experience with large and even mid-sized organisations that seem to move at a glacial pace.
Nobody wants to be a dinosaur. I firmly believe it is possible to grow a business yet still remain nimble and innovative.
What separates out the winners from the dinosaurs? I believe the answer lies in the discipline of business analysis. There are a number of aspects of business analysis that help a business to stay efficient, innovative and able to stay ahead of their competitors. In this article, I’m going to discuss three key pillars:
- IT Applications & Technology
All businesses have processes and procedures that their staff follow. During periods of rapid growth, these processes often “evolve” by coincidence rather than design. Often, front-line staff make pragmatic changes to their procedures to meet customer needs. The trouble is this can cause problems down-stream. What is efficient, say, for a front-line sales agent might be incredibly problematic for the manufacturing department. Take a theoretical example:
- Sales: “I can’t find the part code – so I’ll leave it blank. The storeroom guys will figure it out.”
- Storeroom: “I have no idea what this is – I’ll send it to admin to ring the customer”
- Admin: “I can’t get hold of the customer I’ll try later.”
- Customer: “I’ve already explained what I want. Why are you ringing me again? It’s already a week late!”
- Admin: “Right, you need a 132-7. I’ll send the order back to the storeroom for picking and packing.”
- Storeroom: “Wrapped, packed and dispatched…. Although it’s a week later than the customer wanted!”
- Customer: “I’m never using this firm again… I’ll go online and buy from a competitor….”
As processes evolve, they can often become wasteful, as illustrated by the example above. The million dollar question: How can this be avoided?
As a starting point, there is significant value in mapping out each of your core processes and looking for improvements. A great low-tech way of doing this is to grab a roll of brown packing paper, stick it to a meeting room wall, and use sticky notes to capture the detail and sequence all of the different steps. Work with a team to understand:
- Are all the steps really necessary? Are they valuable from the customer’s perspective?
- Can any steps be eliminated?
- Can any ‘handovers’ be eliminated (this is when things fall between the cracks)
- What might go wrong (the “exceptions”) and how do we handle them? Remember, it’s the exceptions that cost you time, slow you down, upset your customers and (if not handled correctly) can damage your reputation.
Once you have done this, also keep in mind that processes should have a feedback mechanism built in. If customers are asking for a green version of your widget, and you only produce it in blue, you need to know! Insight from real customers is gold dust.
How integrated is your data? Data is the life-blood of many organisations. The term “data” could represent any information your organisation captures and records. A customer order, a sales lead, or even payroll information.
Growing organisations often find that their data is dispersed amongst multiple systems and databases. Data might be embedded with Excel Spreadsheets, PDF forms or even in paper ledgers. When your organisation is small, you can “keep it in your head”, but as it grows this becomes increasingly difficult.
A key challenge for mid-size and growing businesses is to keep data clean, correct and making it accessible. It’s important to have a “single source of the truth”. Just one example of this is Customer Relationship Management (CRM). It’s extremely important that all relevant stakeholders within an organisation can see an up-to-date record for your key accounts. This won’t happen if contact information is hidden away in paper journals, personal e-mails and employees’ mobile phones.
A consistent and coherent view of data allows you to have accurate oversight. Done well, it’ll help you to spot opportunities (“We’re selling more and more of xyz range into Asia – should we start offering more products…”) as well as threats, exceptions and abnormalities.
A key question to ask is “What data is important to the business, and how do we store and access it?”
IT Applications & Technology
A key stumbling block for organisations that have grown quickly can be the technology. Organisations can find themselves in a situation where they have a sprawling IT architecture, with dozens of systems that don’t talk to each other. In some cases, a new innovation or product launch will be reliant on a technical change, and if the IT estate is messy, it can slow down or inhibit innovation.
This isn’t inevitable – with forward planning it can be avoided. When considering a new system, it is extremely valuable to consider current and future requirements. These will be broad and varied, but will include:
– Scalability (can it grow?)
– Functionality (what does it do – will it meet my needs tomorrow?)
– Extensibility (can I extend it?)
– Interfaces (will it talk to other systems?)
Conclusion: Avoid the dinosaur syndrome
In summary, I firmly believe that organisations of all sizes (whether small, mid-market or large) can stay nimble as they grow. By understanding and carefully defining and selecting their processes, data and their IT applications they can create a situation where they can respond to customer demand quickly.
What are your views? Do you work for a “dinosaur” company – or perhaps a “nimble” company – what are your experiences?
This post was written as part of the IBM for Midsize Business program, which provides midsize businesses with the tools, expertise and solutions they need to become engines of a smarter planet.