• Mike Harsanyi

Corporate change - how far do you go?


Every company has many change cycles in its lifetime, when substantial changes are wanted or necessary. With every change cycle, company leaders can start with a vision, form a plan, then execute the change, and finally assess if the change was successful.


But how big should the change be? There are two contrasting philosophies. One is to keep every change small and then accept that further cycles might follow. At the other end of the spectrum is to push through all positive change in one major reform.


The first option aims to reduce the pain and shock of required change. The latter is willing to tolerate more one-off pain and disruption with the hope that it will be for only a short time, then followed by longer-lasting stability.


There is no single golden rule to tell which way is better suited for a particular situation or company. However, foreseeing the possible change disruptions can assist planning. One easy tool we use at my company is our “Corporate Grid”. We use it for projects in client companies and of course internally, for our own reforms.



Profiling tool


The Corporate Grid consists of 15 simple questions covering distinctive company dimensions with five levels to choose from, each one being a marker of the ways that things are done.


Among the five levels, level 1 is always the easiest to achieve, and each further level adds some new complexity and difficulty. At level 5 are the methods and practices widely recognised as helpful to some successful companies in achieving outstanding results.

It’s important to note that not every company should try and reach level 5s. Indeed, level 1s are perfectly functional in some supremely successful companies. The analysis helps to objectively recognise the nature of current operations and it is then up to the company’s leaders whether or not they seek to transform to another level.


Table 1 -- a sample summary of a company’s Grid analysis.

In the grid there are questions such as “how do you monitor work flow?” with choosable options: 1 random monitoring of work 2 methodical checks for some work and metrics 3 exact working practices to aid most jobs 4 in semi-autonomous jobs, having approval stages for results produced 5 autonomous input / output centres providing end-results for assessment The Grid also gives benchmarks for resource management, business planning and a dozen other areas.
The Corporate Grid works well as a thought-provoking analysis tool. With a particular change cycle vision in mind, it can be used for one department or the entire organisation, according to scope of change. (The Grid’s results will vary according to the scale of looking at change in the company.)


Planning a change cycle


As well as a current profile, the Grid gives a planning template for where company leaders want their company to be after change. Building on the chart above, orange blocks can indicate each new desired level to reach. This immediately creates a visual guide, unique to each company, highlighting the focus areas for change.



Table 2 -- the company’s sample analysis, showing orange highlighted change areas.


The Grid inherently shows red flags about disruption risks. As a rule of thumb, no change cycle should involve more than 2 orange blocks, (whether the 2 blocks are in one dimension or in two).

1 orange block typically consumes half of a company’s change resources. 2 orange blocks is at the limit of change-ability. 3 orange blocks risk causing change failure.

The rationale behind this advice is that multiple reforms multiply! Thinking arithmetically, if the “challenge level” of one orange block is 10, then the “challenge level” of two orange blocks becomes 100, not 20. ...Adding one more could tip the system over, giving a “challenge level” of 1,000.


By analogy, it’s like running -- you might run twice as fast and twice as far as you can walk, but try to double it again and you’ll fail.

The Corporate Grid is a private and not a judgemental exercise. It’s a proven management aid which, used commonsensically, helps to crystallize corporate self-analysis to focus on current status and desired post-change situation.


Explaining some categories and their levels


Data management


One exemplary dimension is in data management. Their levels are crucial in designing the functionality and complexity of a company’s system. The Corporate Grid distinguishes between five ways of storing and handling data.


1 Memory: the longest-existing human storage system still has a crucial role in working lives. A company where essential information is passed on verbally, and there are no records of those communications, is in level 1. People just try to remember what they’re told. This can be very quick and efficient as long as people understand each other well and almost never forget anything important.


2 Paper notes: these can vary from scribbles to proper worksheets. They all require a special effort depending on the rigidity of the format. Companies operating at this level rely much more on paper than on any digitally stored data. Paper notes have the significant advantage over memory that they can enable record-making and keeping.


3 Spreadsheets: most companies use them to some extent (for numerical and also for verbal data), but if daily decision-making relies on spreadsheets then the company should mark this level. Spreadsheets hold the advantage over paper notes that they make system-resident data with greater security and flexibility which can be used for further calculations.


4 Departmental software systems: for a company in which most important daily tasks use distinct area-specific software, for example in accounting, production, sales. Corporate software offers greater control, better streamlining, for work flows and data entry. They also provide easier multi-user capacity and history access.


5 Integrated system: data and information inside the company can pass with ease, free-flowing between different departments. Data are recorded only once and are available to everyone concerned. An integrated company system has a common data structure to enable broad organisational and financial control.

Note that these levels above are for operating reality, not for appearance’s sake. That is, select a level for how things actually function, not for how they might do or should do. For example, departmental software systems do not indicate level 4 unless they are properly in use.


What does the company use its data for?


Information holds value according to how it is used. So it’s highly important to take stock of how the company utilises this asset. The levels are --


1 Random: managers take random samples and form judgements accordingly. A company at this level will not commonly use statistics and reports for operational decisions.


2 Statistics, reports: all sorts of metrics are followed and measured throughout the company. Timely, methodically designed and managed data form the basis of decision-making.


3 Hidden objectives: management pay attention and closely follow a few “super” key metrics. These measures are not openly discussed with employees; hidden objectives allow managers to select key criteria for strategic or daily decisions.


4 Open objectives: objectives are shared with key employees / middle managers. Through their actions, employees have some control over results from pursuing these objectives. The results are frequently assessed and discussed where company leaders play coaching roles as well. Open objectives enable company-wide alignment of interests, beyond what’s achievable with hidden objectives.


5 Key indicators: there is a layer above open objectives where even a brief glimpse allows company leaders to have an accurate picture of the company’s current situation.


Work flows


Here the levels are -


1 Random monitoring: work flow depends mainly on “trust” - hoping that individual employees will more or less do their jobs. Strict job descriptions also either don’t exist or are not taken very seriously.


2 Methodical checking: operational know-how is shared among employees and managers without being specified exactly. Work-checking is purposeful and frequently repeated. Most checks are routine and both employees and management know how they are done.


3 Exact working practices: the company has invested in clear and easy-to-follow procedures with good guidelines for all-important areas and common eventualities. Together they represent well how the company can achieve successful results. It’s expected that people follow procedures closely and they expect specified instructions to define their responsibilities.


4 Chain of approvals: procedures have approvals and quality controls at key points. At these points, operations can be halted or alternatively can be looked up retrospectively. Level 4 is consistent with greater employee autonomy.


5 Input/output centres: there are groups or teams which are centres of work, expected to work with high autonomy. Their performances are judged more by results than by the following of procedures. There is a very high level of trust within the company, with hoped-for extreme efficiency and flexibility. Ultimately, only agreed end-results are required.


The Grid’s company-profiling dimensions exist for a dozen further key areas which may be affected by the company’s change possibilities, plus also financing.


Financing


Company finance is briefly generalized here, in order to illustrate that its structured thinking approach can be extended to the company’s different dimensions.


1 Out-of-pocket, angels: usually very early investment stage, where the company can’t yet provide for its own existence or operation. Reforms are for survival mainly.


2 Own profit: the company has already reached some self-sufficiency, proving viable in the market. Budgets can be allocated to certain reforms, as far as profits allow.


3 Credit schemes: reforms (and not operations per se) are financed by loans or credit. Results of these reforms should be judged against the loan costs.


4 Private equity: management, the market, the company have been valued and been deemed worthy of investment by outside professionals. Reforms are financed by this new capital. Results of reforms are judged by multiple metrics inside and outside the company.


5 Public equity / IPOs: the company is now valued publicly; reforms are well-reported and judged accordingly.


Summary


The Corporate Grid is not a magic solve-it-all tool, but rather a quick and easy reflection on the company. It promotes a clear and analytic mindset and provides food for thought, plus red flags where appropriate. Many versions can be created, dimensions can be taken out, or added, depending on sector and company.


If you would find our Corporate Grid’s basic version useful (with short explanations about different dimensions), we are happy to send one to you: please get in touch.


Mike Harsanyi

woodpeckersoftware.co.uk

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