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A Cure for Complacency, the Silent Killer of Family Owned Businesses

Type: Publications | Author: Terry Phinney
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Complacency happens quietly and relentlessly to family owned companies. Cash flow is adequate, competition appears manageable and there are signs of concern, but they are on the horizon. Then, some event or series of events throws sales, profitability and the survival of the company into jeopardy. This scenario happens with increasing frequency to family owned companies. It is preventable but it requires a change of focus.

While companies struggle with growth and innovation, their underlying problem is building a sustainable culture that continually improves the organization and the business. How does a company engage employees to become part of the solution? There are some examples that can illuminate a path forward.

 

The Doldrums, Steam Engines and Organizational Curiosity:

Changing Complacency into Growth

 

The Doldrums: calm (no wind or power) in the Atlantic and Pacific oceans

“Getting stuck in the doldrums” was a captain’s worst nightmare. At certain latitudes and without warning, the wind stopped blowing. Ships were motionless, empty sails hung from the rigging and the sea was calm. Out of desperation, some captains used their lifeboats to tow their ships, hoping to escape. Others threw their cargo overboard, to lighten their loads. Unfortunately for sailors, the only solution was wind and that required divine intervention. Over time, however, the advent of the steam engine made the doldrums a distant memory and opened the floodgates for commerce.

Steam Engines: continual power (no wind required) in all transportation

History shows that the modern steam engine was largely responsible for opening and sustaining global trade. James Watt, a Scotsman, developed the first truly commercial steam engine in the late 1700’s. A mechanical genius, Watt repaired steam engines that pumped water from nearby coal mines. His practical improvements to the design and manufacture of the early engines revolutionized the coal industry as the mines dug deeper and captured richer veins of coal.

Watt and other later inventors designed and built a series of steam engines that were significant improvements over the original design. Newer engines had better steam vessels, planetary gears, lighter weight and they were also much stronger. Within decades, these improved engines powered railroads, ships and factories of the industrial revolution.  

The Connection: Doldrums, Steam Engines and Sustained Growth

Many companies believe that they are “stuck in the doldrums” and are waiting for the wind to fill their sails. They usually have enough water and food on board but they are not going anywhere. In essence, they are waiting for growth to push them forward. In today’s economy, product commoditization, dropping prices and tougher differentiation of services are the norm, not the exception. Similar to Watt and his improved steam engine, history has rewarded those who are proactive, curious, and commercialize new ideas that solve business problems. Those who wait are consigned to history.

Companies ask: “How do we continually develop new products and services that improve our business?”

One answer: Build “Organizational Curiosity” to Drive Sustained Growth and Innovation

Inventors will always change the status quo with new products and services. Waiting for the inventor, however, is a luxury that most companies cannot afford. Companies find that there are many smaller improvements that can have a major impact on performance while they wait for the “great leap forward”. The challenge is creating an environment where innovation and growth come from the entire organization not just a few people. This creates sustainable progress that is not dependent on chance.

Lead with “Curiosity” not with Programs and Jargon

In today’s frenetic world, “innovation and improvement programs” can evolve to “flavors of the month” unless they are an integral part of the company. Without this strong connection, organizational fatigue emerges as employees endure a litany of structured programs that appear loosely connected to their everyday work. With growing disempowerment, employee thinking then becomes “automatic”. Even the best employees pay lip service to productivity and innovation concerns as they do their jobs. But, the underlying problems that drove the need for innovation still remain.

How do we avoid Organizational Fatigue and the “Program of the Month”?

High performance athletes often talk about shifting into “another gear” and “being in the zone” as they compete successfully. Winning athletes drive themselves to succeed and are not fatigued by their contests, even after grueling competition. They are driven by their desire to win and their ability to control their activities within the confines of the game and the rules. Fatigue, if it comes, is often the result of feeling disempowered by sudden personnel changes and by comments from those who are not in the game.  Successful coaches, it seems, are those who provide the means, the methods, and the motivation but do not micro manage “the how” for their players, once the game has started.

In the improvement and innovation processes of some companies, employee empowerment and choice have been replaced by “top down” management directives. This process allows for little employee interpretation or adjustment on the best way to accomplish the task at hand. Historically, the middle of the organization feels squeezed by both ends: the top who dictate the “what” and the bottom who are completing the “what”.

Promote “Organizational Curiosity” and “Inquire” about the Status Quo

With these challenges to improvement programs, promoting “Organizational curiosity” can energize an entire company to improve what it has and add what it needs. It can become a new way of thinking, not a one-time event or a complex process that is the province of a few “R&D people”. It becomes contagious and builds upon itself as “discoveries” are made across the company. By challenging the status quo in a productive and forward way, employee curiosity and embedded wisdom can become the winds that move an organization out of the doldrums.

What really is “Organizational Curiosity”?

·         It is an ongoing conversation about “why do we do things” this way and “what we could do” that would be better than what “we are doing”. It becomes an accepted behavioral norm.

·         It is a capability: As an organization becomes curious, new ideas surface and their value is analyzed. The best ones are pursued if they meet specific business needs and capital screens. This process matches curiosity and rigor to produce legitimate growth ideas.

·         It is inclusive and covers all aspects of the business from operations, to product development, to finance, to customer service. It is both a cost saver and a revenue generator.

·         It creates a positive and productive environment by “freeing up” new ideas and discouraging the second guessing of different concepts before they are analyzed.

·         It breaks down silos. It is not tied to specific functional disciplines but uses several disciplines when an idea has merit and must be developed further.

·         It is part of the leadership behavior and it becomes part of the entire culture.  By stretching minds, new ideas are generated and new solutions are invented and sold.

·         Fully accepted and utilized, “organizational curiosity” moves an organization out of the “doldrums” and the trap of “we have always done it this way”.

 

How do we Nurture and Develop “Organizational Curiosity”?

·         Curiosity must start at the top or it will not be taken seriously. Leaders must ask themselves and their direct reports the right questions to uncover opportunities that are sitting on the sidelines.

·         Questions about the business must be “open”. They must start with “why” and “how” rather than a monologue such as “it won’t work” and “it doesn’t have”, or “we tried that before”.

·         The outcome of the questioning process must be an evolving dialogue about the future rather than a summary judgment on the present and past.

·         Cross Functional Task teams must be chartered and sponsored to conduct further investigation and develop answers to the most promising questions and remove the obstacles before them.

·         New ideas must be celebrated, even if their adoption is uncertain. The process of thinking is really the celebration, not the outcome. Good ideas will rise to the top; the lack of ideas or little time to create new ideas will stifle good thinking.

·         Sufficient curiosity, agreement and funding will lead to a series of initiatives that generate new products and services.

·         Keeping the process simple makes it easier to bring ideas to the surface and avoid the censorship that can happen with overly rigid methodologies and the fear or concern than can accompany them.

 

How do we know that “Organizational Curiosity” is working?

·         A “curious organization” will break down functional barriers in search of answers to specific problems. Cooperation will improve among departments and a process approach will become evident, rather than functional solutions in their various vacuums.

·         The number of potential improvements will grow and change as the opportunities and their value become clear.

·         Organizational conversations will center on what is needed and possible rather than why things are “not right” and can’t change.

·         Recruiting will become easier as an organization’s reputation for growth and self-improvement pervades the marketplace and curious employees apply for jobs. These employees do not come with the baggage of the past but with optimism for the future.

·         Financial results will improve as new products are created. These products will generate higher margins than the legacy business. Improvements to business processes will save cash and resources and increase velocity and throughput.

 

Concluding Thoughts

The development of the steam engine was sponsored by coal owners who provided a new and plentiful fuel to replace the diminishing supply of charcoal that powered the glass and iron business. The steam engine was the integral invention that allowed miners to open previously inaccessible veins of coal that were deep underground and had water coursing through them. With a portable and stronger engine, water could be removed and the coal could be mined. This fuel source and engine marked the start of a sustainable industrial revolution.

Today, technology is ubiquitous but the application of it is often limited to a few people. Opening the technology and process floodgates can develop new applications and improve productivity throughout the organization. For this to occur, however, leadership sponsors must be dedicated and employees must be the engine of change. As Watt invented before them, employees must push for solutions to business problems, using their innate curiosity.

Contact: tphinney@blackstonemgnt.com 617-462-0223