In these days of intense competition only the smartest businesses will survive, says Trevor Gay. The secret, he says, is to make changes to your business before you reach your peak.
I've been thinking about how businesses retain customers for repeat business. My view has always been that if you value your front line employees and stay in touch with customers – in fact if you make customers feel really special - you won't go far wrong.
"It is a paradox in some ways when we say the time to change is when things are going well. But as Bill Shankly, the late great and very successful Liverpool football club manager once famously said: 'Always change a winning team'".There are management consultants out there waiting to take your money by trying to convince you there is a technical, rational, 'systems' answer to all this. I disagree.
I have always said (and written) that of course there is an important place for process in business but passion is more important. The proportions in my opinion should be a pint of process and a gallon of passion. In my experience the businesses that struggle have a gallon of process and a pint of passion – and the owners are left wondering why their business is not a hotbed of creativity, in touch with front line staff and customers.
I am attracted to Charles Handy's explanation in his wonderful book 'The Empty Raincoat' about the Sigmoid Curve concept. Professor Handy simply and persuasively argues that the best chance of survival in the competitive world of business is to launch changes and new developments when things are going well and profits and business expansion are both on a steady upward trend.
The Sigmoid Curve (above) is the S shaped curve which has intrigued people since time began. The Sigmoid Curve can be applied in many of our life experiences and Professor Handy suggests we can apply it in business.
He says we usually start slowly, experimentally, falteringly and after these initial problems and challenges - and even a dip in our fortunes - we begin to see progress and a way forward.
We experience steady improvement and in a business context this means profits are on the increase, employee satisfaction and retention levels are excellent, customers are happy and all in the garden seems rosy.
The inevitable shape of a Sigmoid Curve however is the dip at the top of the curve. Professor Handy therefore suggests one way to see continued upward trends is to start a second Sigmoid Curve when you are near the peak of the upward curve - shown as Point A on the diagram above. Any temporary dips can be absorbed by the business because you are changing on the upward curve.
If you wait until you have peaked at the top of the curve you are about to start the descent, and it will be considerably harder to recover.
It is a paradox in some ways when we say the time to change is when things are going well. But as Bill Shankly, the late great and very successful Liverpool football club manager once famously said: "Always change a winning team".
Professor Handy's writing has always inspired me and the Sigmoid Curve 'Aha' moment for me made me think more about why so many businesses fail after a good start. Over the years I have developed my own simple nine point guide to the stages of the typical business starting from the passionate enthusiasm of the founder. These then are the nine stages.
Stage 1: Passion
The owner of the company starts small with a vision to establish the business. There is real passion at this stage because the owner has to work to eat. It will be a struggle to make any money. This is about making your reputation.
Stage 2: Established
The owner sees the business is meeting a need and begins to break even and maybe make some money. More work is generated and the business is becoming established. The owner is still very hands on - driving the business.
Stage 3: Growth
The reputation of the business grows and more work is generated. The owner decides it is time to get some help and staff are recruited to assist. The owner is still heavily involved. The business is becoming profitable.
Stage 4: Expansion
Now things are buzzing and the owner decides that it can expand. Staff recruitment takes off, business is growing and everything looks great. The owner is now slightly more removed from the front line and customers and has people doing 'all that stuff'.
Stage 5: Comfort
The business is now comfortable in terms of profits and growth. The owner now has a monitoring role because the senior management team takes care of the day-to-day business including customer care.
Stage 6: Complacency
Because things are now comfortable, complacency sets in. Standards provided to customers that were hugely important in the earlier stages seem to have slipped because the business is now big and less responsive to the changing needs of customers.
Stage 7: Vulnerability
Whilst standards have slipped existing competitors and new businesses have emerged as serious rivals. You have become vulnerable. You start to notice profits are reducing and repeat business is not happening. Your staff are not as happy as they were. The owner is now far removed from the everyday business – and may even be oblivious to what is happening.
Stage 8: Arrogance
The business ignores the obvious and growing competition and refuses to learn from what is happening – a classic case of burying your head in the sand. The need for change is now smacking you between the eyes but refusal to accept the inevitable seems to be the overriding culture.
Stage 9: Death - RIP
This is what happens when we refuse to listen to what our customers are telling us. Customers are our heartbeat and if we do not listen and respond to what our pulse is telling us then the outcome is sadly inevitable. The owner – now completely out of touch – is heard to say: 'What went wrong?'
Summary
Being closely in touch with our customers is important throughout all the first eight stages and arguably more important from stage five onwards. Sadly, many businesses seem to lose touch with customers once they have become comfortable.
Five take-away points for Trainers:
1.Develop training packages that have - as an essential component - the Sigmoid Curve concept of professor Handy
2.Compulsory reading - 'The Empty Raincoat'
3.Remind managers that active listening to your customers becomes even more important as you become more successful
4.Encourage managers to be creating change when things are going really well. A competitor is always in the sidelines just waiting to occupy the profitable spot you currently occupy
5.Encourage managers to welcome and love paradoxes such as: you are at your most vulnerable when you are at your most secure
To see more reflections from Trevor you can read his last article on TrainingZone.co.uk by clicking here or visit his Simplicity Blog at www.simplicityitk.blogspot.com
Trevor Gay is an independent leadership and management coach, trainer, consultant and author with a self confessed obsession for simplicity and liberating front line staff.
You can contact him by e mail on [email protected]
