CEOs need to use transitions for true transformation

imo-blogTransitions are dangerous times for any business — not just when a firm is bought or sold, or when there’s a new CEO — and they are also times of tremendous opportunity. Navigating through a change that puts the firm at risk is critical to the life of a company.

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Transitions are dangerous times for any business — not just when a firm is bought or sold, or when there’s a new CEO — and they are also times of tremendous opportunity.

One person who excels at turning transitions into opportunities for improvement and profit is Jim Grew. He works with typically two clients at a time to navigate through transitions. These are not turnarounds, rather it’s a change that puts the firm at risk — the kind of risk that can be difficult to look at.

Big transitions can include the death of an owner, the loss of a major client, the sudden growth of a competitor, loss of a key leader, margin stops growing, or customer complaints start rising. Other warning flags include “we can’t get it all done” or “there’s just too much to do.”

Jim recently worked with a client selling loudspeakers to custom installers of high-end stereos. They were making late deliveries 30% of the time.

Their customers, the stereo installers, needed all the parts to do their jobs, so this late-shipping problem was costing Jim’s client. They were losing sales.

When Jim arrived, this client had a two-week lead time for completing an order. Jim helped them cut it to three days, while improving productivity 30%.

The big change Jim instituted was a meeting among three key people who were not communicating very well: the heads of sales, purchasing, and manufacturing.

This was a short, daily meeting between all three, and the agenda was simply, “What are we going to be late on, and what can we do about it?” Once it became clear that that was the daily agenda, they started showing up with answers. And pretty quick these three started running this meeting themselves, they started solving problems, and Jim got to sit back and watch.

Part of the natural incentive was, that none of them wanted to fail or look bad in front of their peers, which meant they had to deliver on what they had said yesterday they would do. “That’s very powerful,” says Jim.

The full results took several months to materialize. However, some were immediate.

Previously, the sales guy had been unwilling to call customers to tell them the product would be late. “He didn’t want the abuse,” said Jim. “We convinced him to call the customer and tell him ‘we originally told you Thursday, but now it’s going to be next Tuesday.’ Now he wouldn’t have done that if he didn’t believe Tuesday, however the production and purchasing folks a few minutes earlier had told him ‘we have the parts coming in and we’ll be done making things Friday, so Tuesday is no sweat.’ And so he could call his customer with much greater confidence, and to his shock, the customer would say thank you.”

This led to a 47% increase in sales, because they got a reputation for shipping on time.

This is not about hiring better people — they had one leadership change.

It wasn’t about having more money, or more time, or new systems.

It was about getting the key people to focus on the problem together, and to then work together to manage the resulting side effects, because of course at first it’s like pushing on a balloon.

The crucial element to make the meetings work was to create a sense of safety, where they were able to admit when they had screwed up, and get beyond that and fix things.

Numbers are key, Jim says, “But you can’t get results with numbers — that’s like pushing spaghetti.” Actions are what determine results.

Fundamental to Jim’s approach is something I’ve seen countless times — creating safety.

For workers, that includes physical safety, emotional safety, and preserving their job. If people don’t have a sense of safety, then that’s all they’re going to focus on, and they won’t do anything else.

You can’t do that with a speech, you can’t do it with the program — they have to see it in their daily job. It means allowing real conversations. Andy Grove did this at Intel, something called Constructive Conflict — point at the problem not the person.

People are asking, “After I bring up some risky topic, what happens to me?” says Jim. You can only demonstrate that. Their experience has to be that they get rewarded.

Jim’s call to action is simple — transitions are terrific opportunities. Don’t just try to survive. Survival is boring. Going somewhere new is interesting. And get help — pilots want wingmen because you cannot see everything yourself.

Tom Cox is a contributing columnist and business consultant.


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