The Yin and Yang of growth

Change Management

Driving value in your business is all about balance. As investors, we're sure you are all too familiar with the many ‘opposite but interconnected forces’ at play when supporting businesses to grow.

In this article we have highlighted a number of opposing forces that need to be considered in balancing the yin and yang of business growth, especially when it comes to leveraging the power of your people.

Risk taking vs Stability

By definition, risks are being taken with the investment that may or may not deliver value. Yet, stability is also important within the business to maintain the quality of performance that made the investment attractive in the first place.  

 

 

Creativity vs Structure

Making gains in the market or achieving efficiencies is often driven by unleashing creativity within the business. However, structure that provides good governance and support will help realise value from the creativity.  

 

 

Aggressive growth vs Sustainable operations

Depending on the nature of the investment there can be a push for aggressive growth, perhaps through a Buy & Build strategy. However, taking a conservative approach to delivering growth can ensure the business operations are sustainable. 

 

 

Performance-based IQ vs People-centred EQ

So too is the case when managing the changes driven by the Value Creation Plan and supporting Implementation Plan. There is a need for performance-based IQ to drive improvement through hard metrics, plans, and processes that focus on the desired outcomes.

 

 

But, there is also a need for an EQ based approach to leveraging the most important value creator in the business - your people.

 

When investments are made in a business, whether that’s an investment in technology, new roles, or new services, change is being introduced into the business.

 

We all know that change is about people.

 

 

 

It is people (supported by process) who effect change.

 

But, don’t be misled, just because we talk about the importance of people to effect change doesn’t make it soft and fluffy.

 

 It’s not. It’s serious business. While we rightly focus on the needs of people across the business during a period of change, let’s not forget that change is about delivering value for the business and its investors. We believe the yin and yang of hard business outcomes and softer people centricity can, and should co-exist, and complement each other to realise value from an investment.  

 

Because we like a model, we frame our approach to managing that yin and yang of opposing forces around 4Ps: 

 

  •  ‘Performance’ and ‘Pace’ are the outcomes being sought from investments in change. 
  •  ‘People’ and ‘Partnerships’ are the enablers of the change.  

Let’s provide a bit more detail

 

Performance

As part of their strategic planning, businesses will often identify situations they want to change to improve performance.

 

For example, a Private Equity firm might want to convert every £1 of its fund into £15. A hospitality business may want to change its spend per customer from £90 to £150. A healthcare provider might want to reduce hospital admissions to A&E by 30%.

 

They will all have an investment case that outlines the return on investment they are seeking. They will also have a plan on what needs to change within the business to achieve those returns, whether that is portfolio companies acquiring and integrating 4 new businesses, introducing a new CRM system, or establishing a different triage system in an A&E Department.  

 

 

Pace

Those investing in the change will have expectations on when they want the changes to happen.

 

The Private Equity firm may need the changes to start making a difference within 18 months. The hospitality business may want the new system in place by the next busy season. The healthcare provider may want changes to start having an impact before the next winter flu season. Some investors will want to move quickly, others will be happy to go at whatever pace it takes to get it right first time.  

 

We have observed over the years that many changes start by only focussing on performance and pace. i.e. how do they drive out the value as quickly as possible, with little thought into how they will support and enable their team members to engage in the change?

Without the engagement of team members, the investment will struggle to realise the value outlined in the initial case.  

 

 

People

Value for a business is only ever provided by its customers.

 

But that value is created within the business by front-line team members, who are supported and enabled by managers.

Driving out performance improvements at pace creates uncertainty for everyone. When people are facing into uncertainty, they become less productive, less flexible and, potentially, more challenging to manage.

 

Uncertainty therefore heightens the risks of eroding the value being sought.  

 

 

Partnership

Change in a business takes effort from everyone in the business, from the Executive Team, to managers and all team members.

 

It often involves external partners too. Within the business, the Executive Team directs the required change. Managers ensure the environment is ready to receive the change. And team members need to inform, support (whether they agree with the change or not), and engage with the change to deliver value to customers.

 

Partnership only works through having a shared understanding between all the partners. 

The key to driving up value from a change is to get these 4Ps working in harmony

However, keeping an eye on the balance is difficult. Things move at pace and people are busy.

Using the 4Ps

Questions

We have developed a series of questions we would encourage you to continually ask yourself to give yourself some early warning signs of change going off the rails.

 

Here are some examples: 

 

 

Performance

 

  • How widely known across the business is the end goal? Is there common knowledge of what good looks like when you get there? 
  • How is customer satisfaction bearing up through the inevitable uncertainty and disruption during the period of change? 
  • How much impact is the process of monitoring progress and performance improvement throughout the change having to BaU? 

 

Pace

 

  • How well does the structure and ways of working support agility for a quick response to changes in the business environment through the period of change? 
  • What is the capacity of people across the business to properly engage in the change while continuing with business as usual? 
  • Who are the skilled Change Agents across the business, and how well supported do they feel? 

 

People

 

  • How informed do staff across the business feel about why the change is taking place, what it means to them, and what expectations others have of them? 
  • What changes in staff behaviour are being noticed during the period of change? 
  • What are your plans for regular two-way communication with all staff throughout the period of change? 

 

Partnership

 

  • How do you know if everyone is clear on their respective roles and responsibilities during the change? This includes roles and responsibilities of external parties too if relevant. 
  • What are the clearly defined benefits to all parties in the partnership? This includes all of the team members who, for example, won’t benefit financially from a Private Equity investment? 
  • What are the values you expect all partners to live by throughout the change, and how do you hold everyone to account when times get tough, as they inevitably do during change?

 

These example questions, which should be asked on a regular basis, aim to ensure you have the right balance between staying laser focussed on the hard outcomes and enabling team members to fully see and play their part in the growth.  

Hopefully you are already asking yourself these questions, but if you want someone to ask them from an objective position we’d love to help you keep the right balance between the yin and yang of the 4Ps.   

Need help or want to share success?

If you are struggling with change delivery or not realising the value from your investment or are absolutely knocking it out the park and just want to boast about it, contact us.