4 Keys to Changing a Business Initiative
In the first game of the 2016 National League Championship Series at Wrigley Field, Cubs manager Joe Maddon pulled his star pitcher Jon Lester after only 4 hits in 6 innings and a 3-1 lead. Maddon’s decision was controversial, as the Dodgers soon tied the score, but the Cubs rallied and went on to win the game. As the world knows, the Cubs then went on to win the World Series for the first time since 1908.
In hindsight, Maddon’s choice to pull Lester early worked out. But as any sports fan knows, it might not have. Determining when to pull the starting pitcher is one of the toughest decisions in professional sports. The stakes are high, and making the “right” or “wrong” call can have far-reaching consequences.
By the same token, at what point should a CEO change the implementation of a business initiative? Change too early, and you risk team dissension. Change too late, and you risk confirming Einstein’s definition of insanity, i.e., doing the same thing over and over and expecting a different result.
So how do you decide when to make a change to a business initiative? What effect does change have on team consensus or dissension? How best to manage the change process?
1. Strategy Alignment
After the win over the Dodgers, Mark Gonzales, reporter for The Chicago Tribune wrote “…the Cubs’ manager [Madden] stressed looking at ‘the big picture’ after the Dodgers rallied for two runs in the eighth.” Though pulling his starting pitcher in the sixth inning was controversial, Gonzales reported that Maddon knew that his key responsibility was “to manage an entire season, not just a single game.”
On the way to winning the 2016 World Series, Cubs players became accustomed to Maddon pulling a starting pitcher early, understanding that his game-day decisions were aligned with the strategy to maintain a strong pitching staff and bullpen throughout the season. Likewise, corporate execution and the inevitable changes to business initiatives have to consistently align all stakeholders around a consistent strategy.
In discussing the sale of DealerRater, CEO Gary Tucker shared that the business owners prioritized aligning their business strategy with potential buyers. They “wanted to build the company for potential SaaS suitors,” he explained. Tucker’s goal was clear, develop and execute a strategy that removed the profitable services business, focusing DealerRater on just a SaaS model.
Emphasizing the internal alignment necessary to jettison the services business, Tucker continued, “Changing strategy was met with enthusiasm from senior staff, but downsizing caused friction. Communications to the company was key.” To focus on being a SaaS company, senior staff alignment was critical to pushing through the early internal resistance and turnover. After achieving sustained EBITDA growth with 25% fewer employees, DealRater was sold to Cars.com in July of 2016.
2. Change Triggers
The events that led to a significant change in corporate strategy were discussed by other CEO interviewed for this article. Determining when to change was best expressed by Brad Yount, President and Chief Operating Officer of Cambridge Biomedical: “Change is needed when there’s a disconnect between words and results, or when there’s a fundamental shift where your assumptions are no longer valid.”
Before pulling Lester, Maddon looked at the upcoming Dodger batters and concluded, “There was a chance to add-on runs in that particular moment. You had Gonzalez, … Ruiz, … Hernandez [all] already had good at-bats against him.” Cubs players know they have to be ready when the pitching change occurs, especially after six tiring innings. In the corporate world, your team must also be ready for a change by understanding the change triggers. As expressed succinctly by Ellen Richstone, former CEO of Entrepreneurial Resources Group, “Everyone in the organization has to be clear on the decision points.”
For Labsphere President and CEO Scott Gish, the change trigger that necessitated a new corporate strategy for growth was simply that “sales of our mature products slowed and there was low interest in our new products.” Gish and his team embarked on parallel initiatives to develop new products while at the same time re-evaluating current target markets. The team agreed: “We don’t stop development unless the market analysis is bad.” Eventually they determined a need to move upstream in the end-customer’s supply chain to a point where the product’s features were valued. The strategy worked, and with a revamped line of products, Labsphere achieved its’ 2016 growth targets.
3. Constant Monitoring
All baseball managers monitor their starting pitchers closely. But what would cause a baseball manager to pull his star pitcher early in the first game of the National League Championship Series? “I just thought that tonight Jon really wasn’t on top of his game,” The Tribune reported Maddon commenting after the game. Closely monitoring Jon Lester over the season within a strategy that kept the pitching staff strong provided Maddon the necessary context to make the controversial pitching change.
At the height of the IT boom in 2007, Atrion, an IT-services company in the Boston area, was struggling to find IT professionals. “We were having trouble finding talent. At one point we looked at 200 candidates for 4 openings,” said Tim Hebert, then-CEO of Atrion. Vigilant monitoring Atrion’s hiring issues led Hebert to start an IT Entrepreneur program. “Key for the CEO is constant inquiry – always question the status quo,” he noted. After overcoming initial internal resistance and honing a program that prioritizes candidate character and personal skills over technical skills, the IT Entrepreneurship Program is a huge success, graduating 115 people in 10 years with a 90% retention rate.
4. Managing Change
In recalling the difficult decisions that Labsphere had to make, especially around headcount reductions and which legacy products to drop, Gish advises “a dispassionate view is required when deciding to change.” Manager Maddon would no doubt agree, and as Gonzales noted, “Maddon has been accustomed to long stares after pulling his starting pitchers sooner than they’d like.”
Hill & Partners specializes in B2B brand marketing for corporate events and tradeshows. After missing growth targets and experiencing key opportunity losses, CEO Michael McMahon decided to make a fundamental change to the corporate mindset, shifting “from people and services to high-value design services.” McMahon devised a new hiring plan that “hired for attitude and experience,” and then trained the employee. He then communicated a new organizational plan that began with changing his primary responsibilities from account management to President/CEO.
Recalling the team’s initial reaction, McMahon noted that “discomfort of change inhibits performance. People want to know: how does this [change] affect me?” McMahon has successfully managed the necessary organizational changes and Hill & Partners is now growing again. “Six years ago I wouldn’t have believed growth was possible,” McMahon concluded.
While interviewing CEOs on the question, “How do you know when to change business initiatives?” consistent themes emerged: (1) the need for organization alignment around the corporate strategy, especially among senior leadership, (2) clearly defined and communicated trigger events that will change business initiatives, (3) the constant monitoring of trigger events and clarity around what happens when a trigger event occurs, and (4) the ability to overcome initial resistance and to manage the change process. In each interview the CEO recalled stories of a trigger event, which led to new business initiatives, which then led to challenges, especially around internal resistance to the changes.
The CEOs also agreed that changes will always happen and generally agreed on their role during the change period – “like sailors tacking,” remarked Scott Gish. Further, each CEO emphasized the need for clear and concise communications. “Pare down the vision and explain why it’s important,” was Tim Hebert’s advice. Finally, in summing up the CEO’s role during the change period, Gary Tucker explained, “The CEO must set the direction, but shouldn’t over-communicate the route,” and defer to senior leadership the responsibility to communicate details of the route.
© 2017, Ray Ritter. All rights reserved.