It’s often been said that growth can be kill a business. I’ve heard that many small businesses go through three phases: Wonder, Thunder, and Blunder. At first, you Wonder about what you need to do and how to do it. This is your freshman year. Then, business starts to come in as your hard work bears fruit; the Thunder phase. As the business grows, many of the operational systems aren’t in place to handle the new demands… and the businesses Blunders. I recently came across an AMEX Small Business Forum that identified Operational Clumsiness as the second mostly likely cause of business failure due to growth- second only to cash flow crunches.
Of course, how fast a business grows is a key indicator of how much of a threat the growth is. Simply stated, if a company grows slowly- there is more time to figure out what works in your business and industry and the best way to implement it over time. The catch is this: businesses are growing at a much faster rate than in the past. It’s not hard to imagine why- the technology we take for granted allows us to work more, and work more efficiently. Although the construction industry has been historically slow in adopting technology it has been one of the fastest growing business segments for the past 7 years according to Forbes – specifically commercial construction.
In other words, growth is necessary to keep up with your competitors and for business survival. The ‘steady as she goes’, slow paced growth of the past is not a luxury many companies can afford as the growing companies can invest more resources to attract top talent, spread costs over a larger base, and yield more purchasing power to improve buyouts, and ultimately…margins.
IEC has been no exception to this dynamic. In the past 5 years, we have seen double digit year-on-year growth and have not been immune to the challenges it brings. Having a geographic footprint of 6 offices in three time zones certainly adds to the challenge, but makes the need for operational consistency even more important. Of course, as the potential for more work looms on the horizon in both the commercial and federal market- it’s crucial to get the operational systems in place to increase business capacity to handle growth without having to constantly react to problems. After attending Part 2 of an executive education course by the Tuck Business School at Dartmouth hosted by Burns and McDonnell and KCP&L; I left with a renewed sense of urgency to take on a companywide operational assessment and a plan to reboot our operations.
For IEC, we started with mapping our operational process from the time we identify an opportunity….to the closeout of a project. We took the opportunity to have a sober discussion about what works well, what does not- and the causes for both. Doing this, we easily identified the need to have a ubiquitous operational system that leveraged technology for every user (office and field based) to standardize how we store, share, and access information throughout a project. This system needed to address three key points for the business: 1) addressing current operational vulnerabilities 2) improving efficiencies and 3) standardizing processes to facilitate growth. It’s important to note that it wouldn’t have been possible to have this realization without a team of secure, analytical, and invested team members that want to be a part of improving our operations. Engaging invested employees allowed for every angle of the operation to be studied and for challenges to be addressed by the group.
Secondly, we benchmarked our industry with the best information available. This doesn’t require corporate espionage- rather a little research in trade publications and a few conversations with your network that serves others within your industry is helpful. This information allows you to see what’s available, and what would work best for your business. We landed on a cloud based software that ties in various aspects of our business and synced to our accounting system. The system was discovered by an engaged business leader in our organization and vetted by others in our organization. The feedback it provides gives us a new way to evaluate our costs and margins which allows us to better diagnose issues and price more competitively. For us, it was important to have the structure and affordability of pre-built system, while allowing for customizations to suit our unique business model.
Of course, most changes do encounter pushback. I’ve found that this comes in a couple flavors: explicit constructive dialogue and subversive pushback. Both may be rooted in the fear of the unknown- but explicit challenges, if managed effectively, can uncover executional challenges, create joint solutions, and create more sustainable organizational buy in. The subversive pushback comes from the quiet person who doesn’t ask questions, makes a sarcastic comment, or can list all the reasons why a new system won’t work.
Although I don’t claim to have the secret recipe for creating organizational buy-in; I can vouch for the importance of soliciting feedback from the team along the way and genuinely listening to the questions people have about how a new system will be implemented, how they will be trained to function within it, and what it means for their jobs. I recently discovered a valued employee of almost 20 years feared their job may be eliminated due to the automation of a laborious part of their duties. Preparing to have these conversations and thinking through what resources your organization can commit to training and ramp-up is crucial. You must have the ability to clearly and confidently communicate how the changes will make the businesses more sustainable, competitive, and a better place to work.
We also found it crucial to leverage the expertise of a subject matter expert. I can confidently state that this person was not me. Often, it’s a consultant or product representative. If relying on a product support resource, I would strongly suggest developing an internal subject expert that can serve to address immediate questions from your team before escalating to a person outside of your business. Also, choosing the best time to implement a large scale operational overhaul is both important and challenging. It’s easy to kick the can down the road due to not finding the perfect time to upend your business operations for the integration of a new one…but there can certainly be a wrong time to do it. For us, we needed to get over the fiscal year end demands of September 30 and implement before the construction activity increases in the Spring.
A new operational system is a big decision. Implementing it is a resource intensive and daunting task that takes time, the leadership of many, and money. However, if it addresses the vulnerabilities in your business, improves your efficiency, and creates an infrastructure that lets you grow- can you afford not to do it?