Now is the Right Time for Corporations to Change
by David Frood
There comes a time when all things must change. We see this all around us in nature. A caterpillar changes into a butterfly, the egg hatches and a child learns to walk. Why should the life of a business be any different?
There is gradual change that can go unnoticed day by day. If you left your old neighbourhood to live in another location to return ten years later many of the trees would appear much bigger than you remember them to be. Other changes are metamorphic, that is one that is one that manifests in a change of structure. These changes can also be observed, as with the caterpillar/ butterfly example. A tadpole can never become what it truly is unless it grows legs, loses the tail and becomes a frog.
For many years big business has developed more like a tree. The internal culture, systems and processes and the way that they interact with the rest of society, have been all gradual changes. We have many signs that indicate that big business is entering a period of metamorphic change. They are:
Hundreds of billions of dollars have been paid out to large corporations so that they can keep trading. This is an event that shocked the world. In answer to this generosity many corporations continued to pay unreasonably high salaries and bonuses. A significant amount of these funds are yet to be repaid.
Bad Culture Equals Bad Decisions
Large corporations have the resources to get things right. Mistakes are made when short-cuts are taken and decisions are made a just a few people that may be under pressure for results. The culture within many of our corporations is still one where the prime beneficiary of any decision is the corporation itself. This culture needs to change to include customers, employees and the environment as equally important factors in any decision-making process.
People are Running out of Money
The old "master/ slave" relationship has pretty much run its race. Employees are entering the workforce now with higher qualifications and are capable of contributing to direction, strategy and day to day decision-making.
We have seen a movement of people being able to buy with cash, to the use of a credit card, to multiple credit cards and now the use of "interest free" terms being offered by retailers. Disposable income is becoming a thing of the past for a large percentage of the population.
Unemployment figures are high around the globe and showing little signs of recovery. With this comes foreclosures and changes to ordinary people's lives that they never thought they would need to face.
Innovation is Everywhere
Many corporations will openly state that they need to become more innovative to survive and prosper and yet they are surrounded by ideas. All people are capable of being creative and so it is not the absence of ideas that is the problem. The real issue is the corporations' ability to capture and process these ideas that causes them to perpetuate scarcity as their default belief system, rather than abundance.
If the above are not good reasons for corporations to change, what is? Some Directors could read this and come to the conclusion that they are being asked to turn their organizations into a benevolent society. Not so. In fact, nothing could be further from the truth.
The Next Metamorphic Change for Business
Corporations can change to support all of the above issues in a way that benefits the corporation, customers, employees and our environment. They can do this by:
· Implementing a culture that encourages innovation
· Establishing a new employee/ employer relationship that involves remunerating direct contributions to profits
· Learning how to capture, process and implement innovation/ creativity
These points create the illusion of simplicity. However, they are not easy for the majority of corporations to implement because of two very powerful blockers. They are:
1. The fear of loss of control
2. The risk adverse nature of Directors and senior managers
The reigns of the corporation are tightly held by a "hand-full" of Directors and senior managers. In the main, these people fear metamorphic change because of its capacity to reduce their importance. This can be viewed as a loss of control, rather than a revitalized vehicle to produce growth in profits and entity values for shareholders.
The other main reason holding back this level of change is the sheer paranoia that is now associated with change of any kind. The escalation of the term "risk management" has resulted in corporations spending more resources on staying the same than on moving ahead. The underlying reason being that it is easier to stay the same than make a decision that could involve risk to the organization and its shareholders.
Given that the global financial crisis has not been enough to jolt our large corporations into a period of metamorphic change, it must be that we need an even greater level of pain before this will happen. What is the threshold? Perhaps we are waiting for:
· Even higher unemployment and the chaos that goes with it
· A total melt-down of the banking system
· $USD de-valuation that excludes the world's largest economy from taking any credible economic position
· Another round of bail-outs
If we start changing now, perhaps we can avoid some of these things. It's now time for Boards and senior managers to provide real leadership and lead the changes that will secure the futures of generations to come. For this to happen we need true leaders who act in the best interest of all.
David Frood is the author of "The Thinking Corporation" - that explores the issues raised in this article and provides some very practical solutions.
A corporate change program is available to transform organizations into "A Thinking Corporation". The program is available to be delivered by all change consultants following accreditation.