Most businesses have legacy elements which have little part of the company’s future but a large place in the company’s history, however long or short that history might be. Even if the CEO knows this to be true, it usually takes a crisis before the old limbs are pruned.
In a Brexit world, whether your business trades externally or not, continuing to allow these legacy issues to drag performance will doom you to miss the critical moment of inflection. Just when you will need to be able to pivot, your feet will be stuck in the clay.
Now is the time to simplify your business model. Shut down or spin off those underperforming legacy components. If you are in a B2B service business, sit down with your customers and have an open and honest review of the viability of you continuing to provide the service at issue. Offer alternatives such as another supplier or a new approach. Very often the arguments made to put off this kind of change is how disruptive it will be to existing customer relationships.
One very typical scenario is the long-standing but cost resistant customer who demands a great deal more than they are paying for. But the revenue from that account pays for the staff/system/fixed overhead, goes the argument resisting change. This logic hamstrings the reallocation of resources to more profitable lines/customers.
Another barrier to simplification is the pursuit of excellence. Who remembers In Search of Excellence, from McKinsey consultant, Tom Peters? My view is that the lessons in that book are often misinterpreted and distract people from the reality that ‘good enough’ is just that.
Please do not think that I am talking about cutting costs. There is no more awful task than to have to make people redundant. If your people are important to your business, then take the steps now to protect their jobs or reassign them. Be brave and be focused.
There will have been no point in simplifying your business if you don’t then determine where your undistracted focus needs to be applied. That will be a two-stage process.
First, you will have to decide on your priorities. No more than three, please. Be careful here. Boards tend to suffer from the dysfunctional behaviours of individuals, conscious and unconscious. Based on what they say, you may believe that you have consensus in your management team, but I wouldn’t bet on it. Judge your colleagues by their actions not their words and deal ruthlessly with passive resistance.
As you move to implement your specific action plans beware of internal disruptors who have said that they support the direction of travel but, in truth, are pulling in a different direction. This behaviour is not likely to be malicious, but it will most certainly be disruptive. It is your job as CEO to call it out.
When everyone is behind the same ideas it is time to push.
How hard, what risks, what targets? Stretch targets for sales. Conversion targets for marketing. New channels? How good is your online marketing? Capacity issues?
All of this and more will form part of your planning but the key point here is to apply the push to your agreed areas of focus and not allow any dilution of that application of force.
Monitoring and tweaking are the order of the day but avoid early panic if initial results disappoint. Too often marketing and sales campaigns are prematurely abandoned resulting in wasted time and money. And, more significantly, damage to internal confidence and a retreat to the apparently safe harbour of the legacy model. Stagnation and decay follow.