Myth of improving business performance

By aCatalyst staff

Everything you know and have heard about how to change business   performance is wrong.  Wrong, wrong, wrong, totally wrong.  As are the myths about corporate transformation.  Just does not happen that way.  Real operational and financial change relies on a flywheel effect, hedgehog single minded focus and getting the right people on the bus.  Get this right, and you won't be running very quickly just to stay where you are.

A landmark five year study by Jim Collins and researchers that tracked 1,435 established companies over 15 years  pointed out some remarkable commonalties of what it took to go from good to great - that have implications for your business.  In the study, great companies had to have stock returns that exceed the general market by at least three times over 15 years -- and they had to have made a performance leap independent of market trends.

Strange thing is the results that Collins found contradict everything you have probably ever read or heard about what it takes to create great business performance. His team found in  good to great business transformations, no miracle moment.   Turns out all the prescriptions about how to change and turn arounds  happen may be bunk.  But when you look around at successes on the Kenyan business scene, the principles make sense.

Flywheel Effect

Imagine a huge metal disk, 8 meters  in diameter and 2 meters  thick, weighing 20 tonnes mounted 1 metre off the ground.  Sitting there at rest, that flywheel is your organisation.  It's going no where.  You walk up to it, push and it does not move.  No surprise.  You try harder and miraculously it moves less than a centimetre, then it moves a metre, then another, eventually it makes one rotation, then two.  After a tremendous amount of effort in getting things rotating, with others joining, momentum kicks in.    Successful firms have that discipline and stamina  to create a flywheel effect.  When staff begin to feel the delight of momentum, when they see some tangible shifts in how things are done, then  they to begin to put their weight behind things, and push ensuring momentum.  In, for example, the Kenyan insurance sector  companies like British American and Pan Africa Life have got their flywheel spinning profitability.

Right People On The Bus

Suppose you are a matatu driver with 19 seats to fill.  Somehow there is an assumption that the matatu driver (meaning the business leader) best begins  by telling everyone where they are going, setting a new direction, and painting some elaborate blue sky vision.   Sounds nice, but forget it.   Turns out that good to great

companies in Collins' study began not with the "where" but with "who".   Best thing to do is focus in on who should be in the matatu, and seating them in the right seats.  And, making some perhaps painful decisions about who should not be there.

Look at the turn-around at Kenya Commercial Bank (KCB), kicked off  by Gareth George, where from bleeding red ink to profitability,  one of the first steps was to sit down with the senior management team and decide first who should be on the bus and then establish

the "customer first" direction, selling off non core KCB businesses and using the revenue to pay for the unusual "put us back on course" expenditures.

Too bad - forget the myth of miracle moments.  Diligence, getting the flywheel moving,  melded with  simplicity and a  single minded focus, thanks to beginning by having the right people on the bus is the only way to go.

This article may be reproduced as long as acknowledgement is given to the author and aCatalyst Consulting.

aCatalyst Consulting was formed to provide leading edge practical advice to clients in Kenya and East Africa. Our goal is to set a standard of excellence by working together with leaders to build winning organisations. Our intention is to work with clients make a significant difference in their performance.

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