Principles of reformation
1. Give up yesterday
To become a leader of change, an organization needs to have the determination and ability to change its current state, as well as the determination and ability to create new businesses and do different things, and the principle of "creating the future from the present".
Giving up yesterday is the first principle and also the basis of other principles. First of all, we need to liberate resources, which is no longer the direction of resource investment for areas that are not conducive to improving performance and delivering results.
In fact, if we can't give up yesterday first, creating the future is just empty talk. It is always very difficult and a waste of time to retain yesterday.
Therefore, in order to retain yesterday, the organization needs to invest its most scarce and valuable resources and the most capable talents, but it still does nothing in the end.
However, when doing anything slightly different from the past, we will always encounter unexpected difficulties, let alone innovation.
Therefore, we always need smart and capable people with practical experience to play a leading role. However, if these people persist in keeping yesterday, they will be completely unable to create the future.
Therefore, the first principle of change to be followed by the whole organization should be to give up yesterday in an organized way.
In three cases, giving up completely is always the right choice:
1. If a product, service, market or process "still has several years to live", it is appropriate to give up. We almost always overestimate the "life" of the original products, services, markets or processes that can still survive.
2. If the reason for retaining a product, service, market or process is that "they have been completely written off", which has no value, we also need to give them up. The assets that have been completely written off are only meaningful in tax accounting and have no significance in other aspects.
3. In the third case, if the existing products, services, markets or processes continue to exist, resulting in the development of new products, services, markets or processes rising like the rising sun being hindered or ignored, then giving up is the right choice.
General Motors, the largest automobile manufacturer in the United States in the 1990s, is a negative example of change. This organization stuck to its achievements of yesterday, but destroyed its future.
Every American knows that in the short 10 years from the mid 1970s to the mid 1980s, the share of Japanese automobile manufacturers in the American car market rose rapidly to 30%.
One third of the increase in market share of Japanese enterprises came from Volkswagen; The other 2/3, 20% of the US market, was captured from General Motors, whose market share plummeted from 50% to 30%.
In the past 15 years, General Motors has done almost nothing except on price and discount. However, its tricks on price and discount have been like a stone sinking into the sea, with little effect.
Then, in the late 1980s, the company finally decided to fight back with a new car called Saturn. Saturn is a copy of Japanese cars in terms of design, manufacturing process, marketing, service and labor relations, but the price is slightly more expensive than Japanese cars.
When it came to the market, General Motors almost destroyed its prospects. But because many Americans are very eager to own a new American car, the Saturn car was a sensation as soon as it came into the market.
However, almost everyone except General Motors immediately realized that Saturn could not compete with Japanese cars. While its sales increased, sales of other GM brands, such as Oldsmobile and Buick, declined.
These brands are declining, if not dying.
Later, General Motors began to kill Saturn. General Motors no longer invests funds in expanding production of Saturn, but the funds are used to improve the factories that produce Oldsmobile and Buick. Of course, this practice is futile. General Motors also stopped investing in Saturn to develop new models, and the funds were used to redesign the Oldsmobile and Buick.
Neither Ozmobil nor Buick benefited. They were still going downhill, but the Saturn was almost destroyed. General Motors and the United Auto Union continued to decline.
2. Organized improvement
The second principle that change leaders should follow is to improve in an organized way.
Enterprises need to systematically and continuously implement improvement measures. Including products and services, production process, marketing, service, technology, personnel training and development, information use, etc.
At the same time, the enterprise needs to set a predetermined rate for such improvement every year: according to the Japanese experience, the annual improvement of 3% is practical and achievable in most aspects.
However, to acieve continuous improvement, the organization needs to make major decisions. In a certain aspect, what factors constitute "performance"?
If the return rate of a product is performance, the higher the complexity and difficulty of a product, the higher the return rate. To reduce the return rate of finished products from 40% to 35%, enterprises need to significantly improve their products.
For a large commercial bank, if performance refers to "providing more advanced financial products", the bank needs to invest a lot of time and money in order to study the financial products required by customers, develop products and train the branch staff who provide products.
But when the bank introduced new products, the customers quickly lost. Because the bank found that customers do not want to wait too long in line for routine business.
Customers believe that additional "products" are very valuable, but they only need these products occasionally.
Through continuous improvement in all aspects, the organization can finally change its operation mode. These measures bring about product innovation, service innovation, new processes and new businesses.
Continuous improvement will eventually lead to fundamental change.
3. Discover successful experience
Another principle that leaders of change need to follow is to tap successful experiences.
We can't ignore the existence of problems, and serious problems should be treated with caution. But for the leaders of change, enterprises must pay attention to opportunities. They must kill the soil where problems arise and create an environment where opportunities exist.
Some organizations that can successfully guide change usually spend the whole morning or the whole day discussing opportunities first, and then discuss problems the next day.
In order to seize the opportunity, successful change leaders will provide sufficient human resources. List the outstanding performance and talents in the organization. Finally, select the most capable and outstanding people to handle the best opportunities.
Mining their own successful experience and continuing to develop on this basis is the first and usually the best opportunity to successfully implement change.
Sony of Japan may be the best example.
Sony's consumer electronic products are leading the world trend and famous all over the world, but they are derived from a product not invented by Sony: tape recorder.
Sony uses one product that it has successfully developed on the basis of tape recorders to design another product, and then develops another product on the basis of this successful product, and so on.
Every step is not a big step, nor is every product successful.
However, by tapping past successful experiences, each new product has a very low risk, so even if a product fails, it will not affect the overall situation.
Most of the successful products are enough to help Sony become one of the largest and most successful enterprises in the world.
In the process of continuous improvement, the excavation of successful experience will sooner or later lead to real innovation. The accumulation of each small step will eventually bring about major and fundamental changes, that is, the emergence of truly different new things.
4. Create change
The last principle that the leaders of change should follow is the systematic innovation principle, that is, the principle of creating change.
The principle of systematic innovation can help an organization form the concept of becoming a change leader, which helps the entire organization view change as an opportunity.
Every 6 to 12 months, the organization systematically discovers changes that may become opportunities in the following aspects, which Drucker calls "the window of opportunities":
1. The sudden success and failure of the organization, and the sudden success and failure of the organization's competitors;
2. Inconsistency occurs, especially in the process, such as production or sales process, or customer behavior;
3. Process needs;
4. Changes in industry and market structure;
5. Changes in population;
6. Changes in meaning and concept;
7. New knowledge.
If any of the above aspects change, we should ask:
1. Is this an opportunity for us to innovate, to develop different products, services or processes?
2. Does it herald the emergence of new and different markets and/or customers?
3. New and different technologies, or new and different sales channels?
Innovation and risk always go hand in hand. However, if an enterprise innovates by mining the events that have occurred, including the events that have occurred in the enterprise, market, knowledge, society and population, the risk of such innovation is much lower than that of innovation activities that have not explored these opportunities.
Traps of change
The leaders of change will always fall into three traps again and again, and they should avoid falling into these traps.
1. Innovation opportunities that do not conform to the strategic reality
Successful innovation can only be achieved if it conforms to major realities, such as changes in population and income distribution, the way organizations and their customers identify "performance", global competitiveness or political and economic realities.
2. Confusing the boundary between "novelty" and "innovation"
The criterion to measure innovation is whether innovation creates value. The standard to measure innovation, or to test "quality", is not "Do we like it?" It's "Do customers need it and are willing to pay for it?"
3. Confusing the boundaries between specific actions and action plans
When an enterprise changes a product, service or process that no longer produces benefits, the management generally adopts the "reorganization" approach. However, there is an action plan first, followed by specific actions. Reorganization itself is only a "concrete action" and cannot replace an action plan.
Methods of change
Any improved thing or new thing needs to be tested on a small scale first, that is, a pilot.
Enterprises look for people who really want to innovate internally. Or looking for "customers who really want to try new things" is also a good way to test new products or services.
If the pilot is successful, and through the pilot, the organization finds problems and opportunities that no one is aware of, the risk of change is relatively small, both in design and in the market.
Organizations usually have a clear understanding of the scope and methods of promoting change, that is, what kind of business strategy to adopt.
Finally, to successfully guide change, organizations need to formulate corresponding accounting and budget policies.
This requires two different sets of budgets. The first set of budget of the change leader is the operating revenue and expenditure budget, which shows that the expenses required to maintain the existing business generally account for 80%~90% of the total expenses.
At the same time, the change leader needs to develop a second independent budget for the future. This budget should remain stable during boom and bust times. In the total cost of an enterprise, it rarely exceeds 10%~12%.
If the cost for the future cannot be kept stable for a long time, it will rarely play its due role.
This is conducive to the development of new products, services and technologies, the development of markets, customers and sales channels, and, most importantly, the growth of people.
Unless the enterprise suffers a disastrous attack, if it continues to spend this cost, the survival of the enterprise will face a crisis, otherwise, this cost should remain stable both in the boom and the depression.
Future budgets should also include the cost of mining successful experiences. In order to be able to continue to operate, especially during the recession, enterprises often cut the cost of successful projects. This practice is the most common and destructive.
The enterprise's reason is always: "This product, service or technology has been successful anyway, and we don't need to continue to invest in it." However, the correct view should be: "It has been successful, so we need to support it as much as possible."
During the recession, we should support successful projects on a special basis. At this time, competitors are likely to cut costs one after another, so we can take advantage of it.
We often manage according to the reports we get and see. It is for this reason that the leaders of change attach great importance to statements.
The report they need focuses on the following contents: what aspects did the enterprise do unexpectedly well, what aspects achieved unexpected success, and what aspects might contain opportunities.
It is also for this reason that the leaders of change attach great importance to budget, which is the commitment of enterprises to create the future and go ahead of change.
The article comes from the network.
