Many people just don’t have time to think about the steps that need to be taken to manage business evolution velocity.
Business processes that were stable and delivering value 5 years ago are now outdated. Decisions made two years ago are obsolete. This means the job of the c-suit is in a moment of flux. Having to revisit decisions made only six months ago to ensure validity.
The critical point about velocity is; it has a direction. Being the fastest doesn’t always help. The biggest question, and opportunity, is “Which is the right direction?” And, as this direction is changing, due to stakeholder opinion, “I need a system which shows me which decisions need to be revisited”. So, any future focused company will need to have some key attributes to stabilize, grow and survive. I believe some of these attributes will be:
- Flexibility – a system that can identify when a project, investment etc needs to be stopped.
- Agility – the company needs to identify and understand its core future strengths, not the strengths of the past.
- Innovate – capturing and acting on ideas. Adapting existing company knowledge and using it effectively.
- Opportunity driven – having a strong foundation and framework on which extended risk appetites can be supported. Not embedded in creating risk and compliance protocols.
- Transparency on your vulnerabilities – timing of investments and actions, understanding the future and not the past, decision velocity has hurt many companies and, as a result, funding has been ineffective. The direction of the decision, understanding where we need to be, is vital.
Regardless of whether you’re a large or small company; high-tech or commodity player. Change is happening. Helping you to transform needs only four basic elements.
- Facilitated discussions with directors, c-suit, operations etc to understand where you are and give insight into where you need to go.
- A clear understanding on decision timeframe and timeline so that windows of opportunity can be captured, and projects stopped if the market has gone.
- A management control tower that gives transparency on where, in the production process, value is created but also project valuations based on current market prices.
- A continuous review process.
Within the next 10 years there will be significant change taking place in all sectors of business. Within 20 years everything needs to change and will have changed. The resistance to leading these changes is thoroughly cemented in a few business practices that need to fundamentally change; and fast.
- The board of directors need to direct – directors have long term stakeholder value as a key directive. They need to have future insight and understand the changes that are coming and the company potentials. They need honest transparency and support from advisors who are not influenced by markets, profit goals and the internal fight for capex. The vision needs to be decoupled from the past and attempt to understand where the company can fit into the future business environment.
- C-suit need a different set of KPI’s that drive opportunity and overall company value – most KPI’s today are inwards focused, siloed and concentrating on short term financial results not company value. Management will create the mid-term strategy and build the company culture needed to support the vision.
- The budget process needs to be transformed and flexible. Many projects KPI’s use budgeted figures as their benchmark. But as the market changes these need modification. Budgets are typically created by looking at the future from where you are. We need to look from the possible future and look back to where we have been. The forecasting process tries to correct this fundamental error but as each projects kpi is budget based then there is internal resistance to change. An opportunity driven company need to have funds available at any time so that windows of opportunity can be captured. “We don’t have the budget for that great idea!” Should be a statement of the past.
- Reporting needs to be continuous – the change from annual to quarterly reporting is clearly an attempt to capture the faster moving world and enable shareholders and stakeholders to obtain transparency. However, this is a reporting driven exercise. This quarterly cycle should be a by-product of a continuous and “as required” review process because, with the speed of change in business environment, a quarterly reporting process will be too slow.
The ATLAS program is designed to embed each of these elements into a single system and thereby create the competitive advantage you need. The two separate but interlocking processes, planning and execution, create the system that is able to act, and change, in a fast, dynamic way. The portfolio review taking place in step 4 captures the costs of the initial project but also those costs incurred by mitigative, or facilitating, the actions. This creates the transparency needed for good decision making and reduces the risk of over budget or delayed results.