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Jo Geraghty

Director

A substitute for structural reform

Date added: 29th Jan 2015
Category: Organisational Culture Change

n an ideal world organisations should be looking to drive the change, but even when they are responding to external forces then the response has to be positive and forward thinking rather than shallow and simply reactive.

Commenting on the ECB decision to introduce quantative easing within the Eurozone the Chief Economist of the IOD, James Sproule commented that “QE is not, should not and cannot be seen as a substitute for the kind of structural reforms to labour and product markets that the EU so desperately needs.”  Calling for a liberalisation of product markets Mr Sproule added that ““The problem across much of the Eurozone is a lack of entrepreneurialism, as rigid and anti-competitive systems hold back enterprise and growth.”

Whether or not QE is a potential solution for Europe’s stagnating economy is perhaps a debate for another time but the remarks about QE as a substitute for structural reform certainly strike a chord.  The post recessionary world is a very different one to that which went before.  Whilst businesses have been shoring up the cracks in a bid to survive tough times, the world has moved on.  Technological developments, a boom in social media, even a change in consumer appetites all conspire to render business models which were perfectly suitable pre-recession, obsolete.

The instinctive response to the changing landscape is to do more of the same, to add on layers or to tweak processes; all the while staying within the comfort zone of that which was successful before.  So businesses respond to technological developments by tweaking the layout of their website or changing the colours to meet the findings of some focus group.  Businesses respond to a rise in social media by setting up a Facebook page or blog but then neglect what they post there.  And businesses respond to changes in consumer habits by offering additional incentives to encourage shoppers to revert back to shopping patterns of yore.

Some of this activity may have a temporary effect as customers respond to the ‘new’ but in the longer term it is simply activity for activities sake, papering over the cracks in an attempt to hold on to business models which are quite simply out of date.  In an ideal world organisations should be looking to drive the change, but even when they are responding to external forces then the response has to be positive and forward thinking rather than shallow and simply reactive.

For example let’s look at an organisation which decides that its website needs an overhaul.  Simply changing the colour balance or the order in which products are displayed is akin to papering over the cracks.  What may well be required is a complete overhaul in which every department within the business is encouraged to focus on their contribution to the website from a customer-centric perspective.  Basics may include making the website easy to navigate and optimised for smart phone or tablet but in addition:

  • IT may want to review hosting to ensure the data is secure and the site loads quickly
  • Accounts may want to look at streamlining the payment process and at offering payment options which meet the requirement of the customer base
  • Sales & marketing may want to review product information to ensure it is helpful and complete
  • Support staff may want to review their processes to ensure that queries are dealt with quickly and efficiently
  • HR and the business unit leaders may want to change targets and metrics to ensure that strong customer outcomes are rewarded rather than quick sales
  • Those responsible for product development may want to ensure that the products/services offered are relevant in today’s marketplace
  • And the leadership may need to change the strategy and culture to support all of this effort by encouraging and rewarding innovative and proactive solutions

In short, what started out as a quick website refresh can, and in many cases should, develop into a complete organisational overhaul.  We’ve been through the recession; we’ve got good at juggling the books and making do.  Now it is time to stop tweaking and carry out a complete structural reform which will fit our businesses for growth.

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