Maintaining an Agile Company

Overview

In today's business world, with its ever-changing marketplace, many companies recognize the need to adapt and change in order to remain competitive. This article will help you reinvent your company's vision to more closely match trends and customer preferences. By doing so, you will be better equipped  to satisfy customers and increase profits. As change doesn't come easily, this article will help you devise strategies that will allow you to thrive in a change-or-die environment. By following the steps outlined here, you will be able to better identify opportunities for change, determine if you are ready for change, recognize what your customers want and create the proper environment for change in your company.This article will help you to think like an innovator, and it will reveal how you can use Internet technology to help you implement your strategies.

.Outline:

  1. Identify Opportunities for Change
  2. Case Studies in Change
  3. Know What Your Customers Are Thinking
  4. Become Innovative
  5. Reinvent Yourself Through Branding
  6. Let Technology Make A Difference
  7. Create An Environment for Change
  8. Resources

I. Identify Opportunities for Change

David Bowie sang about it. Bob Dylan did, too. It's change, and it's something that usually strikes a little fear in the hearts of most ordinary people. Whether it's moving into a new home, changing jobs or giving up the single life to start a family, change has given us sweaty palms at one time or another. But in the business world, the ability to change — and adapt to change — has become the keystone of many successful operations. Without it, your business risks becoming stale and alienating customers as buying trends and consumer preferences shift over time.

Therefore, as a businessperson, you have no time to be afraid of change. Instead, you need to embrace it. Change in the business world often means reinvention. In more specific terms, it means reinventing yourself to satisfy your customers and reap bigger rewards down the road. Reinvention is often the end result of identifying a changing tide in public opinion. Throughout modern history, corporate executives and business owners have prided themselves on keeping their fingers on the pulse of the public. That means identifying what consumers want now or will want in the future. Many successful businesspeople say that such ability is the key to their accomplishments.

Some organizations are inherently better suited than others to make changes. Small businesses, for example, are generally more adaptable than their large counterparts.

"The one advantage that a small business has over a very large company is that it can reinvent itself and move very, very quickly," says Jeff Hyman, co-founder of Career Central (formerly MBA Central). "Big companies basically have all the advantages. They have brands. They have deep pockets. The one thing they can't do is change very quickly. So, I think it's very important for a small business to leverage that one advantage by reinventing itself, and I think every year or two is not too frequent."

As a result of the need for change, many companies have altered their product offerings, target markets, customer service practices, locations and even their names.

But change, especially when it comes to a business vision or plan, is a tricky thing. The truth is that most business owners have trouble altering their business strategies. Some don't even know where to start. And yet others don't know how to sustain the change momentum once they've started it. But in this day and age, the new law of business has become change or die. So, eventually, it must be done

One reason why business owners struggle with change is that the idea of change itself has changed. It used to be a guessing game: What might work now that our present plan has gone awry? Today, creating change requires skill. It has become a type of art form in the business world. It's something that takes practice and learning to accomplish in an effective manner. The best news of all is that there are methods available for measuring the effects of change — and gauging the outcomes of change. For a full discussion on the effects of changes on your business, see Expand With New Market Development and New Products and Services.

Change is also no longer a practice that is implemented from outside the organization, spearheaded by a savvy "change agent." Instead, change in today's business environment is intrinsic. Either you or a qualified person on your staff must regularly address the need to change and establish a change plan that is based on your level of resources, personnel and funds.

Self-Assessment: Are You Ready for a Change?

Is the time right for your business to make a change of one kind or another? To answer that question, take the following short quiz:

  1. Have my sales started to flatten or decline slightly?
     Yes No
  2. Am I gaining customers at a slower rate or even starting to lose some of my current customers?
     Yes No
  3. Do my customers seem less excited about and eager to purchase my products or services?
     Yes No
  4. Do my employees seem less "jazzed" discussing the company during our regular meetings?
     Yes No
  5. Have staffers stopped offering fresh, new ideas that could possibly boost sales?
     Yes No
  6. Is my company experiencing a high turnover rate?
     Yes No
  7. Have any new businesses entered into direct competition with me?
     Yes No
  8. Do competitors tend to always outpace me when it comes to new idea generation?
     Yes No
  9. Have any new technologies or substitute products affected the usefulness of my product?
     Yes No

If you answered yes to one or more of these questions, it might be time to consider making a few changes — subtle or drastic — to the way you do business. If your sales are decreasing significantly or you are losing customers at an alarming rate, it's probably because someone new has intruded upon your turf and become what you once were: an agent of change who's revitalizing an industry and attracting new customers — your customers. If this is the case, you need to get on the ball immediately.

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II. Case Studies in Change

Linda Rae Tepper is a business owner in tune with the need for change. In the mid-1970's, Tepper ran a successful fashion business called Ruby Slippers, which peddled antique clothing and accessories from various time periods ranging from the Victorian era to the 1960s. At the time, Tepper was one step ahead of the retro-fashion trend. However, in the 1990s, everyone seemed to be selling vintage clothing — everything from the '60s "flower child" look to pre-World War II "swing."

These changes led Tepper to look for new opportunities in vintage fashions — and she found them. In the process, she initiated a new trend and created a new identity for herself. In retrospect, what she noticed seemed simple. She observed that customers in her New York City store were looking for sleepwear and having a hard time finding it. It didn't necessarily have to be vintage sleepwear, either. Sleepwear, in general, was something that fashion designers had moved away from at that time.

Being a savvy entrepreneur, Tepper jumped on the market opportunity and made a change in her product offering to satisfy the need she discovered. Today, she and her partner Steven Abrams run Nick & Nora, a Manhattan-based sleepwear company that specializes in outfitting customers with humorous and retro-style pajamas.

Even though Tepper's inner circle of advisers told her that nobody wore pajamas anymore, Tepper did some research and found that the reason sleepwear had taken a plunge in the market was because the only "PJs" available wear the very expensive, upscale kind. The opportunity was ripe, therefore, for the development of a line of comfortable and casual pajamas.

So Tepper reinvented her company and became the queen of whimsical sleepwear. She started manufacturing and selling pajamas with humorous themes, featuring bacon and eggs and Oreo cookies. Now, her reinvention has developed a niche within the fashion industry and turned Nick & Nora from a small startup to a company at the forefront of a trend. Today, you can see Tepper's pajamas on television shows like Ally McBeal and in the pages of the Victoria's Secret catalog. This is a classic example of a small business owner finding an opportunity for change and reinventing her product offering to address the wants of consumers.

Likewise, Jeff Hyman and his partner Lun Yuen at Career Central, an email-based executive placement service, pulled off a similar reinvention, although in a different manner. Before there was Career Central, there was MBA Central, a service exclusively for M.B.A. students and graduates. The change for this young, successful company was spurred by the fact that its founders didn't want to stand around and let competitors catch up to them.

"When we started the company, we only focused on marketing people, accounting people, people who had M.B.A.s," Hyman says. "Then we started asking clients what else would be useful. A lot of them told us they had trouble finding software developers also. So we decided to launch a similar service for software developers and change the company to be broader and include a lot of other different kinds of people. That was not our original plan, but it kind of worked out that way."

In the midst of this transition, the company changed its name to reflect its broader focus. The new moniker, Hyman will tell you, has boosted business dramatically and attracted more customers.

"Now people don't think of us for just M.B.A.s any longer," he says. "We get calls and inquiries from people we probably would not have before. It's definitely helped."

In fact, Career Central is a company born out of reinvention. The company began when Hyman graduated from the Kellogg School of Management at Northwestern University in Chicago in 1995. He was surprised to discover that job offers were hard to come by. The reason he was having a hard time, he realized, was that his target market, the technology industry, didn't know he existed. Eventually, he found a position with software developer Intuit, Inc., but couldn't get past the fact that the job hunting process was harder then it needed to be.

When he hooked up with Yuen, a computer scientist, the two realized that the Internet offered a new opportunity for job hunting and placement. Instead of the old slow and expensive method that companies had to go through to find candidates, new technology presented an opportunity to change the way the game was played and bring more satisfaction to both clients and job seekers.

"What we found when we talked to potential clients was that if you found a way to reduce the cost and find candidates much faster, they would pay for it," Hyman says. "So we designed a technology and email-based service that basically matches and emails the jobs to candidates very quickly and at low cost."

The new way of doing business allows Career Central to charge companies about one-tenth of the cost of traditional search firms. And the slight reinvention of the industry now puts Career Central, a small firm, in a distinct advantage over much larger and well known competition. Now, Hyman and Yuen are known as the guys that can get the job done faster and cheaper.

Identifying change opportunities can also become a lifesaver when a business begins to struggle. Take, for example, the plight of Steve Bernard, founder of Cape Cod Potato Chips in Hyannis, Mass. Bernard operated a successful, small business that prided itself on creating distinctive chips. In the beginning, his special recipe for snack foods kept attracting more and more business. However, he suddenly ran out of capital because, although they were popular, the chips weren't making any money yet. Around that time, a car careened off the street outside of Bernard's shop and crashed through the window of his storefront. The resulting insurance money gave him the capital he needed to continue, and he took advantage of that second chance by reinventing the way he sold his chips.

Bernard's marketing strategy already touted his product's distinctive recipe. But he decided to market the Cape Code brand name as well. He believed that the upscale Americana image many consumers associated with the town of Cape Cod, Mass. would improve the popularity of the chips and open them up to a new demographic nationally. He also started placing his chips in the produce section of supermarkets instead of the traditional snack food aisle. Bernard believes this new placement lent the chips a healthier, higher quality image.

All of these examples bring home one point: Success often depends on how you identify new opportunities and continue to change your company. But how do you identify these opportunities? For a start, ask yourself these questions:

  1. How are my current products/services performing?
    ________________________________________________________
  2. What niches have not yet been tapped by my competitors?
    ________________________________________________________
  3. Do I have the financial resources to venture into new product/service development?
    ________________________________________________________
  4. Do I have the technological capabilities to support product/service expansion at this time?
    ________________________________________________________
  5. Do I have the time to devote to a new product/service?
    ________________________________________________________
  6. Do I have the manpower to support new product/service development?
    ________________________________________________________
  7. Are other companies currently offering the product/service? If so, how can I improve upon it?
    ________________________________________________________
  8. What other types of customers can I target?
    ________________________________________________________
  9. What marketing strategies can I leverage if I change?
    ________________________________________________________
  10. What do I want my business to be known as a year from now?
    ________________________________________________________
  11. Does my business operate with strict processes, guidelines and standards that are easily reproduced in different locations?
    ________________________________________________________
  12. What changes will I have to make to my business to successfully expand into a new market?

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III. Know What Your Customers Are Thinking

Although we have established that change is something to strive for, change for change's sake is not a good thing. You want your changes to have a direct correlation to larger profits, more customers and more opportunities for future growth. Therefore, before you set about on a process of change, you should first realize what your customers expect from you.

How do you know what your customers want? You can look for clues in a number of ways: questionnaires, focus groups, word of mouth, suggestion boxes, online surveys and nonverbal messages. You can also analyze your customers' loyalty through their purchasing behavior.

To better understand what your customers are saying about you, consider the answers to the following questions:

  1. What are the main points that are being repeated during the customer feedback process? (Remember: One statement is just one person's opinion. Multiple statements that are similar may be indicative of a developing trend.)
    _________________________________________________________________
  2. What do my employees pick up in their direct communication with the customers?
    _________________________________________________________________
  3. What are my customers saying directly to me or to each other?
    _________________________________________________________________
  4. What products or services seem to be stuck on the shelves, unused or returned on a regular basis?
    _________________________________________________________________
  5. What products and/or promotions have received a wildly positive response that could be repeated or built upon in the future?
    _________________________________________________________________

Listening to and understanding what customers want is the simplest way to identify how or what you should change about your company, your products and/or your services. The changes based on this information can range from a minor adjustment in merchandise to a major overhaul of your company's strategic plan.

For an example of the former, consider the case of Jennifer's Coffee, a coffeehouse in Los Angeles. At the end of each week, proprietor Jennifer Morgan would inventory her shop and notice that some of the individual coffee bean bins were completely empty, while others were still filled to the brim. Morgan realized that her customers were telling her, in a nonverbal way, that they didn't like certain blends and that she should ditch them immediately. She continued to replace the unused blends periodically until she found varieties that were popular with her clientele.

Morgan also listens to what customers say to each other while waiting in line. One comment she heard was that customers were getting annoyed that she didn't offer free refills. Although her supplier warned her not to offer free second helpings because of the hefty capital expense, Morgan decided to appease her customers anyway. She swallowed the cost in order to become the local coffeehouse that gives free refills, a change that has enabled her to compete with the new Starbucks down the street. An individual franchisee within the large Starbucks chain probably would have had a much harder time instituting such a change, because of the red tape he or she would have to go through with the corporate headquarters in Seattle. Morgan has fully exploited the one advantage she has by being a small, owner-operated business: the ability to change for her customers — now!

Others have taken a more direct approach to finding out what customers desire. Remember the partners at Career Central? Hyman says they recognized what their clients needed by asking them over the Internet and through focus groups.

"We do market research and we basically ask them," Hyman says. "And we do it in a number of different formats. We ask them individually. We organize focus groups. Then we also do surveys online."

Focus groups have long been a strong way to gather information about a company and its offerings. Usually, these informal information gathering sessions involve five to 10 customers who are led through a series of questions by an independent moderator. (Note: It is inadvisable to try to orchestrate a focus group yourself if you have no prior experience doing so. There are many trained professionals who can assist you in this endeavor.)

"We kind of walk them through questions about how or what we can do to improve our service," Hyman says. "Then we have an hour of brainstorming, where we sit back and let them talk about their ideas, and they come up with some pretty good ideas because they're faced with these problems every day."

Hyman says that the Internet now provides a direct way to ask questions, particularly through email. In fact, more and more companies are turning to the Internet to conduct market research by emailing questionnaires or developing online discussion groups, which are basically virtual focus groups. For additional reading on this topic, see Effective Use of Technology.

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IV. Become Innovative

In Toronto, Canada, television viewing is significantly different than the rest of the world. Moses Znaimer, co-founder of CityTV, explains that the difference lies in the selection of programs available. In this age of 500-channel cable systems, CityTV has become a visionary company looking to innovate the medium. Seeking to break down boundaries, it created studio-less television and program-less programming, and it embraces reality rather than make-believe.

It may sound silly, but Znaimer has taken this offbeat concept and a low-powered, low-cost television station from a $1.5 million startup to a $200 million, 600-employee empire. And he did it all on the strength of innovation. Znaimer saw that all television was becoming the same. Of approximately 1,000 TV stations in the world, virtually all of them had nearly identical programming concepts, he noticed. So he decided to make a change within the industry and developed CityTV to become a local, interactive television station.

How does the concept work? CityTV takes votes from viewers on what to air. It covers news events as real events as they happen, instead of creating half-hour news programs that air a few times per day. CityTV has even branched off into new ventures, including MuchaMusic, a Spanish-language pop music venture in Argentina.

So what do you find on CityTV? There is Fashion Television, a global search for the most stimulating works in fashion, art, architecture and photography; Media Television, an insider's look at the media process; The Originals, which explores personalities whose achievements and outstanding contributions to society make them unique; and Intimate and Interactive, where viewers get a close-up look at big-name music artists in concert. (The artists even answer questions from their audience via phone, fax or email.)

Meanwhile, innovative software companies such as Marimba, Inc. have applied new spins to old methods. Marimba's CEO Kim Polese left a high-profile job at Sun Microsystems, where she played an integral part in developing JAVA to create a new company based on a new technology: CastaNet, a Java-based multimedia information-delivery application that allows businesses to push their own information to clients across the Internet or intranets — as opposed to the traditional pull method of downloading data from the Web.

What these and other companies have done illustrates how change can make a difference in a sub-market, market or entire industry. They also illustrate logical ways of making changes. All have first identified a niche market, learned what potential customers need and want, and developed their business model to reflect those desires. They also came up with innovative ways to distribute their services, which sets them apart and gives them an identifiable feature.

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V. Reinvent Yourself Through Branding

Experts say that branding can increase the value users perceive in an existing product or service and rejuvenate growth in companies of all sizes. In fact, branding is one of the most effective ways to change and update your company.

Branding can also be a synergistic part of an overall plan for change. The reason that Hyman and Yuen changed the name of their company to reflect the change in their business model was to create a new brand that could be associated with what they do. Under the old tag, MBA Central, their organization was recognized as a place for companies to find potential employees with M.B.A.s. Under the new brand, Career Central, the door is open and recognizable for anyone looking for a job or a new employee. If someone were looking for a placement service on the Web, they would not use a service called MBA Central if they don't hold a master's degree. But Career Central will attract a larger and more diverse crowd because it implies that all types of jobs are available.

Another example of branding is the case of Bari & Gail, a family-owned chocolatier in Massachusetts. When the proprietors of the company wanted to revitalize their company's image to appeal to a broader base of consumers, they set out to reinvent their brand. What they discovered was that their existing trademark was nearly invisible to consumers, and their packaging lacked a distinctive design.

What they did next changed the face of their company for the better. First, they conducted research in the fine chocolates market to better understand what leads a consumer to purchase chocolate. As it turns out, they discovered that consumers' chocolate cravings are seasonal. Using this knowledge, they developed a commemorative package to celebrate the gift of chocolate.

Before setting off on a branding scheme for your products or service, you should first ask yourself:

  1. Is there a common need among my consumers?
     Yes No
  2. Will the new brand attract more consumers to my type of products or services?
     Yes No
  3. Will new packaging hold a stronger appeal for my target audience?
     Yes No
  4. Does my company's name represent the personality of my target group?
     Yes No
  5. Does my company have credibility with the market?
     Yes No
  6. Will a new image build credibility for me?
     Yes No
  7. Will the new brand credibility last for at least the next couple of years?
     Yes No
  8. Does the new brand represent the type of image I want to portray?
     Yes No
  9. Has my old brand been ineffective to this point?
     Yes No

For a complete discussion on this topic, see Creating a Branding Strategy.

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VI. Let Technology Make a Difference

Of the many things the Web provides, the opportunity for businesses to reinvent themselves or to reach new customers is probably the most exciting. In fact, some experts believe that the Web demands that nearly all businesses reinvent themselves or fall by the wayside.

If the real world seems crowded, the Internet seems virtually overpopulated. And this poses a singular dilemma: In order to survive in cyberspace, a business must stand out like a sore thumb. That's why new enabling software for the Web is debuting at a fast pace as companies look to distinguish themselves through new innovations.

"The Internet lets you do things faster and for lower costs," explains Hyman. For that reason, several businesses have either emerged solely to take advantage of the Internet  to make an identity for themselves online. For example, Barnes & Noble, the bookseller chain, has taken advantage of the Internet to reach more customers and has done extensive work and marketing to create a brand that is now among the leaders of e-commerce retailers. BarnesandNoble.com amassed more than $65 million in online sales since launching its online presence. Likewise, Wal-Mart expanded to include an online division, which has found tremendous success at reaching new customers by changing its merchandise to fit online demographics.

In fact, the Internet has opened up a new channel for companies to change or reinvent themselves altogether. Fingerhut, the nation's largest catalog retailer, recently reinvented its business model to become a strong Internet company. Even though the print catalog business remains a giant among catalog companies, the company has embarked upon a program of acquisition and development to transform itself into an Internet company. The reason? To take advantage of a new technology that lets the company become something new and fresh, opening itself to new customers and increased sales.

On the Internet, no one has taken better advantage of changing with the times and the medium than Bluefly.com. Established in 1991, Bluefly operated under the name Pivot Rules and sold golf apparel and accessories. But, as the Internet evolved, Pivot Rules set upon a program of change and reinvented itself as Bluefly.com.

At that same time, Bluefly recognized that golf was starting to gain momentum as a recreational sport, especially among young people. As the new generation began playing, the company changed its merchandise to address the buying habits of the new generation. Bluefly officials recognized that new-generation golfers were strutting around courses in attire that was a far cry than the old-fashioned plaid polyester that older golfers wear. So it developed a site that specialized in more versatile color palettes for its clothes, better fibers and updated silhouettes.

Soon, however, the company noticed that there was more than just online golf commerce to conquer, and it set out to grow into larger markets. It identified a non-golf Internet retail niche. In an interesting twist, the company now sells brand name, end-of-season apparel and accessories via its online retail store.

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VII. Create an Environment for Change

Of course, you can plot a reinvention of your business, but you can't pull it off unless you have created an environment that supports it. That starts with you, but also includes your employees, investors and customers.

To create this environment in today's business world, it is important to remember a few things:

  1. You and your employees are the agents of change.
  2. Change should be instituted for the sake of the business, not for change itself.
  3. Change is about people — not numbers.
  4. Opposition is still a good learning tool.
  5. Change can be informal.
  6. You can't force people to change.
  7. You can't change a company without changing yourself.

Employees and customers of the metamorphosing business often think of change as a bad thing. All too often, the problem is actually a lack of communication during the process — which fosters an environment of fear. Employees will fear for their jobs, and customers will fear that their convenience will be lost if they sense that changes are being made without their knowledge.

How do you combat these attitudes? One way is to remember that employees are your change agents. They must be on board and part of the process from start to finish. Change cannot be dictated from the upper echelons of management without input from lower level employees, or those employees will inevitably fear the changes.

Also, when soliciting ideas about change, you should remember that not everyone will agree. People have instinctive reactions to news of change. When David Clarke was heading the IT group at W.L. Gore & Associates, the maker of GORE-TEX, he introduced a new manufacturing system for one of the company's facilities. He immediately faced skepticism from engineers. However, Clarke listened to the opposition and discovered that their concerns weren't unfounded. Thus, many of the previous ideas were rejected and new, better ones drawn up.

Likewise, change should be instituted as informal, not as a directive from the CEO or owner. Many times, change can be accomplished in individual divisions with the knowledge and input of workers who are most familiar with the part of the business that is undergoing the transformation.

In this situation, employees are more willing to accept change. In fact, they may more readily embrace it. Collaboration throughout the company, especially if yours is a small operation, allows you to get solid input while letting people ease into the change.

Finally, in any change effort, the first person to change has to be you. If you, as owner, boss and/or leader are not willing to change, you can't expect anyone else to.

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VIII. Resources

Books

Frank R. Bacon, Thomas Butler, "Achieving Planned Innovation," Simon &
Schuster, 1998

Rowan Gibson, "Rethinking the Future," Nicholas Brealey, 1999

Constantinos C. Markides, "All the Right Moves: A Guide to Crafting
Breakthrough Strategy," Harvard Business Press, 1999

C. K. Prahalad, Henry Mintzburg, "Mastering Strategy Complete MBA Companion
in Strategy," Prentice Hall Publishing, 2000

"Customers for Life," Sewell, Carl.

"Re-Inventing the Corporation: Transforming Your Job and Your Company for the New Information Society," Naisbitt, John.

"The Adaptive Corporation," Toffler, Alvin.

"The Popcorn Report," Popcorn, Faith.

"The Business Planning Guide: Creating a Plan for Success in Your Own Business," Bangs, David H.

Web Sites

Beyond.com

Namestormers

Russell Mark Group

Sigma

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Copyright © 2004 Virtual Advisor, Inc.