Edition 129 – Don’t Change

“Don’t Change” happens to be my favourite INXS song, perhaps because it is so powerful a memory of my teenage years. Now, incredibly, almost 36 years old (for the audio nerds, it was off the Shabooh Shoobah album), the distinctive voice of Michael Hutchence suggests to the object of his desires to “don’t change for you, don’t change a thing, for me.”

Whilst Hutchence implored his love to stay as she is, the fact remains that through our lives, our experiences, for better or for worse, impose change on us. Some of it we force. Some of it merely happens. I’d suggest that for most people, it is resisted as it takes us out of our comfort zone.

In my observation of family businesses, the most entrepreneurial period of their existence is in the first five years. Someone has a bright idea and sense they can change the world. They throw in their job, borrow some money, then hunker down on the journey of business.

It is at this time that the most rapid growth occurs. They make plenty of mistakes, but not the same mistake twice. They’re diligent, ensuring their product or service is world class. They build new relationships and gradually gain a greater sense of self confidence about being in business.

Around year five, the pace of growth tends to taper off. The business is still growing, but generally only in the specialty of what the owner knows. There are further inflection points at years 10 and 15, which I’ll talk about another time. However, the fifth anniversary is the portent of the future. If you’re still doing what you’ve always done, it’ll hold you in good stead for a while, but will not build a longer term sustainable business model. “Don’t Change” is playing on the iPod.

Here are some examples of what I’ve observed over the years of what leads to stagnation (at best) or contraction in a family business:

  1. Doing the same work for the same clients over a long period of time – and expecting to generate a higher return as time progresses. If you’re still doing something after five years, your business is commoditising its product or service offering. That means prices will only go down and profits will diminish.
  2. Keeping the same people employed doing the same thing in the incorrect belief that long service creates an efficient employee. In my experience, most long serving employees are staid, bored or just lazy and are not contributing new ideas to the family business. There are exceptions – but very few.
  3. Holding onto old technology or outdated equipment out of the belief that you paid a lot of money at the time for it, so you’d better get a good return on it! A software programme that generates rubbish numbers, or a piece of machinery that requires two processes when newer ones only require one, are both inefficient. Get rid of them. Not upgrading is costing you more money than the cost of upgrading will.
  4. Not changing your processes means you’re not questioning “is there a better way to do this?” Unconscious competence occurs if your employees are almost robotic in the way they approach their work. If this is what happens in your family business, why not blow up the whole concept and start again?

The world of business is rapidly changing. Too many family businesses are not taking the time to consider what change looks like, nor how it impacts their business. Too few business owners are learning the lessons of what is happening in other industries and seeing how quickly things can change. Instead of “don’t change”, the mantra really should be “must change”.


This Week’s Tip

“10 years ago, the Australian car industry employed 250000 Australians and commanded a third of the new car sales market. Fast forward to 2018 and learn from the experience of an industry that wouldn’t change.”

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