In a recent article, Planning to Take Control of the Family Business, I talked about the reluctance of family and privately owned business to plan. I opined that “time pressures” and “not knowing where to start” were two of the main reasons for this reluctance.
However, I believe there is another, very important, reason for not planning – basically, a lack of desire. Or, in other words, not enough discontent with the status quo. If the business owner is “content” with the way things are, why plan, why change?
So, how do you assess whether the business owner is “content” and therefore whether there is a desire to plan and a desire for change?
I use a simple model to assess the change potential of any business using the formula:
D x V x P = Change Potential
So, what do D, V and P stand for?
The “D” stands for dissatisfaction or the extent to which you are unhappy with the current position of the business. It is the “why” – why change?
The “V” stands for Vision and represents the extent to which the business has a clear, documented vision which is shared with the key stakeholders. The vision provides the direction. It is the “what” – change to what?
The “P” stands for Plan and represents the extent to which the business has a clear, documented and communicated plan with time and date actions (i.e. who has to do what by when). It is the “how” – how will we achieve our vision?
I then ask my clients to provide a score from 1 to 10 (with 1 being low and 10 being high) for each of D, V and P. What is interesting is that sometimes there is considerable variance in these scores between the various stakeholders, particularly between key employees and the owner of the business. This in itself opens up a worthwhile discussion.
So for example, if they have a documented plan but it is not communicated to key stakeholders and/or it doesn’t have time oriented actions attached to it, then you might rate the “P” as say a 4 or 5. Similarly, if the owner of the business has a vision for the business that is in their head and is not communicated to their team, then you might rate the “V” as say a 3 or 4.
However, in my view the level of the “D” is extremely important in determining the change potential of a business and therefore the likelihood of success in implementing the plan. This determines the level of motivation the stakeholders have to change and therefore the level of motivation to plan for something different – the “fire in the belly” if you like.
If there is a low “D” and all stakeholders are content with the way things are going, why would they be motivated to change? In addition, many people fear change particularly when it is imposed upon them.
Mathematically, then if the scores to the “D”, “V” and “P” are say:
5 x 4 x 3 then the product is 60. Given that the maximum possible score (10 x 10 x 10) is 1000, then to get a percentage simply divide the calculated number by 10. Therefore, in this example, the likelihood of the business implementing change and improving itself is only 6% – a very low likelihood.
However, if for example the scores were a high level of dissatisfaction with the status quo (say 9), the owner has a clear, documented and communicated vision (say 8) and there is a written action plan as to who has to do what by when (say 8), then the likelihood of the business implementing the plan and achieving the vision is much higher (9 x 8 x 8 = 57.6%).
As a final point, if the level of ‘Dissatisfaction’ of the owner is very low or does not exist, (e.g. zero), then any number multiplied by zero equals zero. Therefore, if “D” is zero so too is the change potential, or impetus to change, of the business even if there is a clear documented vision and a detailed action plan. There has to be a desire for change.
The challenge then is to convince the stakeholders of the need for change and that remaining as they are is not an option.
If you would like to find out more about applying this model in your own business or any other aspect of business planning, please feel free to contact me or take advantage of our free Business Development Consultation.