When Sergey Brin and Larry Page realised Google was going to be a smash hit they sacked themselves. The Google co-founders were brilliant at developing the product, the search engine, but they lacked a skill even more vital for chief executives: the ability to handle business transformation.
So in 2001 they hired Silicon Valley veteran boss Eric Schmidt to replace them at the helm. They reasoned he would know all about whipping departments into shape, motivating workers and constantly reshaping internal processes to ensure Google could grow at breakneck speed. They were right. In the following decade Schmidt turned Google from a promising startup into a global Goliath.
It’s a story which emphasises the importance of business transformation. You can have a world-beating product. You can have customers throwing their money at you. But you also need to be able to reshape the guts of your business to keep it performing as the company grows.
Even the most ancient business models need this mindset. Take crop farming. Since the Babylonians mastered crop-planting, the routine has been unchanged: plough, fertilise, sow, water, wait and reap. Yet take a look at the way a modern farmer handles this and you might be surprised. It’s all about global positioning systems and pilotless combine harvesters. At Glebe Farm in Leadenham, Lincolnshire, former arable farmer of the year Andrew Ward uses a satellite-controlled fertiliser spreader from Kverneland to boost accuracy when fertilising.
“Automatic spreader control is saving me around £9,000 a year on our annual fertiliser bill,” says Mr Ward. “It should easily repay the higher cost of the sophisticated spreader in three years.
You need to be able to reshape the guts of your business to keep it performing as the company grows
“We can see on the in-cab screen just how well the system is working. The graphics show how the spreading pattern is continually adjusted to prevent waste. It is very precise and exceptionally accurate – much more accurate than relying on the tractor driver to switch the machine on and off by eye, while spreading.”
Or what about staff on the shopfloor? They too are ripe for business transformation. You may know Lush, the purveyor of bath bombs and Curly Wurly coconut shampoo. Lush shop assistants mostly answer questions about how much cinnamon is in the soap. Now they have iPads displaying real-time information on sales performance across all Lush stores. The data, gathered by data analytics provider Qlik, allows staff to analyse inventory so they can alter the store layout and create two-for-one offers to shift struggling lines.
Another goodie. Oral-B wanted to find a way to create a unique selling proposition for its electric toothbrushes. The traditional approach is to brainstorm this sort of challenge in-house. Instead the firm broke the mould and crowdsourced, using the eYeka platform. In just 22 days, Oral-B received 67 unique and innovative ideas from community members in 24 countries. Three won prizes. Oral-B used the crowdsourced insights to develop an internet-connected brush which gathers data on the users’ brushing techniques and notifies when the head needs replacing.
Marketing director Stephen Squire says: “The eYeka community gave us the head-start needed and helped us anticipate some of the problems that we had to consider in the development of the product; in particular the importance of content, gamification, family interaction and socialisation.”
Technology is often at the heart of business transformations. The key is discovering how this new techno-wizardry should be used. For example, lots of companies use cloud services. BETE, a small UK industrial nozzle-maker, went one further and entirely closed its office. All staff work from home via a corporate intranet. The result is operating costs down by £34,000, two-thirds of which was rent, and £9,000 on travel. Environmental costs are down and productivity is up. The new processes, developed with Claranet, mean BETE can compete ferociously on price.
Sometimes the new process is clever, rather than technical. At Cambridge Consultants, which develops products such the artificial pancreas, employees can nominate co-workers for a “Nobel” prize, for a job well done. There’s a small cash prize, but more importantly, it serves to highlight the employee’s dedication and talent. Annual reviews in which employees can gather feedback from anyone they chose, including the chief executive, a company magazine, quarterly “togetherness” meetings, a free restaurant and tailor-made career plans are the reasons Cambridge Consultants can boast a 6 per cent staff turnover and 10 per cent year-on-year growth.
Only two things are required to begin a business transformation. First, the recognition that every department needs to be constantly improved. And second, an appetite to introduce new measures, however novel or uncomfortable they may seem at the time, provided the evidence supports the strategy.
The alternative to business transformation is to stand still. Even muck-spreaders know that won’t work.