Adapt and change before any major trends or changes.
—Jack Ma
Your business will be created in an environment of change, the new (or not so new) normal. Our working lives are generally underpinned by uncertainty, instability, and sometimes volatility.
This naturally means that the dynamics of your business will be constantly changing. In some cases, the triggers for change will be from within your business (the internal environment) and in other times from the outside (the external environment). There will be times when change will be caused by a combination of internal and external factors.
In general terms, the rate of change is increasing, and business owners must embrace this reality. An example could be working hours. As entrepreneurs, and in increasing cases the working world, the expectation of us working 9 a.m. to 5 p.m. Monday to Friday is an increasingly rare reality. There needs to be a degree of flexibility, to work those hours necessary to take the business forward while achieving your chosen work–life balance.
Depending on what products or services your business offers, there needs to be a recognition of the significance and potential of technology and artificial intelligence (AI). As a minimum, it is likely, for example, that all entrepreneurs need to embrace the potential of social media.
Types of Change
There are several different types of change. However, in most cases, there are two main categories to understand and recognize.
Transactional change: This type of change might refer to changes in your business processes. This is where your key processes will continually evolve to meet any changing requirements. This type of change is usually planned and systematic, where you change a process toward an identified outcome.
Examples may include altering the way you invoice or process and accept payments, changing your supply chain, or evolving your planning processes.
Transformational change: This type of change will include every aspect of your business and will be enacted over a (usually short) period of time. As entrepreneurs, this could mean a restructure, a change in your product or service offering, deciding to outsource certain aspects of your business, or possibly a change in direction or overall strategy.
Your role in this type of change is pivotal. You need to ensure every aspect of your business is actively and meaningfully involved. In the early stages, this may be just you, and in later stages, it could involve employees, contactors, or other outsource partners, all of whom could be affected by changes you make. Any proposed changes need to be viable, be clear, and be inspirational to those around you.
The Complexities of Change
The reality is, that ongoing and continuous change is inevitable—something to be accepted by all of us.
If we fail to, or perhaps even choose not to move with the times, there may be consequences. In terms of your business, this may mean harmful and permanent consequences. So, an entrepreneur needs to have a successful, adaptable, and sustainable change management strategy to give the optimum chance of surviving and thriving in an ever more competitive arena.
There will undeniably be occasions when you need to have the courage to challenge and critically analyze the way you do things. An example of this could be deciding to change as a result of an unexpected problem or changing processes to prepare your business for growth. Internal and/or external change must be successfully accommodated and is therefore an absolute priority.
We need also to remember that there is both planned and unplanned change. Preparations for planned change can and should be made in advance as much as is reasonably possible. This gives the concurrent opportunity for you to have detailed, realistic, and sustainable implementation strategies. However, reality tells us that not all changes can be reasonably planned for or anticipated. The impact of unplanned change can be instant, destabilizing and extremely disruptive. However, this still needs to be prepared for or mitigated in the most effective possible way. It is essential to have a robust contingency plan in place to try and neutralize the impacts of any unexpected change. Examples of unplanned change could include sudden large-scale system outages, an unexpected severe economic downturn, or a political change that negatively affects the business community.
The External Environment
Understanding the context within which your business operates is critically important. By having a current (then very regularly updated) knowledge and awareness of the external environment will give you the opportunity to be more effective in accommodating change and calculating and managing risk.
A brief explanation as to why this is so important. The principle of the significance of the external environment to your business is based on Systems Theory (1937). The implications for you and your business are as follows:
• That your business is an open-looped system that is dependent on and interrelated to the external environment as a prerequisite for your longer term survival.
• Therefore, your internal business environment and external environments are inevitably interrelated. By way of clarity and inevitability, both environments are constantly changing!
The categories of external change that you need to identify and understand in terms of your business can be placed in a PESTLE framework. This framework is a snapshot (i.e., at that moment in time, so can become quickly outdated) of the six following categories:
P = Political
E = Economic
S = Social
T = Technological
L = Legal
E = Environmental
You may find it helpful to create your own PESTLE framework so that you have a dynamic, regularly reviewed and updated awareness of these business-critical external factors.
Always remember:
• That all six categories apply, always with no exceptions.
• At a moment in time, one or more of the six categories may have a greater significance for your business.
• The six categories are inevitably interrelated, so a single external factor may appear in more than one category, albeit in a different context.
• You need to constantly prioritize and reprioritize these external factors in terms of their known or expected impacts on your business.
Examples From the PESTLE Framework That Will Impact Your Business
Political
• The current central and local government policies
• An impending election and political public opinion
• The political benefits of a government (some may be more pro-business and pro-trade than others)
• The level of relative prosperity or economic recession
• The rate of inflation
• Levels of unemployment
• The rate of economic growth domestically and abroad
• Levels of direct and indirect taxation
• Levels of business and consumer confidence
• The impacts of fluctuating exchange rates
Social
• Demographic trends
• Age distribution
• Influence of the mainstream and local media
• The impact of social media
• External perceptions of your business’s brand and values
• Usual and changing lifestyles and habits
• Evolving consumer attitudes, tastes, and values
• Ethical perspectives
Technological
• The rate of change and technological innovation
• The trend toward automation
• Awareness of competitor strategies
• The evolving and increasing range of technological communication and delivery channels
Legal
• Employee and workers’ rights
• Consumer protection
• Discrimination laws
• Equal opportunities
• Health and safety
• Legislation to encourage or restrict competition
• Tax regulations
• Environmental laws and regulations
• The swing toward reducing the carbon footprint across the world
• Sustainability
• Various pressure groups
• Increasing stakeholder awareness of the importance of protecting the environment
An alternative framework you may find useful in this context is a SWOT analysis (this is also covered in Chapter 2).
Here, you can look to pinpoint and understand the key internal strengths and weaknesses and also external opportunities and threats that may impact your business at any one point in time. As with the PESTLE discussed earlier, you therefore have a greater opportunity to manage and mitigate risk and accommodate change.
Some key factors that may apply to your business:
Strengths:
• High-quality employees
• Effective business leadership and management
• The quality and reliability of your processes
• Your business producing high-quality products or services
• Establishing a strong unique selling point (USP)
Weaknesses:
• Limited capacity or resources
• Shortage of space
• Lack of financial support or funding
• Poor reputation
• Poor management of costs and overheads
• Inefficient processes
Opportunities:
• Looking to build and expand your market share
• Developing an influential marketing strategy
• Robust social media strategy
Threats:
• Competition: Both new and current
• Cost fluctuations in supply chains
• Poor or minimal consumer awareness of your offerings
• Over reliance on specific suppliers
Technology and AI
The influence of technology and AI is constantly evolving and will inevitably increase over time.
As an entrepreneur, aspects of these relentless changes you need to consider include the following:
• The benefits of having a website.
• Your presence, activity, and profile on social media.
• The cost, resource, and opportunity cost implications: In addition to your people and premises, technology and AI are most likely to be a very significant overhead.
Your Role in Leading Change
There are several key roles an entrepreneur will need to adopt when leading change. We could well argue that as change is the norm, as a result demonstrating these roles is “business as usual”:
• Being a role model: This is where you lead by example. Where you react appropriately, sensibly, and proportionately to change and guide and lead those around you, both inside and outside of your business, through change.
• Having a clear vision and strategy: When navigating through change, it becomes critical that you have a clear plan and strategy to deal with it. A visible, succinct, and well-communicated strategy will enable awareness, understanding, and application for all your stakeholders, including you.
• Inspiring others: You are the fulcrum of inspiration for all those around you. If your key stakeholders trust and believe in you, you are motivated by you then any change adventure may well be more acceptable and coherent.
• Having a clear communication strategy: Before, during, and in some cases after any change, you must have a clear communication strategy. For many of your stakeholders, maybe even for you, change can be daunting and unsettling. Any stakeholder reactions to change can be accompanied by elements of doubt or even lack of trust in you as entrepreneur if they are not sure what is going on. You need to have a clear, honest, and transparent communications strategy, using any and all appropriate communication channels, so that all your stakeholders are kept fully and regularly informed. This applies whether the change is welcome, for example, a new product launch, or when news of change is not so welcome, for example, a delay in distribution.
• Stakeholder management: Mendelow’s matrix is discussed in detail elsewhere in detail in Chapter 4 and emphasizes the need for you to understand and accommodate all your key internal/external stakeholder priorities and expectations. Your stakeholder’s agendas can and will differ, in some cases, dramatically. Your role as entrepreneur is to meet or exceed your stakeholder expectations by adopting the right balance. Your optimum stakeholder balance will also constantly change.
• Emotional intelligence: You need to understand and manage your own reactions to change. You also need to be aware of, respect, and understand the emotions and reactions of the various key stakeholders. You therefore look to balance and accommodate your own feelings and those of others as you navigate through ongoing change. As an entrepreneur, there may be times when you may decide to pause and reflect before taking any action. Throughout you must make every effort to demonstrate empathy and understanding.
Essential Skills and Competencies During Change
As an entrepreneur, there are a range of skills and competencies that are likely become even more important during times of uncertainty and change.
These include the following:
• Building collaborative relationships: There is a need for you to develop and sustain key stakeholder relationships. Each stake-holder, whether internal or external, will require an individual approach, with mutual awareness, respect, and understanding being fundamental aspects throughout.
• Continuous personal development: As an entrepreneur, you must constantly embrace learning, experiences, and knowledge. This allows for continual development. In any regularly changing environment, nothing stands still. Therefore, you and those around you or working with you must look to embrace the philosophy of lifelong learning. Ideally you and your employees should have a development plan which gives you a framework to support your professional, entrepreneurial lives, and lives outside of work. If your workplace encourages learning, acquisition of knowledge, and personal development, there is a greater chance of effectively and successfully navigating through change.
• Listening skills: Many view this as an extremely high-level skill; however, this is crucial for you as an entrepreneur. Amidst the realities of day-to-day business life, when in contact with others, allowing them to convey their message, viewpoint, or feelings while saying nothing in response and also being 100 percent attentive can be challenging in some cases. However, this is exactly what you need to do when you are looking to productively engage with your stakeholders and take them with you through change.
• Self-motivation: Through change, you need to demonstrate a relentless desire and appetite for achieving the desired outcome. Everyone around you, your key stakeholders, will be looking to you for inspiration and encouragement through change, especially if and when any difficulties are encountered. As an entrepreneur, you need to actively demonstrate a drive and energy to maintain the momentum of change. Outwardly, you never hint at giving up and others will feed off your positivity.
• Self-reflection: This is another lifelong skill. This is very closely aligned with your continuous professional and personal development. This skill implies ongoing self-challenge. Where we regularly take the time to pause and reflect on what has happened and consider what can and has been learnt. This means your business can benefit from any lessons learned next time. Without doubt, if you and any employees actively apply this philosophy, then as a result your ability to cope with and deliver change is considerably enhanced.
• Verbal and nonverbal communication: As an entrepreneur, you will often be in the spotlight. Others will scrutinize what you say, when, where, and how. This is the case even more so during times of change. Your tone of voice, clarity of message, eye contact, honesty, credibility, integrity, and being self-awareness are some of the many aspects to consider. You will also need to be adaptable, demonstrating this range of complex skills in a unique way for each stakeholder.
Individual and Collective Reactions to Change
Every one of us reacts differently to change. It is therefore vital that you understand your personal response to change and the response of those around you.
Some of the variables you need to consider include the following:
• The job security of your employees could be at risk during times of change.
• The sway of some your employees: Collectively, they will influence each other. In some cases, it only needs one negative influence to start with.
• The need for your employees to feel valued, where their contributions are recognized.
• How you involve your employees, giving them a meaningful role to take throughout change.
• How you keep your employees informed: A clear communication plan is needed.
• How far your workplace culture embraces change, creativity, innovation, and ideas.
• The level of mutual trust and respect: This aspect can make a significant difference to how change is accepted and embraced.
Your Choices With Change
How you, as entrepreneur, respond to change depends on several key factors:
• The change itself and its implications, now and in the short, medium, and long term
• The timing of the change
• Previous experience of change and of managing change
• Internal and external stakeholder views and influence
• The reactions of family and friends
This clearly implies that the way each of us sees change, while being unique, is influenced by a range of interrelated business and nonbusiness factors that in themselves will constantly change.
We live in an imperfect world, so when you respond to change, the priority is to make the right choice or the best choice available at the time. Ensure you have awareness of your viable options and get as much information as you can. If possible, seek the advice, expertise, and opinions of others who may have knowledge of what choices you are facing. Making as informed decision as possible is always preferable.
Whenever possible, know that your decision is the best that it can possibly be at that moment in time.
If you focus on results, you will never change. If you focus on change, you will get results.
—Jack Dixon