Friday, August 16, 2019

Measuring Enterprises' Capacity for Change

Change is difficult.  The default mode of most organizations and people is to resist change.  It's like a helmsman who steers a ship straight into an iceberg because he doesn't want to rock the boat.

Agile businesses, however, that can redirect energy to fast and positive change and transformation can exploit many more opportunities than enterprises mired in resistance.  The challenge for leaders today is to create an organization that is not only prepared and willing to change, but that also has enough energy and resources to succeed.

One of the rules of the First Law of Thermodynamics in physics is, "Energy can be changed from one form to another, but it cannot be created or destroyed.”  I propose there is an application of this rule in business as well.  If energy is being consumed on resisting changes to your business, then it is not available for making positive changes to your business.

If markets are changing due to economic conditions, competition, technological innovations or rapidly changing customer behaviors and preferences, then companies must be able to quickly redirect their energy to implementing positive change in order to win.

Change consumes energy, and energy is finite.  That means in order to make changes to keep up with a rapidly changing market, energy must be conserved and stock piled so it is available.  Expending scarce energy resisting intelligent change is a huge waste.  Making investments and taking your business down a path that cannot quickly be undone if the market moves a new direction is also a big waste.

We have focused so far on the notion of conserving and investing energy to facilitate intelligent change, but there are additional things that go along with energy that we must intelligently ration as well such as: time, budgets, credit limits, trust, skills, goodwill, leadership, mental and emotional capacity, etc.  Too much change can drain goodwill, and expend too much mental and emotional energy to continue.  The responsibility of a good leaders is to always be measuring how much energy is available to make changes.

In days of old, when battles were fought by foot soldiers and horseman, military leaders paid attention to energy levels.  You couldn't march your soldiers and horses on short rations to the point of exhaustion and expect they can fight effectively.  Intelligently managing energy levels are just as critical today.

Today, when most companies are engaged in digital transformation journeys, enterprises need a method by which they can measure and monitor the amount of energy available, created and consumed.  Knowing how much energy is available requires a formula for calculating the number of transformative energy units (TEUs) currently in reserve, how many are being created over a specific period of time, less the number of energy units consumed in a particular time frame.  To that end, all aspects of a business should be assigned TEU values so a total energy score can be derived.

All business activities consume and/or generates TEUs.  As a result, the second step is to identify how many TEUs each transformational task consumes. If digital transformation can be implemented with minimal resistance from the board, executive team, employees and customers, then those TEUs can be dedicated to making the necessary changes.  However, if there is major resistance to change from any combination of these constituents, then there is less energy available for making it.

Once the number of available TEUs is known, enterprises can monitor their total energy scores to ensure they maintain a sustainable level to implement current and future changes.

Higher total energy scores that are self-sustaining, support a higher level of business agility, while lower scores limit a company’s ability to make changes fast enough to compete.

In a world in permanent flux, enterprises that can maintain higher total energy scores have a competitive advantage in the form of business agility and energy to use for new digital transformation efforts.  As real-time data is analyzed, and changes in trends detected, businesses with higher total energy scores are in a far better position to exploit emerging trends.

Kevin Benedict
SVP Solutions Strategy at Regalix
Website Regalix Inc.
View my profile on LinkedIn
Follow me on Twitter @krbenedict
Join the Linkedin Group Digital Intelligence

***Full Disclosure: These are my personal opinions. No company is silly enough to claim them. I work with and have worked with many of the companies mentioned in my articles.