Volume 19 Number 6
Business of Change
01 December 2006
When the whole context in which you’ve existed changes, what do you do? The Managing Director of a family firm describes his experience.
OUR FAMILY firm was founded by my great-great-grandfather in the early 19th century. My forebears had a strong Christian ethos, and this had significant consequences for the company when, in the 1930s, my grandfather accepted the challenge to let the Methodist faith, which he proclaimed and practised on a Sunday, affect the way he ran the company from Monday to Saturday.
His first idea was to go back into the factory with his eyes open as if he were a stranger. He saw, for the first time, the men’s real working conditions. There were no washing facilities. There was no canteen. The yard was dirty. There was no sick pay. There was little or no pension provision.
So, in an experiment of faith, he began to change these things. He built washing and canteen facilities, introduced sick pay and persuaded all the shareholders to give some of their capital to set up a fund for the benefit of employees and their dependants. During the Depression he deliberately created work and took on staff.
This experience convinced my grandfather and father that what was morally right was economically viable. Over the next 60 years, the business achieved worldwide success based on quality, reliability, integrity and service. They saw the firm as a model for how relations between shareholders, management and employees could be, a working example of an alternative to industrial conflict and class war.
I came into the business in 1982, straight from university, with various unspoken, and even unconscious, assumptions. Among these were:
that life would go on for our company and for me as it had done before.
that there would always be a business to run, markets to support us and a job for life for everybody employed in the company.
that change would only come in small, incremental and digestible amounts.
that we shareholders were meant to be stewards, not entrepreneurs.
In 1994, after 12 years in the firm, I became Managing Director, responsible for the day-to-day running of the company. Over the next three years, sales increased and exports grew. In 1997 we had our highest ever level of sales and of profit.
The next year, our profits halved and in1999 we had our first recorded loss in over 70 years. Over the next four years our home market collapsed and export markets shrank as customers moved their production to countries where we could not compete.
In responding to this business crisis, our company went through four stages: denial, coping, positive acceptance and planning.
We were slow to realise that this was more than just another cyclical downturn, albeit a pretty deep one, and that business was leaving our traditional markets in Europe for good. As a result of that denial we waited too long before we began to implement changes.
Coping involved having to reduce our workforce by about a quarter: a huge shock, both corporately and individually. We also brought all the employees together on one site which helped to improve communication and change the culture of the company. At the same time there was a transition of generations, as seven of the nine directors and three senior managers retired, and a new management team took their place.
Then we accepted that, rather than having reached a new equilibrium, change was going to continue. This positive acceptance of change led us to switch the emphasis of our business into new fields. Many of our staff had to learn new skills: they have done so enthusiastically and with great success.
These responses were all essentially reactive; we had been managing change. But the time comes when you have to move from managing change to leading change. This required me to take active responsibility for our future.
As I was told on a training course, ‘the only way to transform your company is to transform yourself’. I had to address attitudes which undermined my ability to be entrepreneurial: my tendency to feel a victim of circumstances, to prefer to avoid things rather than confront them, my fears, my aversion to risk-taking. I had to become willing to break rules, customs, precedents, assumptions and expectations which I had previously accepted as givens.
This fourth, planning, stage has involved developing a long-term plan, making a fresh statement of the values which matter to us, developing new products, and identifying a whole new direction and technology for the company to adopt.
After the collapse of communism, the purpose which had inspired my father and grandfather lost some of its force for me: it no longer seemed relevant to talk about our company as a model of an answer to class war. But through the development of new, environmentally adapted and biodegradable products, a new sense of purpose has begun to emerge, around the idea of sustainability, which makes sense in the context of today.
This idea of sustainability implies longterm economic viability; relationships of trust and integrity both inside and outside the firm; satisfied staff who enjoy their work; and products and processes which do not denude or damage the environment.
In the last seven years, our company’s markets have changed; our products have changed; our locations have changed; our structures have changed; our people have changed. I expect that we will be radically different again in five years’ time. But what I have learnt, above all else, is that change really does start with me.
The writer has asked to remain anonymous.