JONATHAN MAC­DON­ALD

The Smart Manager - - Front Page - JONATHAN MAC­DON­ALD IS AN IN­VEN­TOR, IN­VESTOR, AND THE AU­THOR OF POW­ERED BY CHANGE.

on the power of change. [ ]

A com­pany’s re­sponse to change de­ter­mines its chances of sur­vival—as Jonathan Mac­Don­ald writes in his re­cent book, “When the winds of change blow, some peo­ple build walls and oth­ers build wind­mills.”

Igrew up in the fam­ily busi­ness. I say ‘grew up in’ lit­er­ally. My par­ents worked seven days a week, so my stan­dard lo­ca­tion be­fore I could walk was un­der­neath the till. Then when I could walk I was pric­ing goods and clean­ing stuff. Things were far more straight­for­ward when there was one other mem­ber of staff, than fif­teen years later with over 20,000 items of stock and al­most 100 peo­ple in­volved. I lived through ev­ery el­e­ment of that scale, all the way through to my par­ents’ re­tire­ment when I piv­oted the busi­ness into a dif­fer­ent sec­tor.

I can re­mem­ber the days when stock con­trol was man­ual. Pa­per and pen. I can re­mem­ber when my dad and I booted up the first com­puter sys­tem, long be­fore the World Wide Web, and we gazed in won­der at the black screen with green text say­ing Xenix. It was an ex­tremely pop­u­lar ver­sion of Unix in the ‘70s and ‘80s and it rev­o­lu­tion­ized our lit­tle com­pany. We were able to link the tills to the or­der­ing sys­tem, and then via a phone line we could ac­tu­ally com­mu­ni­cate with sup­pli­ers. This was space-aged stuff at the time, I can as­sure you.

Ev­ery me­mory I have in­volves a change. A move­ment from one state to an­other. I re­mem­ber that we did not re­ally know what was com­ing around the cor­ner—we just had a very clear ob­jec­tive in mind and the new tech avail­able, or the chang­ing cus­tomer ex­pec­ta­tions, were just part and par­cel of run­ning a busi­ness. We never con­sid­ered that change would stop or that change was a bad thing, we just got on with it. Ev­ery day and ev­ery night.

It is what small busi­nesses can do that large ones can­not so easily. When we are small we can flex more with the flow. I love that. I love be­ing able to do a u-turn strate­gi­cally, with­out hav­ing to ex­plain it to Wall Street an­a­lysts. In Clay­ton M Chris­tensen’s book The In­no­va­tor’s Dilemma, he says out­stand­ing com­pa­nies can do ev­ery­thing right and still lose their mar­ket lead­er­ship—or worse, dis­ap­pear al­to­gether. What he cites as the rea­son is that while you get big­ger as a com­pany, your abil­ity to con­tin­u­ally in­no­vate slows or stops. I have seen this to be true.

In my book, Pow­ered By Change, I go a level deeper and look at the DNA struc­ture of change and how we can use it as a su­per­charg­ing fuel. This is be­cause I think there is a big­ger dilemma than be­ing un­able to in­no­vate even if you want and need to… and it is that:

■ we are no longer in the world of one-off change man­age­ment, we are in the world of manag­ing per­pet­ual change.

■ how we re­spond to that de­ter­mines our des­tiny, re­gard­less of size.

In any of the star­tups I have had, fol­low­ing my par­ents’ one, I have tried (with vary­ing de­grees of suc­cess) to em­u­late the agility my par­ents had. I have asked them how they man­aged things and they sim­ply stated that the only thing they knew for sure was that change hap­pened. They did not have any other as­sur­ances. Sup­pli­ers went bust, cus­tomers changed habits, staff went rogue—all man­ner of stuff hit the fan—but with a clear ob­jec­tive in mind, they were able to ride all the waves to­gether.

There is a key here. A clear ob­jec­tive. A fo­cus point that is crys­tal clear to ev­ery sin­gle per­son in­volved in the or­ga­ni­za­tion. An an­chor that, de­spite be­ing move­able, is

“If you are build­ing a busi­ness with­out pur­pose, not only are you miss­ing the point, but you are most likely miss­ing out on the jour­ney, the ex­cite­ment and the profit too.”

not vague or par­tial. In my book, I have an en­tire sec­tion ded­i­cated to this, called ‘pur­pose’. I have lib­er­ally used some ex­cerpts here to il­lus­trate my point— pri­mar­ily be­cause once you have pur­pose, han­dling the guar­an­teed change is far eas­ier.

Get­ting to grips with the pur­pose of a busi­ness is com­monly un­der­stood to mean look­ing at ‘why’ it should ex­ist, and then build­ing en­gage­ment and loy­alty on the back of that mis­sion along with the val­ues that un­der­pin it. As Vir­gin Group founder Sir Richard Bran­son says: “If you are build­ing a busi­ness with­out pur­pose, not only are you miss­ing the point, but you are most likely miss­ing out on the jour­ney, the ex­cite­ment and the profit too.”

Unilever’s Paul Pol­man, a flag-bearer of the pur­pose move­ment, puts it slightly dif­fer­ently but still sees pur­pose in busi­ness as be­ing fun­da­men­tally about the ‘why’. “The best busi­nesses un­der­stand their con­sumer in­ti­mately,” he says. “They are real peo­ple with com­plex lives and con­cerns. That’s why the mar­ket for re­spon­si­ble, pur­posedriven brands is grow­ing so rapidly. There’s a mas­sive re­turn for com­pa­nies on th­ese so­cial in­vest­ments. We need to step up and de­liver . . . through gen­uinely pur­posedriven brands that an­swer a real need.”

I have no ar­gu­ment with ei­ther of th­ese views. There is some clear ev­i­dence that the 2008 fi­nan­cial cri­sis has left a residue of doubt about the ra­tio­nale and func­tion­ing of the cap­i­tal­ist sys­tem, and a need for a stated pur­pose that en­tails more than sim­ple prof­its and share­holder value. How­ever, the re­quire­ment for this is not new. In an­cient civ­i­liza­tions, such ques­tions were asked too. In­deed, in an­cient Greece, in­di­vid­u­als’ tomb­stones recorded not the dates of the de­ceased’s birth and death but the thing that de­fined their ‘te­los’, or the es­sen­tial pur­pose of their very be­ing. Tele­ol­ogy was a ma­jor sub­ject, and in those days the searchers of rea­son were re­garded as lead­ers and su­per­heroes. So, we can see that the ques­tion­ing of pur­pose goes back a very long way.

How­ever, the ap­proach to pur­pose that my par­ents took is linked more closely to the ‘what’ than to the ‘why’ of a busi­ness. Eth­i­cal ap­proaches to busi­nesses are com­mend­able and wor­thy, and it is hard to ar­gue with the con­vic­tion that those firms that do not op­er­ate in line with con­sumers’ mo­ral com­passes greatly di­min­ish their chances of sur­vival. How­ever, be­ing eth­i­cal or clear about your ‘why’ does not au­to­mat­i­cally guar­an­tee con­tin­ued suc­cess in a per­pet­u­ally chang­ing world.

When we look ahead to the changes that will trans­form the planet in the next 10 or 20 years, if we truly want to be able to adapt, then a com­pany’s pur­pose needs to be framed around ‘what’ it is for as much as it does about ‘why’ it is do­ing it. One might think that some of the world’s big­gest com­pa­nies would know ex­actly what it is they do, if not pre­cisely why they do it. Yet, a first glance at this can miss what is ac­tu­ally at the heart of a com­pany’s rea­son for ex­is­tence.

I im­plore you to dig deep into that an­swer. What it is you are ac­tu­ally in the busi­ness of do­ing, and why it mat­ters? What would be the out­come if you stopped trad­ing? Would any­one care? What would you launch if your ex­ist­ing prod­ucts or ser­vices did not ex­ist? What is the wider arc you are on?

In my par­ents’ case, they were on a mis­sion to make homes more happy. This ranged from fur­nish­ings to toys, and paint­ings to crys­tals. Noth­ing was off the agenda—if there was a chance, a home would be happy, they would stock it. Why? Be­cause home is a mas­sively im­por­tant con­struct of life, and hap­pi­ness is too. This was why change was wel­comed. The changes en­abled my folks to cre­ate hap­pier homes. And they did, in busi­ness and in life. I am ex­traor­di­nar­ily proud of them for it. ■

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