At a certain point within the life of an organization expansion becomes not simply a luxury but an inevitable necessity if the business is to remain competitive in its designated industry and market.
This is true regardless of whether you are in such technical fields as mechanics, electronic recycling or more intangible industries such as insurance sales or marketing.
I. Determine whether growing will require acquisition and or subtraction of an existing underperforming company department.
When a company recognizes that expansion is necessary there could be several solutions. One solution could be an acquisition. A case and point is the FedExKinko’s business model. Here you have two companies that provide well-suited services. Kinko’s offered copying services, binding, faxing, and office supplies which serviced both the business and personal market segments. Then you have FedEx which enabled people to ship large or small packages all over the world. What resulted with the merger was a streamlined process that had equal demand enabling the same customer to do business more efficiently.
Therefore this was a good merger. Sometimes a company may recognize that in order to free up the liquid capital necessary for expansion and or acquisition they need to cut off some the dead weight. If there is a department that is underperforming then determine whether a simple downscaling approach might be possible since the market can be cyclical or whether drastic measures are needed and the elimination of that department is necessary. Either way this could free up vital liquid cash for the purpose of expansion.
II. Assess the time and risk variables associated with implementation of proposed changes.
Most companies can hardly afford to be down for a couple of hours or a few days. Beyond that, under productivity or inactivity can mean that net gain for the affected quarter is drastically impacted. Not to mention the fact that major accounts could be jeopardized. This is why when workers go on strike both entities the company and the workers recognize it is a leverage tool of unions. It forces the company to sit down at the table because they can scarcely afford the resulting downtime. So if the expansion that is proposed will require significant retraining and technical upgrades then consider a phased in approach to implementation. Therefore, one might consider reserving the more time consuming portions for periods when production is generally the slowest.
III. Begin to build internal coalitions with key department heads.
It is a significant philosophical and strategic blunder to assume that department heads and personnel will simply bend to pressure of change. Granted change can be enforced from a policy standpoint and there will usually be a customary degree of compliance. But since organizations are essentially functioning bodies of people with specific skills sets the goal of the company should not just be standard compliance but rather revitalizing compliance. This type of synergy is contagious and leads to teamwork, inner-department communication and therefore long term company growth. Do you see the difference between the two? It is like the story of the little boy who was disciplined for not listening to his mother. He told her, “You can place me to sit down in the corner as punishment if you chose. And though I may be sitting down on the outside, inside I am standing up defiantly.” As a business you should want buy in from key persons.
IV. Schedule brainstorming sessions that can be done either departmentally or company wide.
Many times the best ideas for expansion, issues related to efficiency, or company operation can be found in the tacit knowledge of workers. The only way to truly tap into that knowledge is to make it an attractive proposition. So for example if you have Company A that wants to increase productivity and output by 15% by the end of the year then maybe it can challenge employee’s. Perhaps the carrot can be a company wide party at the end of the year if the goal is reached. If logistically possible a company might even consider some type of shared profit plan. Although some companies may scoff at this notion they would be wise to give it serious consideration. After all your employees are directly associated with and key factors in your overall profitability so why not engage them by offering them a piece of the rock?
V. Schedule time deadlines for completion of specific tasks related to the expansion process.
This point is essentially self explanatory. If you want to create a sense of urgency and accomplish tasks then you need a deadline for completion of action related tasks. This serves to give shareholders, key company personnel, and workers alike a sense of shared mission and purpose in the expansion strategy.
VI. Utilize electronic tools to measure ongoing effectiveness of expansion efforts.
While I won’t necessarily promote a specific electronic tool, there are a number of tools that provide measurement data related to effectiveness of expansion efforts. The particular tool that your company chooses to use will be based on preference, overall compatibility with existing infrastructure, in addition to a customized objective. A company may even want to consider internally developing a tool to measure their expansion effectiveness. I would suggest that if a company is forward thinking then they may want to start the process of expansion planning at least one to two years in advance. This gives ample time to get the technology personnel or department on board for the creation of a measurement tool. Therefore prior to that there needs to be set criteria or measurements that the company will look at to establish the achieved level of success. For example a company may propose, “If we can do XYZ more efficient and as a result accomplish ABC then we have met our goal.”
VII. Get feedback from various departments related to efficiency of new processes.
Sometimes the biggest problem as it relates to expansion is the aspect of efficiency. Does their need to be more personnel training? Are the tools that vendors said would revolutionize the business operation not meeting the standard? These are issues that cannot be diagnosed in a board room but rather on the playing field where they are being used. You would no more ask a football coach how the new helmets and running shoes are; in terms of effectiveness than you would a CEO or board member how effective a new tool or process is.
VIII. If an expansion requires acquisition anticipate any discrepancies in terms of operation procedures and establish a joint agenda and mode of operation.
Although this should be a given it is something that needs to be reinforced. How many mergers gone bad have you heard about? This is usually due to the lack of planning for the merger. Again, not to oversimplify it but in order for it to have pragmatic application I will use the example of blending two families as is the case of many household’s today. As matter of fact, I speak from personal experience as my wife and I have brought together a blended family. The philosophy she came into the marriage with was based on how her family operated independently prior to meeting me. The way that I operated as a separate unit prior to meeting her, worked for me. So when we come together the synergy, and philosophy as it relates to operation must be based on shared value. It will be habit changing, and a process of compromise on both sides. If one entity feels as though they are being slighted and undervalued they will feel like they are in an undesirable situation. One suggestion for two merging companies is to ensure that equal space is given on the board. This is not only the essence of a democracy but it creates a checks and balance. If this is not possible for whatever reason as much consideration as can be given, always serves to promote unity in the merger.
IX. Before launching a National Advertising effort to promote the features and benefits of the expansion run a smaller test market.
Most companies prior to launching a new movie, uses the coined phrase, “Now showing in select cities.” Why do they do that? Because they recognize that if the movie flops in those select cities then chances are it is not going to have the type of global impact that they anticipated. As matter of act I am a firm believer that the reason why many movies are direct to DVD because the “test market” results showed very weak audience response and they figured they would fare better by going the DVD route. In like fashion most if not all commercials undergo a “test viewing” where a small group of individuals are brought in to watch the commercial and provide constructive commentary. If the intended message is communicated accurately and the response is favorable then a conclusion can be drawn that this same commercial will have similar reaction on a National Scale. Now granted some companies gear or customize certain commercials to impact a particular market segment but the core message is the same. How this relates to business is that let’s say they have a service they are offering. If they can offer it on a smaller scale first then they can work out any kinks before expanding nationally.
X. Be willing to go back to the drawing board during the early stages of the implementation if it proves to be inefficient.
If a company has the “Titanic” mentality then Stockholder beware! That company will be willing to stick with an expansion strategy well beyond the point that it makes common or economical sense. In contrast if a company say’s we are going to give this a designated time to produce the desired results. If we find that we reach that designated time period and we are losing money, market shares, and having difficulty with implementation then let’s go back to the drawing board. That to me sounds like a smart company.
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