PRACTICE MANAGEMENT

Changing the way we do business

The idea of change can fill us with dread. But embracing current industry changes will help you realise a new vision for your business.

BY RUSSELL HUTCHINSON

Business is hard, change is harder. To run your own business takes a special combination of skills. You had to learn many of them in the crucible of experience. In the insurance industry, perseverance, resilience, and in sales and advice – a willingness to speak uncomfortable truths to clients strongly enough that they listen, but not so loud that they close their minds. These conditions tend to create a certain kind of person – opinionated, self-sufficient, and good with people. I like insurance people. I also know that having found an approach that works, it can be darned hard to change.

Change is harder because you inevitably end up breaking things that work before you rebuild them in new ways that work better. You don’t want to go around breaking things all the time, or you’ll never get anywhere. Anyone who has ever come back from a conference with a great idea to change their business and discovered that in six months of trying that the idea is now just a memory, knows exactly what I am talking about. People that you work with don’t want to change either – they have their ways – and they can’t see how good it would be if you managed to implement the change you want. All they see is the work. What we do right now is fine, they say.

Change is also necessary. The context for our businesses is changing, so we must too. The most important aspect of that changing context is our market: potential clients, closely followed by the legal and regulatory requirements for our sector, and then by the changes that our partners in the value chain (insurers and other important suppliers) are making in their businesses.

As my kids are just leaving home, I have been doing a lot of reflecting on where the time went. Gradual changes around me have been thrown into sharp relief. Both my oldest kids can drive, and drive well, while it seems like only yesterday that they needed us parents to help them

“Few people are objective in assessing their own strengths and weaknesses – which is one good reason to get someone else to take a dispassionate look at what you are doing in your business.”

“The context for our businesses is changing, so we must too. The most important aspect of that changing context is our market.”

do everything. The way the marketplace changes is just like that. Very gradually, then seemingly, all at once. We get an opportunity to get ahead of marketplace changes if we read and respond to the small changes as they happen, we get a difficult, hard to swallow serving of change if we wait to be hit by it all at once. But whenever it comes, one must change.

If you have ever struggled to make effective change in your business then you should be interested in good governance. If you weren’t expecting that it is probably because most of the talk about governance at the moment is framed in a conversation filled with “you must” and “you should”. It is true that certain minimum standards of governance are expected by the regulator for the industry as new advice law is implemented in March next year. But how much upside you enjoy from that will depend on how much you really want the change. There are good reasons to want good governance. A colleague who runs an advisory board business gave me these key facts from research about the implementation of good governance:

67% revenue growth was enjoyed over the three years following the establishment of an advisory board

5.9% productivity improvement was experienced over the same period

24% higher sales were made by companies with advisory boards compared to those without over a 10-year period

86% of leaders said advisory board members’ role was a significant factor in their success.

Why do boards have such an effect? If you do not run a board process it is easy to see the costs and the hassle, and hard to see how they can help much. Easy to think that you’ll spend ages explaining your business to people that don’t know much, hard to see how they can really help. They aren’t even going to be doing much of the work! Just a lot of talking, writing reports, and keeping another set of records.

Even having just one other person involved can help a lot. Even having just one governance meeting each year can provide valuable, quantifiable benefits to your business. How does that happen?

The answers can perhaps be found in habits research. Habits are hard to form, and hard to break. Healthy, productive habits are particularly difficult to change. An author, Gretchen Rubin, has been collating and summarising research into habits and change for some years now, and published her results. In her view self-knowledge – knowing what kind of manager you are, for example – helps to enable change. You will know what changes you find easy, and what you will find hard. If you know in advance, that, say, people management is a challenge, you may seek special help in making changes in that area. But how do you get self-knowledge? Few people are objective in assessing their own strengths and weaknesses – which is one good reason to get someone else to take a dispassionate look at what you are doing in your business.

But there is more: monitoring, scheduling, and accountability are identified as three of the pillars of creating a new habit – or in our case, change in the way business is done. Once again, governance is built to create an effective structure for exactly these things. Rubin’s research also identifies slippery slopes that lead people to fail in acquiring a new habit, or skill, such as looking for loopholes, distractions, and the role of inconvenience and convenience. Designing new management processes and ensuring their effective implementation meets exactly the same challenges. Another person can help by spotting the gaps in our planning, perspective, or selfmanagement to enable achievement of otherwise unattainable goals. That is how businesses with advisory boards achieve outperformance. Although it may be a requirement of the new regime, I think I could add a further item to Rubin’s list: willingness. The forced change looks like an arid and unforgiving place to try and grow a new business. The willing change, one motivated by the desire to realise a new vision for the business – now that looks like something where “new” could grow into “great”. A

Russell Hutchinson is director of Chatswood Consulting and Quality Product Research, which operates Quotemonster.