The run-change relationship is critical to any smart, cost-effective business. Unfortunately, many organizations become caught in outdated patterns. They become their own worst enemies instead of empowering themselves to evolve with new industry standards.
Run activities refer to all the processes that keep your business’s lights on. These include payroll software, cybersecurity systems, disaster recovery mechanisms — essentially your entire IT infrastructure. The run list is made up of your must-haves, the items that always get funded because your business can’t survive without them. For instance, if you trade foreign exchange currencies, your system must be online at all times. International markets operate 24/7, so you do, too.
Although run processes are vital, business leaders don’t spend much time monitoring them. Concerning yourself with run is seen as old-school and a waste of time. These aspects are fundamental to the company, so why deliberate over them? Just spend whatever’s needed and move on to the next thing.
But there’s good reason to deliberate. As I said at the outset, the run-change relationship is crucial. If you’re not evolving your run strategies, you risk losing money and market share.
Balancing the Run-Change Equation
The change side of the run-change equation refers to three areas: efficiency, regulatory compliance, and relevance.
Efficiency often calls for streamlining via newly available project management and data systems. Industry regulations are often revised and updated, so your organization must shift with them. This can mean using more secure technology or revising your reporting workflows. Staying relevant means having the budget to pivot as needed. Too often, businesses don’t build room into their budgets for unexpected occurrences, and they get left behind because of it.
But companies that do monitor their run-change relationships are finding that change is happening quickly. Many are beginning to look at large-scale consolidation of their operations, seeking ways to digitize and simplify everyday tasks.
Digitization means different things depending on the context, but it’s impacting all aspects of capital markets. On the institutional side, it means automating manual work and eliminating workflow redundancies. Then there’s the client element, which involves new protocols for delivering information. These include communication platforms that facilitate business-client interactions in a smoother, more user-friendly way.
These shifts are necessary and exciting, but they also pose significant challenges. In fact, the problems that arise from the run-change relationship often deter leaders from acting in the first place. Here are the key sources of tension:
1. Funding: Even when leaders are keenly aware of the need for change, they don’t have the resources to implement it. Ninety to 98 percent of a typical organization’s budget goes toward the run space. They simply lack the discretionary funds to invest in new programs.
2. Prioritization: Businesses run on predictability. Change introduces unknowns, and these can disrupt day-to-day operations. Whenever you bring in new software programs or management systems, there’s a risk that you’ll lose business in the transition. The question comes down to what’s more important: revising your run strategies for long-term sustainability or maintaining operations in the immediate future?
3. Delegation: The third challenge to run changes is the question of who will be responsible for them. CEOs often find themselves in situations in which their entire staffs are so busy keeping the lights on that no one has the bandwidth to learn and execute new programs. They can hire external vendors, but there’s no guarantee that outsiders really understand the company’s culture, methodologies, and overall goals.
Risks and Returns
Given these challenges, how do you balance the run-change relationship? You use the risk-return theory. We make risk-return decisions as individuals every day. If I enroll in a Master of Business Administration program, I’m risking a significant amount of money and temporarily reducing my income by taking time out of the workforce. However, the return is the promise of a better-paying job once I’ve earned the degree.
Businesses make this calculation each time they risk money on a new venture. The potential gain outweighs the potential loss. So it is with run-change management. But you can disperse risk throughout the organization to minimize negative impacts. Instead of overhauling all your software systems at once, tackle one department or system at a time.
Partner with vendors who have skin in the game as well. If you hire a company to assist with your transitions and its reputation is on the line, you can almost guarantee that the implementation will be done correctly. You’ve spread the risk to include more than just your organization, making success more likely.
The run-change relationship is difficult to wrangle when you’re starting with a limited budget and resources. But with consistent monitoring and incremental tweaking, you can bring your organization to a place of balance. Being able to adapt to your changing industry is the most efficient way to run.
Business & Finance Articles on Business 2 Community(95)
