Outside the box: Prospering for the long haul
Sep 1, 1999 12:00 PM, Alan Kruglak
As a rule of thumb, human beings are creatures of habit. The status quo iseverything, and change is truly the exception to the rule. Unfortunately,encouraging change - thinking outside the box - is essential to ensuregrowth and vitality for people and businesses alike. The inability to thinkoutside the box was probably a major reason why Europe languished in theDark Ages for more than 1,200 years. History is replete with examples ofsocieties that failed to embrace change, fading away into the annals ofhistory.
One example in modern times is Florida, a haven for retirees. Even my wifesays that when we retire, we will relocate to Florida. Retired men inFlorida represent the perfect example of maintaining the status quo. Haveyou ever noticed that most of the retired men in Florida wear their pantsup to their chests? Although a fascinating sight, there is a simple reasonfor this behavior, a closely guarded secret that I will share with you aslong as you promise not to post it on the Internet. Retired men wear theirpants up to their chests because when they age, they shrink. Because mostmen are reluctant to change (or think outside the box), they never buy newpants. Welcome to the Dark Ages.
The inability to think outside the box especially applies to the long-termsurvival and prosperity of any business, especially when things are goingwell, such as they are in today's booming economy. I know from experiencehow thinking outside the box can have a tremendous impact on a business.Let me share my story with you.
In 1991, my former company was generating more than $10 million in revenuewith a respectable operating profit of $850,000. To understand ouraccomplishment, you must first know that during the three prior years, wehad crawled from the brink of bankruptcy, shrinking our debt from $3million to nothing. This was an amazing feat, making us feel that we hadachieved the American dream and could take on any challenge. We thoughtthat things were going so well that change was unnecessary. It was not thefirst time I was wrong.
That same year, at the urging of my financial consultant, we hired aretired business executive to take an outside look at our company. Why not?Wouldn't it be great to pay someone to look at your company and tell youhow great you are? That's what we did, and Ed the retired businessman cameknocking on our door.
After spending one week conducting research, Ed came to us and said,"Gentlemen, you are not as good as you think you are." Then, he laid thebig one on us, saying. "If you don't grow, you'll die." He noticed that oursales representatives were milking existing business while foregoing newaccounts because they were driven to do so by our sales compensation plan.Without new clients, our base would eventually diminish and so would ourrevenues, which would impact our long-term survival. Although it was hardfor me to accept these findings, and we engaged in colorful discourse overseveral days, we eventually did. With Ed's help, we began the slow painfulprocess of thinking outside the box.
One of the many steps we took was to change the direction of our salesefforts. Within several months, we hired a new vice president of sales whocame from the software industry. He instituted a new sales compensationplan commonly used in his industry. After modifying it, we applied the newsales compensation plan to our company, and the results were phenomenal.Within three years, our sales had doubled. Most important, our operatingprofit had increased more than 350%. Because we thought outside the box, wenot only recognized the potential danger lurking around the corner, but ourfinancial performance also improved beyond our wildest expectations.
How to think outside the box
The process of thinking outside the box is difficult to implement withoutoutside assistance, and there are generally three ways to achievesuccessful change. The first way is to benchmark business strategies fromother companies. Although this approach looks good on paper, it isdifficult to implement without a person on the inside to champion the causeand reveal the hidden details.
The second way is to hire an outside consultant. If you choose this route,be careful with your selection. When selecting a consultant, always hiresomeone who knows what it is like to make a payroll and has already beensuccessful in operating a business. It makes sense that, if the consultanthas been successful in a previous business, the consultant can apply his orher expertise to your company.
The third and most recommended way is to hire a department manager fromoutside your industry. Let this person infuse your company with new ideas.For instance, our sales compensation plan came from our vice president ofsales who, in turn, came from the software industry. Our service territorymanagement plan came from our service manager who came from Minolta Copier.Both programs were great successes.
Thinking outside the box is not easy to do, and it is fraught with danger.By benchmarking from successful businesses and using common sense, you canminimize the potential downside while maximizing the gain. Thinking outsidethe box is a philosophy I try to practice daily, but there is one thing Iknow for sure. When my wife finally drags me down to Florida to retire, Iwill think outside the box, and I will buy new pants.