Why carrying on doing what you’re doing is not an option

By Mike Harris, founding CEO of First Direct and Egg

Can you feel the flame beneath you, slowly heating things up? There’s a good chance you can’t, but it’s there – whether you’re an accountant at one of the Big Four or a lawyer working for a start-up. And unless you become sensitive to that flame and react positively, you could soon find yourself thrashing about in boiling water.

This dramatic metaphor reflects the fact that in business, things are in a constant state of flux. The flame represents these continual forces of change, be they technological, generational, political, economic or behavioural. Such forces are undoubtedly pushing and pulling at your company’s business right now.

Grasp the opportunities

Happily, these forces always result in guilt-edged opportunities that you, as a professional, can grasp if you have the right mindset and approach. React and win. Stay still and burn!

When I launched First Direct 25 years ago I was reacting to the flame of behavioural change, as customers demanded more than the appalling service presented by traditional branch banking at the time. Every bank said I was crazy – that people would not bank over the telephone. History proves they were wrong.

Similarly, when I created Egg, I was reacting to technological change. And every banking chief executive in the world lined up to tell me I was stupid – that no-one would bank on the internet.

Their attitude is typical of incumbent businesses who, when an upstart comes along with a new way of doing things, generally take the view that things won’t change, don’t need to change, and that they should simply carry on.

Incumbent instincts or entrepreneurial spirit?

Throughout my career I’ve seen that when transformational change takes place – or when there’s a threat of it – people react very differently depending on whether they have an incumbent’s instincts or entrepreneurial spirit.

As a rule, incumbents think change is either not desirable; that it might be desirable but it’s not possible; or that it is possible but not possible for them. The end result is panic, as the flame gets hotter.

Those with entrepreneurial spirit tend to think: “This change is great and it is possible to react to it. We can do it but our competitors can’t. Let’s go!”

The rocky road

Incumbents are, I’d say, correctly wary about taking on the challenge of working towards a new business vision based on opportunities created by change. In my experience, a company that takes a new direction can expect things to appear to go wrong for three-to-nine months: results get worse because the entire business has been disrupted. Further down the line things pick up, and then they dip again. It’s a rocky road.

Win or lose?

My experience tells me that the game is won or lost after results have dipped for the first time, rallied, but then dipped again. This is the crucial moment. At this point only around 10% of your organisation will be on your side and you’re in a battle for the sceptics – the 80% who will be waiting to see if the new approach works. If you can convince that 80%, you’re in business and you will also defeat the cynics – the remaining 10% who are actively fighting change.

However, if you lose the battle for the sceptic majority then the business may fail.

React or burn!

It may be a rocky road, but only by reacting positively to change can you take advantage of the opportunities it creates. So take a leaf out of an entrepreneur’s book: ask yourself what forces are fuelling the flame that’s slowly heating up your industry? What opportunities are being created? Then form a new vision and a high-performance architecture that allows that vision to succeed. Otherwise, before you know it, the water might start boiling.


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