Season 2 | Ep 27: The Decision to Change & The Cost of Inaction

In today’s rapidly evolving business landscape, staying ahead of the curve is essential for maintaining a competitive edge. Yet, many organizations struggle with outdated processes that can significantly hinder their efficiency and strategic growth. In a recent episode of the Risk Intel podcast, host and CEO of SRA Watchtower, Ed Vincent invites, Ashley Saville, Chief Revenue Officer at Top Line Growth Partners and Niki White, Chief Growth Officer at SRA Watchtower on to the show to delve into the critical aspects of recognizing the need for change, how to build a compelling business case, and navigating the complexities of the change process. Below we have summarized their insights, emphasizing the importance of understanding the cost of inaction, engaging stakeholders, and exploring viable options for improvement.

Understanding the Cost of Inaction and Building a Compelling Business Case

The Hidden Cost of Staying the Same

Recognizing the hidden costs of maintaining outdated processes is crucial for any organization. Both Ashley and Niki discussed how reliance on inefficient systems, like spreadsheets, can lead to significant inefficiencies and errors. For instance, Ashley shared a story about a client who suffered financial losses due to unnoticed spreadsheet errors. Niki added that these hidden costs are not always immediately apparent but can accumulate over time, affecting overall productivity and efficiency.

"Maintaining the status quo often means hidden expenses and inefficiencies that are not immediately apparent"

The impact of these inefficiencies goes beyond immediate financial losses. Niki highlighted how time and resources spent on outdated processes could be redirected towards strategic initiatives, enhancing an organization's competitive edge. This cumulative effect can hinder the achievement of strategic goals, making it essential to scrutinize current processes regularly.

Learn more about Hidden Factories in this 8-part podcast series here.

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Building a Business Case for Change

Creating a compelling business case for change involves clear communication and stakeholder engagement. Ashley shared an anecdote about a client who successfully built a business case by quantifying pain points and outlining potential benefits. Niki emphasized the importance of involving stakeholders early to secure their buy-in and ensure the proposed changes align with the organization's strategic objectives.

Both Ashley and Niki stressed that quantifying pain points and demonstrating the benefits of change are critical for gaining internal support. They suggested to start with documenting how each consequence each stakeholder might face in the near or long term future of staying the same and not changing. Use a simple spreadsheet like this example to add up the cost of each incident, the number and frequency the incident might occur (annual or monthly fine/expense) and then add up each line items to help quantify the cost of staying the same.

Navigating the Cycle of Change

Understanding and navigating the cycle of change is essential for successful implementation. Ashley outlined the steps involved, including recognizing the need for improvement and overcoming internal resistance. Niki added that building internal support is crucial, sharing a story about a company that faced significant resistance when introducing new technology, but ultimately succeeded by demonstrating long-term benefits.

Leadership plays a vital role in this process. Both Ashley and Niki highlighted the importance of effective leadership in driving change, creating a culture open to new ideas and continuous improvement. Niki emphasized that inspiring teams to embrace change requires clear communication of the vision and benefits, fostering a supportive environment for new processes and technologies.

Opportunity Cost and Strategic Objectives

Evaluating the opportunity costs of not acting is crucial for making informed decisions about change. Ashley discussed how inefficient processes could lead to missed strategic objectives, sharing an anecdote about a company that missed key market opportunities due to manual data entry tasks. Niki added that the opportunity cost of inaction could be quantified in terms of lost revenue, decreased market share, and reduced competitive advantage.

Understanding these costs helps organizations make a compelling case for change, ensuring resources are allocated towards activities that drive strategic growth and innovation. Niki emphasized that failing to act means not just maintaining the status quo but potentially falling behind competitors. By recognizing the full impact of opportunity costs, organizations can better prioritize their efforts towards meaningful change.

Exploring Options and Engaging Stakeholders

When considering change, you have three main options. 1) you can choose to stay the same, 2) make internal adjustments yourself, or 3) seek external help from a partner, like SRA Watchtower who are risk experts. Ashley and Niki discussed the importance of engaging key stakeholders in this evaluation process.

"Each option [staying the same, making internal adjustments, or seeking external help] comes with its own implications and costs, which need to be thoroughly evaluated"

Niki emphasized that engaging stakeholders doesn't have to be a dry process. Using humor and relatable stories can enhance engagement and connection.  This can help create a relaxed atmosphere, allowing stakeholders to feel more comfortable expressing their concerns and ideas, leading to more collaborative and productive discussions.

Conclusion

Understanding and addressing the hidden costs of inaction, building a compelling business case, navigating the cycle of change, evaluating opportunity costs, and engaging stakeholders effectively are crucial steps in successfully implementing organizational change. Ashley Saville and Niki's insights from this episode highlight the importance of these steps in driving strategic growth and maintaining a competitive edge. By fostering a culture of continuous improvement and embracing change, organizations can navigate the complexities of today's business environment and achieve their long-term objectives.

We have helped hundreds of Banks and Credit Unions with making the important decision of changing the status quo and building a proactive risk program. If you are looking to stop using home grown spreadsheets, manual processes or outdated software to managing your ERM function, please connect with Niki and the SRA Watchtower team today!