Change occurs constantly in the business world. Another constant: Change creates uncertainty, which is always unsettling for people. Your stakeholders—both internal and external—are no exception. Investors in particular can be deeply unnerved by change, because their money is quite literally at stake. How you communicate through periods of transition is critical, and the risks of mishandling them are considerable. Change that becomes too disruptive can damage your credibility and cause you to lose market share. Employees are generally more tolerant of change than external stakeholders, but mishandling transitions internally can even cost you valuable team members.
Some changes are planned, while others are completely unexpected. This post deals with the former—as well as proactive communication strategies for positioning change as positive, or at least ensuring a smooth transition.
3 Types of Change – And Strategies for Successfully Navigating Them
Below are three examples of major change at the corporate level, drawn from SPINE’s history of helping clients navigate periods of uncertainty through their marketing, corporate, and investor communications. For each situation, we share some of our strategies for helping our clients achieve successful outcomes.
- Leadership Succession
Over the years, the topic of succession has arisen fairly often in our work with financial firms—particularly asset managers. Usually, it comes up in the context of founders passing the torch to the next generation of leadership. These situations can rattle investors, who understandably fear they won’t achieve the same returns with someone different managing their money—decimating funds and even destroying firms as a result. The term we often hear is “key man risk,” the idea that the fate of a business is too heavily tied to one person. PIMCO and its founder, Bill Gross, are a prominent example from recent years. Gross ran the firm for more than four decades and managed the PIMCO Total Return Fund, once the world’s largest bond fund. After his abrupt departure in 2014, the fund saw massive outflows, with assets dropping from about $200 billion to about $74 billion as of February 28, 2017. To minimize disruption—and outflows—it is best to begin planning for succession well in advance. (A case can be made that PIMCO could or should have planned better for Gross’ eventual departure, although the precise timing came as a surprise.) When we work with a client planning for succession, we recommend a multi-pronged approach to communications that may include strategies such as:
- Focusing on attributes that enable the firm to generate consistent returns no matter who is in charge.
- Providing greater exposure to the team that will ultimately lead the firm.
- Sharing details as soon as possible; transparency reduces uncertainty.
- Corporate Merger
When two companies join forces, customers and employees alike are bound to have big questions:
- Customers want to know how the merger will affect the products/services they use, as well as their overall relationship with the company.
- Employees want to know the company will have a place for them in its new incarnation, and how the organizational structure will change.
We help clients assuage both internal and external concerns through proactive communications that set expectations and eliminate surprises. Beyond that, we advise clients to make sure all stakeholder groups understand how they will benefit from the merger. Again, transparency and detailed explanation help eliminate uncertainty, so we recommend increasing customer outreach and holding frequent staff meetings during the transition.
- Increased Capabilities
As businesses grow, they often expand into areas that fall outside the core competencies they were historically known for. By way of example, one of our clients began as a logistics company and ended up adding eCommerce IT services. If you’re launching a product or service that’s substantially different from your current offering, you must be careful to do it in a credible way. That means taking a measured approach that ensures your stakeholders understand your product line logic:
- Externally, we work with clients to develop messaging that explains the new offering in the context of their overall mission. Often we update core components of the branding system to communicate the strategic shift in a visual way, or at least signal that positive change is occurring.
- Employees will be the ones to execute your vision, so we recommend involving them early in the process to ensure their buy-in. Before the messaging and branding are launched publicly, we work with clients to educate staff members, help them internalize the changes, and build excitement.
Facing one of the situations above, or another significant transition? Contact SPINE now for help communicating through change—and positioning your business for long-term success.