Today’s Strategic Alignment Journal post in two sentences:
A bustling neighbourhood café attracted loyal customers despite its apparent disorganization, but when a new owner introduced operational improvements, the business lost much of what had made it successful. Improving a business without first understanding what makes it work can destroy the very things that create value, making it just as important to know what to preserve as what needs to change.
I read an interesting story this week about a small café run by a Polish woman. By conventional business standards, it was hardly a model operation. Service was slow, the coffee was inconsistent, and the owner reportedly couldn’t even say whether the business was profitable. Yet the café was bustling. People knew one another, conversations flowed, and customers would stop for coffee and find themselves still there an hour later.
Whatever its operational shortcomings, the café had become somewhere people genuinely enjoyed being.
Eventually, the woman sold the business to someone who appeared to know how to run it more efficiently. The new owner streamlined the menu, trained the staff, improved operations and brought overhead costs under control. By conventional measures, these were sensible improvements.
Within a year, however, the café was empty.
The story, shared by entrepreneur Damian Fozard, makes the argument that a badly run business people love can outlast a well-run business they don’t.
Did the new owner understand what he was buying?
He bought a business that was already attracting customers, yet apparently failed to understand what made them want to be there before deciding what needed to change.
Understanding Why Something Works
Looking at the café from the outside, it would have been easy to identify the operational shortcomings. The service could be faster, the menu more manageable, the staff better organized and the costs more tightly controlled.
These are familiar areas of business improvement, and none of them is unreasonable in itself.
But the café wasn’t simply selling coffee. It was providing an experience that customers valued enough to return for, even when the service was slow and the coffee inconsistent.
The warmth, familiarity and informal atmosphere were not incidental to the business. They appear to have been central to its appeal.
What looked inefficient from a management perspective may have been contributing to something valuable from the customer’s perspective.
When business improvement begins with the wrong assumptions
When we enter an organization with the intention of making things better, we often begin by identifying what isn’t working according to established standards. We compare processes, examine performance measures and look for opportunities to improve efficiency.
But how much attention do we give to understanding what is already working, particularly when it doesn’t resemble what we have come to regard as good practice?
In a recent article, When the Problem Doesn’t Happen, Dan Rockwell introduces the importance of studying what he calls successful exceptions, occasions when a problem that normally occurs doesn’t happen. Rather than concentrating exclusively on failures and how to prevent them, he encourages leaders to examine what contributed to a successful outcome, who or what made the difference, and what could be repeated.
The café presents an interesting application of that thinking. Despite its apparent disorganization, inconsistent coffee and slow service, customers continued coming. They stayed, socialized and returned. Rather than treating those results as incidental, the new owner might have investigated why the business was attracting and retaining customers despite its operational shortcomings.
Understanding why something succeeds, even when it appears to be doing many things wrong, is just as important as understanding why something fails.
Had the new owner approached the business with that understanding, he might have made different decisions about what needed improving, how those improvements should be introduced and what was essential to preserve.
The Risk of Fixing What We Don’t Understand
There is a difference between identifying something that appears inefficient and understanding the role it plays within the wider business.
A process may seem unnecessarily complicated until we discover that it accommodates an important customer requirement. An informal working arrangement may appear disorganized while enabling employees to respond quickly to situations that formal procedures don’t adequately address.
Equally, a business may have developed relationships, practices and ways of operating that contribute to its success without anyone having deliberately designed them.
These arrangements aren’t necessarily ideal, and some may need to change; but their value needs to be understood before decisions are made about replacing them.
Consider how frequently organizations introduce changes based on what has worked elsewhere. A new system, a revised structure, a standardized process or a different management approach may be entirely appropriate in one environment and disruptive in another.
The difficulty arises when the proposed solution is evaluated primarily on its own merits, without sufficient consideration of the environment into which it is being introduced.
Something can represent good management practice and still be the wrong intervention for a particular business.
What Should Have Been Preserved?
The original owner’s apparent inability to assess profitability was a legitimate concern. A business can be loved by its customers and still be financially unsustainable. Popularity alone doesn’t guarantee survival. The new owner may therefore have had very good reasons to improve its operations.
But imagine approaching the business differently.
Before changing the menu, reorganizing staff or introducing new procedures, what might have been learned by spending time observing how the café operated, speaking with regular customers and understanding the relationships that had developed?
- Which elements of the customer experience were essential?
- Which practices were genuinely creating problems?
- What could be improved without changing the character of the business?
The answers might have led to some of the same operational changes, but introduced differently. They might also have revealed that certain practices needed to be preserved rather than eliminated.
We cannot know whether that would have changed the outcome. The story doesn’t provide enough information to establish precisely why customers stopped coming. Nevertheless, it illustrates an important risk in organizational change.
Good intentions do not guarantee good outcomes, particularly when decisions are made without a sufficient understanding of the business as it currently operates.
The objective of improvement should never be simply to make an organization conform to a preferred management model. It should be to strengthen its ability to create value while addressing the issues that limit its effectiveness and sustainability.
That requires understanding both what needs to change and what should remain. The café already had something its customers valued. The challenge was to improve the business without losing it.
Before we decide how to make something better, we need to understand what makes it work.
Strategic Reflection Prompt
When considering improvements to your business or organization, are you examining only what appears to be wrong, or are you also taking the time to understand why certain things are working and what could be lost by changing them?
I’m Giselle Hudson, The Pre-Fixer™.
For nearly three decades, I’ve worked with business owners and leaders across the Caribbean who carry important decisions largely on their own, often when problems keep returning, solutions fall short, or implementation stalls.
When I ask business owners what problem they can’t seem to solve, the answer is usually “people.” So I ask them to tell me more, because people and businesses are rarely as simple as they first appear.
I help them understand what’s really causing the problem before they spend more trying to fix it. And where needed, I help design the solution and guide their teams to put it into practice.
Get Clarity before the Fix.
What are you trying to make sense of right now?
