If you could step outside your business and look at it from a new perspective – What would surprise you?
What you might see are “Legacy Systems” with considerable “Sunk Costs”.
A “Legacy System” can be defined as an outdated and inefficient software program that a business is still using out of habit, fear of change and the general comfort of not having to think about or learn something new. But these systems also exist outside of software – in the filing cabinet and in the daily habits of employees and business owners.
A “Sunk Cost” is an investment in a system that is already spent and non-recoverable – it is like a sunken ship that is not coming back up from the ocean floor.
These old habits and fear of change are holding your business back from growth and improved efficiency!
So, what are the actual costs of a legacy system?
If you invested $20,000, 10 years ago, in upgrading your in-house computer server, then this “sunk cost” can get in the way of moving to the cloud, (with a non-server-based application, accessible anywhere) for only $50 per month.
The reality is, that the $20,000 is already spent and should not be relevant to the decision to move ahead with an improved solution.
A non-software example may be the habits in which employees manage their daily tasks.
Do employees override the time tracking system and only fill out their timesheets once a week?
Do they perform the follow-up call to a potential customer that wasn’t scheduled?
Challenges
- The first challenge is to identify the existence of these old-fashioned and inefficient bad habits.
Identifying the legacy systems can be difficult within the day-to-day management of your business.
Here are a couple of tips to help you recognize these costly legacy systems:
Visit another business like yours. I have a client who is part of a network of 300 independent businesses across North America. It’s incredibly valuable to do a site visit and observe how they run their business. When you can observe a different way of doing things in the same industry, it improves your confidence, and it just might work at your business.
Follow an employee around as they do their job for an hour or two. There is a good chance that they won’t like it at all, but when you’re able to observe and to ask, “Why do you do it this way?” and “Does everyone do it the same way?” all kinds of insights will shake out.
- The second challenge is to change the habit once a legacy system has been discovered.
Do not assume just because you’ve determined there is a better way that the change will magically take place!
In order to obtain even a small change in behavior, we need to accomplish the following:
- Get buy-in. The person making the change needs to want to do it. It needs to be beneficial to them to make the necessary change. This is known as “voluntary behavior change”.
- Set out the specific steps and actions of the new procedure in writing in simple and complete detail. If the change can be broken down into small increments, it’s easier to make it happen.
- Create external accountability. Regular check-ins will help to support the change.
Overall, you want to change the “environment” along with the new system, software or procedure. Even with all this in place, the person responsible for external accountability must be persistent.
Relentlessly persistent.
Follow-up and reminders may have to happen 10, 20 or 30 times to make the new way “stick” – just do it. Habit change takes longer to develop than often assumed, but it will be worthwhile when the new habit kicks in.
There is so much new research on behavior change – more than could fit into a blog – but if you want to understand about how the human mind splits into the “rider and the elephant” and why that matters to your business, please reach out; paul@thebusinesstherapist.com
