Where's the Beef?

You like to think your company changes as it grows. But it may not be changing as fast as you think. Just below the surface, every company has a few "sacred cows": policies, products, procedures- sometimes even people- lost their effectiveness a long time ago. Maybe it's a way of recording sales or a job position that made sense during the first two years of business but seems redundant now. Whatever it is, the result is the same: Sacred cows can get your company stuck in the mud.

It's a critical time to scan your workplace for the sacred cows that are hindering growth, says Tim Connor, president of consulting firm Connor Resource Group in Davidson, North Carolina. "Changes are coming very quickly today," he says. "Smaller companies have the opportunity to beat larger companies because they have maneuverability, but sacred cows prevent them from acting quickly. You need to be willing to reinvent yourself as an organization."

But how do you spot the sacred cows grazing in your midst, and when should you put them out to pasture?

Stuck in the Past
Usually the entrepreneur creates a sacred cow and is the last person to admit it's no longer working. "You'd be amazed at [the number of] organizations where the president or CEO is aware of these sacred cows, but their attitude is, 'I'm not going to change it,'" Connor says. "They're totally out of touch with reality until they start losing customers, vendors, market share and money."

Not to mention good employees who leave because they feel like they're living a real-life version of the 1993 movie Groundhog Day: They're stuck in a time warp where nothing changes. Ronald Cook, associate business professor at Rider University in Lawrenceville, New Jersey, says every policy and procedure in an entrepreneurial company should go on trial for its life every three years. "Look at [one department] one year, and look at another the next," he says. "Make processes show their worth."

Brian Saunders is founder of Edison's Attic Inc., a 2-year-old Chicago software company with 20 employees. He's working with his employees to change the company's technical support policies, which were based on how large companies operate and didn't work as the company grew. This has meant white-boarding a solution, redefining jobs and altering systems to communicate better with the company's customers. The changes have taken a ton of work, says Saunders, 33, but they should improve the bottom line. "We're already seeing a key competitive advantage emerge," he says. Edison's Attic is projecting sales of around $1 million in 2003.

Your employees can tell you which policies, procedures, products and people are stuck in the past. At least once a year, ask them what needs to change and what's holding them back. Have them list five things that haven't changed but should. Keep the survey anonymous and limited to a few questions.

Keep asking yourself some questions, too. If you were starting the company today, would you do things the same way? What already seems outdated, based on how the company is growing? Look for trends that don't make sense. "If you normally have a 10 percent turnover in your sales department and in the last year you've had 40 percent turnover, you have something going on there," Connor says. "My guess is, it's a sacred cow."

Letting Go
Sometimes you don't need to eliminate a sacred cow; you just need to update it, as Saunders did when he changed his company policies. If you're losing employees, for example, it may be that the compensation package you've offered since the company started is out of date. "You don't need to throw out the baby with the bath water," Connor says. "You might reinvent yourself only 10 or 20 percent, but you have to be willing to let some stuff go."

It takes time and energy to think outside the box, Saunders says, but step back to brainstorm better ways of doing things. Says Saunders: "The most important thing about the white board is the white. Once you white-board a solution, you're excited about the potential."

What if you need to let a person go instead of a procedure? Kaleil Isaza Tuzman learned that the hard way as co-founder of govWorks Inc. Its rise and fall was chronicled in the documentary Startup.com. As the company grew, it was painfully obvious that a co-CEO arrangement between Tuzman and co-founder Tom Herman wasn't working. Herman left eventually, and it was a difficult decision.

"The stuff you don't want to talk about is the stuff you need to talk about," says Tuzman, now president and managing partner of Recognition Group LLC, a New York City-based consulting firm that helps companies with restructuring issues. His advice? Don't procrastinate with difficult decisions. The health of your company depends on taking action now: "Understand you need to cut twice as much as you think, and you need to do it sooner than you think," he says.

Facing your sacred cows requires good, ongoing communication with employees. Be ready to explain the reasons behind changes you're making. "You've got to have confidence you're doing the right thing," Tuzman says. "What's right is not always pleasant."