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How to Avoid Yet Another Restructuring


by Andrew Blum, CEO & Managing Partner

Many of our clients have recently undergone or are now undergoing a series of organizational structure changes, and despite the best of intentions, all too often they find it’s time to reorganize again just as soon as the new structure is in place.

This leads to a fundamental point: changing boxes on an org chart seldom changes anything.

We say this because, in the time it takes to vet, announce and implement a whole new structure, the initial impetus for change very often loses its relevance. So organizations repeat the cycle. This can lead to reorg after reorg and change initiative after change initiative… and a stalled organization unable to put down the mirror and look away from itself.

The dynamic of “organizational narcissism” is most problematic when it leads to a lack of external market focus and, ultimately, lack of connection to the customer.

Additionally, internal fixation often creates highly competitive environments in which leaders at all levels come to see success as getting a new position on the org chart rather than producing meaningful business results. It can become something of a game of musical chairs where getting a seat becomes a fierce battle. With each reorg, the frictions grow and become all the more debilitating.

We believe the traditional view of organization structure is at the root of the problem.

Specifically, traditional, hierarchical organizational structures – which are functionally based, geographically based, and/or product based – have inherent limitations. Most companies have recognized this and created matrixed structures of some kind to overcome the limitations, but in doing so they’ve found matrix decision-making accountabilities are foggy and things only work when goals are closely aligned and teamwork is at its absolute best.

So what’s a better fix? Lately we’ve been actively discussing the need to build more agile, networked organizations—organizations in which different empowered nodes share a mission, philosophy and set of high-level beliefs, and then each operates and thrives independent of deep, rigid hierarchy in a manner that brings critical knowledge in from the edges. This is about mindset and capability, not about structure.

Of course, creating a networked organization is easier said than done, so here are 3 “No Regrets” actions to enable flexibility without restructuring:

Unbalance the matrix structure. Nearly all large organizations today have some version of a matrix structure because there’s a natural need to coordinate functional activities with product or geographic priorities. This creates natural and often unresolvable tensions between centralized and decentralized authority, between functional and geographic authority, and so on. Often, the tension manifests in paralysis or acrimony. The answer is to make the tough call of deciding what one dimension of the structure should be fundamentally dominant and then to grant authority accordingly. Teamwork is great, but when difficult decisions need to be made quickly, it is important that there be clear ultimate accountability – this is the same reason there is generally just one CEO in a company. Unbalancing the matrix will not please everyone, but will do far more good than yet another reorganization.

Create more “soft” structures. Org charts naturally speak to hierarchy. So any time you move boxes on an org chart, you create complexity and emotional reaction. The same goes for moving lots of people amongst the boxes. But there’s another, easier way to shift resources and accountabilities in times of change: by creating and leveraging advisory councils, committees, and even temporary breakthrough teams to take on some new challenges as they arise. The key here is to develop a deep competence in structuring “soft” groups to tackle hard work – meaning they are effectively chartered and that their roles, accountabilities, and decision rights within the organization are clear. We’ve observed that, when done right, these groups often also enable the kind of cross-functional dialogues that matrix structures were initially intended to create.

OK juniors’ senior decisions. All too often, organizational structures are such that important decisions must be escalated… only to get bottlenecked at the top of the organization for extended periods of time. The reality is that there are many times when a situation requires people to improvise or otherwise act without first engaging senior leaders in dialogue or getting the appropriate authority. And more often than not, the actions junior people take without authority are directionally correct, and if not, it’s seldom the case that the repercussions of a wrong decision are worse than those of no decision. Fast moving companies make it ok for junior people to make senior decisions – under certain circumstances and within limits. Or they make it ok to ask forgiveness instead of permission. Ask yourself: When is the “Do Nothing” alternative any better?

 

What’s possible with agility
Some recent examples of what organizational agility and adaptivity can enable, from the recent news:

Walmart stores now routinely alter their inventories at different times throughout every month, selling larger packs at times when shoppers receive regular paychecks and government assistance funds, and smaller “get by” sizes when shoppers are often tight on funds.

A company called Ecovative has developed a commercially viable way to make land-filling Styrofoam packing materials obsolete—it’s ecocradle line is made from mushroom roots and agricultural byproducts like corn husks.

Android-based smartphones now hold more than 25% market share globally roughly two years after reaching stores, and Taiwanese maker HTC has skyrocketed from unknown contract manufacturer to name-brand player… and pricing.

The point: Regardless of your vertical, geography, etc., your world is changing. You can ignore or avoid the new reality, or you can respond to it. And you can respond with a static solution, or one that can accommodate more change. The choice is yours.


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