Restructuring or destroying?

Restructuring or destroying?

First there was diversification, then centralisation, then risk spreading, now “Core Business” rules. You could be forgiven for thinking consultants were chopping and changing just to create more work for themselves. Perish the thought, they would never do that.

So why does organisation fashion change so fast?

Does digitisation mean that barely is the ink dry on a deal before the acquisition is for sale again? Flexibility is all very well, but this?

Disentangle strategies that are for the benefit of the business and tactics that are for the manager’s benefit. When put into a new job we all want to demonstrate our prowess. Change is the most dramatic way of doing so. Great strategists come in many forms. Branson is the visible kind. There are leaders we hear very little about, too. They may be good strategists although some visibility is more or less essential if you are to rally your troops and lead them into battle.

Responsible strategists today are thinking about employment continuity, ethical dealings, sustainable behaviour as well as quarterly profits. Centralising and decentralising have very little to do with that. In fact in those companies with which I have worked reorganising generally had about as much impact as rearranging the deckchairs on the Titanic. Disruptive, time consuming, often illogical and frequently leading to even more complex matrix organisations, they suffered as much from the same problems of hierarchical control, ritualistic behaviour and wasteful political infighting after the event as before it.

They forgot the vital ingredient. As Paul Polman, CEO of Unilever put it at Temasek’s Ecosperity Conference the other day, it is people working to a purpose, challenging each other positively for the good of the business, thinking beyond the horizon to the vision beyond, taking responsibility for the whole business not just their desk, making life enjoyable and fulfilling for others so that it will be the same for them.

Everyone pays lip service to the importance of people and then treats them like old plastic bags. Your business doesn’t need re-structuring, it needs more co-operating. You can’t just chuck out the assets. You have a responsibility to be a good employer. New people are expensive, take time to learn and are not so easily found. So you do restructure, not around some mythical organisation chart but around the people assets you already have. You cherish them, develop them and fit the organisation to their abilities. They care about you when you care about them.

Restructuring is resorted to too often. It has been demonstrated that whether the engine is in the front of the car or at the back makes little difference to its efficiency. It is the design of the engine that matters. Before you start a restructure to modernise your business ask yourself:

[1] What is your objective? If it is purely efficiency it is unlikely to work. If it is only to cut short-term costs it will probably damage your business. If it is to make a better product or service for customers, you may have a point. But ask yourself how you could do that without such upheaval.

[2] What will be the cost in both financial and human terms of the exercise? Be realistic, then double the figure. You are now on the low side. Add 50% to be right.

[3] What will happen if we do not restructure? This is a forecast, of course, so make it realistic not an exaggerated horror story waiting to happen.

[4] Will our restructure give us new knowledge that will put us top (or nearer to the top) of the industry? Generally, structure and learning have little to do with each other.

A pond needs a stir every now and then. Often doing so creates confusion.

Think before you stir.