In my 20 years of working at large organisations, I can’t pinpoint a time when the company wasn’t going through some kind of reorganisation: either designing the new structure, executing team and leadership shifts, or embedding a new operating model on top of a recently reorganised set of teams.
Organisation is key to corporate success, particularly once companies or departments reach a certain size. Org charts help explain to your team, as well as your internal customers, how your department works and who is accountable for what. However, most reorganisations fail to deliver significant improvements, and many add more problems and cost that they address. Why is that, and how do we do it right?
Is it time to reorganise?
A reorganisation takes significant effort and introduces disruption and risk. For the time your business is reorganising it becomes inward-focused, as opposed to market and customer-centric. Your energy is directed away from your sources of value and revenue streams. Think of a reorganisation as if you were a crab moulting your old shell: there may be growth in the future, but you will become slow and vulnerable in the process.
Back in 1957, Charlton Ogburn Jr. wrote: We tend to meet any new situation by reorganizing; and a wonderful method it can be for creating the illusion of progress while producing confusion, inefficiency, and demoralization. The first question must, therefore, be: is a reorganisation the best solution to the problem at hand? Many times, much progress can be made by adopting new processes, tools and frameworks without necessarily impacting the structure of the businesses. This is particularly true for functions that can best benefit from Digital transformation: your IT, Marketing, Sales and Services teams can transform themselves beyond recognition without necessarily having to impinge on organisational boundaries. Capability development should be your default, not reorganisation.
How to reorganise
If you decide that your company will benefit from reorganising, what is the best way to ensure it will be successful and pain-free?
Most people will start with a view of the existing organisation as an org chart, and then move the boxes and lines in a semi-iterative fashion until they’re satisfied or exhausted. To make matters worse, often there are overt and implied constraints, such as a preference to minimise the impact on a certain population such as senior managers or an ambition to reduce one-off costs or PR impact.
The ways of working of the Digital work can be of much help when starting a reorganisation. Start with discovery: explore your people – their roles, skills, talents and how they go about doing their jobs. Focus particularly on identifying people who have found creative ways around existing roadblocks, as well as examples of unused capability such as software features. Document your processes as they exist, which will be different to how they were designed. Identify bottlenecks and underused capability. Most importantly, spend a good amount of time understanding your company’s culture – what makes people choose to come to work to your company each morning? You won’t want to impact that when reorganising.
Give some thought at this stage to insourcing, outsourcing and governance as well.
- As technology becomes ever more central to how companies operate, you must consider insourcing all/most of it as a way to create a competitive advantage.
- In order to achieve speed, agility and resilience, you must explore ways to make your governance robust and resistance to shock. This tends to involve multidisciplinary teams replacing stage gates, short low-risk decision periods, and guidelines and principles instead of boards and formal approvals.
Redesign for Agility and Resilience
At first, Agility and Resilience may appear to be opposed to each other. Agile is all about decentralisation for speed, and Resilience has traditionally been associated to centralisation and command-and-control.
This is a false dichotomy: Resilience is a feature of a well-designed Agile organisation. In fact, such a company is much more likely to survive changes in its environment than a rigidly centralised one. Agility is not just about speed, it also includes balance, strength, energy and coordination. How do you combine Agility and Resilience?
- Promote Agility by ensuring your new organisation incentivises innovation and experimentation. Give people the tools, skills and autonomy they need to take ownership of their outcomes and shoot for the stars.
- Bring in Resilience by adopting consistent strategy and structure, delivered through clear principles, KPIs, tools/frameworks and open communication. Invest in a strong and sustained culture, values and mechanisms to identify and reward your best talent.
A process to reorganise well
- Focus on the strategy: pain points may have identified the need for a reorg, but you must design an organisation for the long term. Don’t just address the visible cracks, architect a new building.
- Do a very accurate inventory of your starting point. Do you think you know how your company works? Think again. Start with the people, their skills, their ideas and those golden nuggets of creativity where they have solved a problem your last reorg inadvertently introduced.
- Be brave at this point and do a candid evaluation of your leaders. Are they the right people to lead the organisation into the next phase? Very frequently leaders insulate themselves from the impact of organisational change by being involved in the design. Some times, you’ll find you need them to develop their skills or make space.
- Start by choosing from a number of standard templates, and try to test them in increasing amount of detail under realistic scenarios.
- If at all possible, find a way to actually pilot your new organisation. Select a small business unit or a geography. Use real-world data to evolve your design.
- Remember to go beyond the org chart and include people, processes and culture in your design.
- Create well-defined roles and ensure the process to fill them is open, transparent and based on merit alone. Start with your role and those of the C-Suite.
- Lead by example. Ensure you model all behaviours, principles and participate in processes as designed. Take feedback and adapt them if needed – don’t stick to the blueprint just to meet a deadline if the solution doesn’t work.
- Be very vigilant about culture and mindset. People may not understand, less always fall in line with your design. Make sure the change is embedded and not just skin-deep.
- Collect and communicate data to show how your company is benefitting from the process. Don’t talk about how many teams have changed, but how change is allowing them to reach new heights.
- Ensure transitional risks are managed ruthlessly. Particularly those impacting your long-term success, such as loss of talent. Keep your best people happy throughout the process and give them a chance to shine.
Reorganising your business is not a silver bullet, but sometimes it is the right action to take. Combining reorganisation with modern business practices such as Digital ways of working, Service Design and Agile processes can be the ticket to business stardom and success.