Structure Follows Strategy

STRATEGIC SOLUTIONS
Issue #1

About Strategic Business Issues thatA ect CompetitivePerformance

Summer 2005

“Realigning Without a Strategy Could Spell Disaster ”
Why do so many executives, especially new Like any good process this one needs to start with CEOs, want to reorganize right away? And why do a clear set of organizational realignment objectives they go to the white board andstart drawing boxes such as: and placing people names in them? They think the Drive the organization toward a customer focus exercise is simple and can be done one afternoon Reduce the hierarchy between meetings…or maybe even in a meeting on another subject. Back of the envelope organizational Minimize organizational boundaries design will lead to even more chaos than they can Achieve deep changethroughout the organization imagine. What some executive don’t understand is Reduce the cost structure that organization redesign is as critical as strategy development and needs the proper thoughtfulness. To determine future needs, the existing If organizational realignment or design organization needs to be assessed in terms doesn’t start with a strategic plan, it is of its effectiveness andefficiency. This already off the rails. Structure must must be done objectively or change simply follow strategy! What are you realigning for the sake of change will occur. At the for? Just to shift people around? How same time looking at current priorities and ridiculous is that?! But the reality is that it the needs for the future must be taken into happens far more often than you’d think. account.Normally, this requires a And as CEO, if you don’t have the complete organizational audit or review of patience for a full blown plan, then at least the structure, people and manner in which have a vision of the future so you can the business is done. This need not be redesign to an aspirational image of your lengthy, bureaucratic or excessive. But the company down the road. Be smart about it factsneed to be placed out in the open to avoid mistakes. followed by an objective pros and cons Dobri J. Stojsic analysis. Senior Partner The mistakes I just referred to are the following: Many organizational change processes do not • Not assessing the strategic needs of the company consider the following two major aspects: short term or long term Identification of existing organizational synergies •Aligning to no particular strategy or vision for the across company boundaries, and company Cultural implications of any changes • Just moving people around in boxes Done with these in mind the redesign exercise should • Not considering modern management techniques take into account any major obstacles to could affect and restructuring around older concepts transition. functional versus market orcustomer segments With all of this prep, an effective process should • Doing what’s easy versus what’s right for the allow for a number of organizational options to company emerge and be considered. Each option should • Restructuring to fit people’s personal needs not include the following: the business needs Ability to implement the strategy • Restructuring without the benefit of proper job Clearfunction definitions profiles making people wonder what their new job really is Role alignment within each function and across each functional group • Abdicating organization realignment to the HR department to design Clear role definition in terms of a job profile These are only some of the worst ones. But we’re The pros and cons of each realignment option should all guilty of this. Now in doingit right, I’m not be evaluated and compared to each other with one talking about a big bureaucratic process. I am option emerging as the most viable strategically, best suggesting be patient, do the plan or your vision suited for the organization and its times, and one that properly, then align your resources to suit the needs can be implemented with the least disruption. of the plan or the...