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The truth about organisational restructuring

The start

The first time I experienced a restructure, was when I got a call to come into the CIO office. that was about six months after I joined the company as a team leader in IT. Not sure what the topic was, I got into his room and set down. The CIO wanted to hear my ideas about some other areas in IT. The conversation sounded valid, but I had this distinct feeling something was up. I got back to my desk to find everyone in IT were called to a meeting for an important announcement. In the meeting the CIO announced a new structure, many senior managers names had no box, and my name was there now responsible for these areas that I was asked about an hour ago

…it was my first job in a commercial business and I believed the CIO that it was about better service and clearer accountabilities for the new management team. In reality, it happened to be about cost-cutting and moving aside “opinionated” managers who disagreed with the CIO. Many months later we were still struggling to recover from the damage to trust that this restructure created.

The reality

Restructures as a way to deal with cost-cutting became particularly popular after the financial crisis of 2009.

Mckinsey, 2009 : “We suggest a better way: companies should start any cost-cutting initiative by thinking through whether they could restructure the business to take advantage of current and projected marketplace trends (for instance, by exiting relatively low-profit or low-growth businesses) or to mitigate threats, such as consolidating competitors” (https://www.mckinsey.com/business-functions/organization/our-insights/a-better-way-to-cut-costs) and the recipe was clear:

  • Combine incidentals to gain a visible effect on the bottom line
  • While reducing the number of roles take personnel actions that were avoided before
  • Cut on management

Since, I myself led many restructures, some to accommodate new technology and changes to processes and roles responsibilities and some responding to a CEO demand to cut 10%, 20%, or even 30% of operational costs. Because of my experience in that first restructure, I committed to doing it differently. I believed that transparency, inclusion and opportunities for feedback and training made a difference even if at the end of the day some people lost their role. However, we now overused restructures and squeezed the lemon as much as possible.

Organisational restructuring motivated by cost cutting (and nowadays most are), achieves less and less sustainable long term benefits. It means that in the process, we are breaking the fundamental trust we need for a productive relationship between people and organisations. We embedded a cynical view, even on the few times a restructure was really about a new business model, new ways of working or strategic alignment.

The alternative

When we move forward we have to get away from this overused, usually ineffective method or improving business results. The answer should be in creating agility within an organisation in a way that allows an on-going evolution to teams purpose, roles and responsibilities and even to the size of the organisation. This agility is what is required as a dynamic response to fast-changing conditions.

There are many aspects organisations need to create to achieve agility. However, here are my favourite three ingredients:

Teams

With technologies and competition accelerating, companies plan on shifting to a more flexible organizational model. A popular approach is adopting the concept of agile teams. The idea is that when a new challenge arises, companies using the agile teams approach allow for small teams to form, with the necessary range of skills, to seize the opportunity. Agile teams manage themselves and are fully accountable for what they do. In the not very distant future merging artificial intelligence with real intelligence will allow these smart, dedicated, in-place, and flexible teams of generalists, to direct much larger teams of remote workers and digital humans. This combination of in-person, remote, and digital workers will allow the teams to react quickly to new opportunities and quickly retreat from failures. It is clear why this concept is so attractive. These teams can be the biggest winners in the digital era.

Learning organisation

Learning organisations and the people in them learn constantly from everything they do. Continuous learning is systemically built into the organisation’s DNA and infrastructure. Everyone gets that continuous learning is expected and will be rewarded. To achieve that, communication is open and widespread, people at all levels are included in most communications and it’s assumed everyone “needs to know.” Further, senior leaders show they are learning constantly by communicating what they are learning as they learn; people are rewarded for learning with recognition, growth jobs, promotions and even financial compensation. (most recent example https://www.microsoft.com successfully making the massive shift in mindset from desktop to cloud)

Holacratic governance

Rooted in methods like Holacracy an holacratic governance is a process to support distributed decision making replacing the current way in which decisions making are vested in a management hierarchy.  The principle of holacratic governance are:

  • roles purpose and boundaries are clear and transparent to all
  • a role is fully accountable to deliver to its purpose
  • everyone in the organisation has an equal voice to suggest changes to purpose or boundaries
  • no one has the power to overrule a suggestion unless they can prove certain and real damage to the business.

The principles of holacratic governance are counterintuitive to current management thinking however are critical as part of achieving agility. (most famous example https://www.zappos.com/)

 

If you feel you are constantly being restructured, you are probably right. This method of cost-cutting is overused in most organisations. It is about time to embed true agility for long term sustainable change.

 

@Hadas Wittenberg is a change maker and a Future of Work Enabler

Stop the waste of the latest management fad

When I came out of university in the 90s, it was TQM. Then we moved into BPM and Process Re engineering, followed by six sigma and lean and lately, graduated into scaled Agile. During these many years I learned how to work in and with top down and matrix management, management by objectives and by consensus.  I Experienced the cubical office, the open space hot desking and the mandatory bean bags. I refer to all of these as management fads.

What is a management fad?

I characterize a management fad by the following:

  • Easy to understand by using principles and visual concepts that come with a clear process for management on what to do and how to use
  • Is tailored to answer the current/ latest business world problem: diversification, globalisation, digitalisation, automation, etc.
  • Claims to be universal regardless the industry, culture, size etc. hence “easy” to copy from another company as “best practice”, so you can be as successful as they are.
  • And finally, it is promoted by well recognised management experts that make a lot of money out of it.

It is true, I have been part of that system. Every few years a new promise takes over as the favorite among management consultants and executives. These management fads are usually not “new” rather they wrap century old values of money and control into a “new” something. These fads also come with new jobs.  Like the ISO auditors, Process engineers, Six sigma black belt ninjas, Agile coaches and many others.  All, there to help management ensure the “cut and paste” is done correctly. Fads are not fundamentally wrong, some have profoundly changed companies, for better or for worse. Some even introduced useful ideas that stayed longer than the fad itself. However, fads over promise and under deliver, hence doomed to be replaced by the next ones.

Why do we have these fads?

When I reflect on how come we fall for these repeatedly, I think the answer is management laziness. I can explain. We all know that the world (and business) problems are becoming significantly faster and more complex.  We also know that in most cases it requires us to:

  • Enable multidisciplinary collaboration of passionate and capable people, wanting to achieve something bigger then themselves
  • Learning, course correcting and becoming better at, and staying with it, until the problem is solved
  • Focus on creating value and reducing waste with in context and adaptive approaches

But changing values and behavior, navigating the complexity and needing effort and courage to progress is hard so we go for the fad. Think about it, loosing weight is simple: eat less, exercise more – right? So, how come we have a massive industry, billions of dollars, millions of experts and similar number of books and we are still on a promising trend for obesity? Same with management, we know the principles, but we hope that by buying into the latest we can get a quick fix.

I say to senior management, stop it. There is no one size fit all, there is no method that is better than the other, there is no consultant that knows better than you what your vision is and how to motivate and keep you and your team on track to create,  there is no end date or a magic transformation, and there is no pink pill. There is only a purpose, a desire to learn, and care for the people around you. All with limited resources and hard work.

But…!

If you need external push or specific advice, absolutely, get help. Get a (real) expert, get a good coach, get a useful tool, get a process that works. But own it, cause the change. It is your job and your problem to solve.

 

Hadas is the founder of Adaptive Futures and a future of work enabler.