Organizational Restructuring

"Today's environment is beginning to threaten today's organizations, finding them seriously deficient in their nervous system design.... The degree of coordination, perception, rational adaptation, etc., which will appear in the next generation of human organizations will drive our present organizational forms, with their clumsy nervous systems, into extinction." -Douglas Engelbart, 1970

The observation that the American inventor, Douglas Engelbart, made in 1970 may shed some light on the cycle of restructuring that most companies find themselves in. In the many years that I have worked in companies, big and small, change has meant one thing for most of the time -> Organizational Restructuring.

How many of us have been in these situations? For many of us who have been long enough with the same company, we know that new management seem to feel like they need to “make their mark” by changing people around and restructuring the organization. Who has heard or repeated the comments: "Here it comes again!" or "Shifting the deck chairs on the Titanic again?"

In industrial design, experts know that "form follows function"; business schools teach "structure follow strategy". So why is it that some companies tend to be in a never ending cycle of restructuring? Is strategy changing that much? Are the fundamentals of the business changing so much that you need to change the organizational structure?

The top reasons why organizations change:

• Innovations in product, technology, materials, work processes, organizational structure, and organizational culture
• New and shifting markets
• Actions of global competitors, work force values, demands, and diversity
• Regulatory and ethical constraints from the environment
• Individual development and transition

These are all solid reasons for change. However, organizational restructuring in these situations should only follow after the BUSINESS STRATEGY has been changed - for the very same reasons. Very seldom have I seen an Organizational Change process that does enough due diligence around the strategy of change. Such a due diligence process is proposed below.

Getting to effective Organizational Restructuring.

1. Assess the impact of internal and external factors causing change on the business strategy.
2. Commit to a new business strategy to address the changes in market, technology, regulations, etc.
3. Assess as-is business processes to determine the impact of change on the organization. This will include the impact of process changes on existing roles. This will define the ‘gaps’ in existing roles which will make any structural changes effective.
4. Design/ align roles to support the changes in the business.
5. Develop and execute an organizational change management plan to address and define the drivers of any structural change, as well as the impact on the business of the change options.
6. Define performance metrics. Measure before and after the change to ensure that the change is effective.
7. Understand the cost of organizational change.