How reorgs destroy value and what to do about it

How reorgs destroy value and what to do about it

I hear from lots of clients how they're going through reorgs. The pattern is predictable. A new CEO arrives, they look at the world, often through the expert eyes of a big-5 consultancy firm, and deem the organisation to be poorly suited to the market it's trying to serve. They decree a reorg - a reorganisation of that business. Also known as a transformation. Sometimes digital transformation if you need it to sound sexy.

Common symptoms of the reorg:

  • Progress stops – while everyone waits to learn their fate
  • Good people take IP with them – not in the sense that they steal it, but that knowledge is just lost
  • Momentum grinds to a halt – all that energy gained from engagement and team building goes
  • New leaders insist on fresh starts, strategic reviews and wheel reinvention

People who survive reorgs wear them like stripes in the military. It’s a badge of honour to survive not only with your job, but also with a programme intact and momentum preserved. And rightly so – as it’s very hard to emerge unscathed.

My view is that the reorg is fundamentally out of step with the way the world is moving. For all their language about putting the customer at the heart of everything they do, CEOs who commit to the reorg are actually putting the shareholder at the centre of what they do – and the shareholder is embodied by the City, in our case the City of London. Announcing a reorg says: “I am the new gun in town. I am a man/woman of action. I have strong instincts and a clear plan, and I will shake things up a bit.”

Some level of occasional re-organisation is necessary to keep aligned with the market, but given the market is changing so very fast these days, if you expect to reorg to keep up, then you’ll be in doing it constantly, which means a persistent presentation of the above symptoms.

The right alternative to the reorg is to organise the business authentically around the customer. I worked with a senior leader in a UK bank not so long ago and when asked how the customer journey redesign work we were doing fit into the bank’s long term plan, he said he wanted all work to be done like this. Multidisciplinary teams working together to continually improve the customer’s experience of the service, with the power to make front stage interface and backstage organisational changes.

Not only is this better and easier to influence, but employees like it more. One participant said of this new way of working: “I used to spend all my time in meetings that didn’t matter. Now I spend all my time in one meeting that does matter.”

Wholesale reorgs and endless transformations are destructive and so often counter productive. We help clients organise themselves around their customers, using new agile, multichannel, collaborative working methods, combined with lifecycle infrastructure and tooling, which reduces this need for wholesale reorgs.

And if you don’t believe me, here is Chris Pratt using the power of dance to help make similar points, more entertainingly than I could ever do. And here is the wonderful gaping void making the point, as ever, more succinctly than I could ever do.

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Anne van Lieren Blogger
Lead Service Designer

Anne van Lieren

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