STRATEGIC SOLUTIONSAbout Strategic Business Issues thatA�ect CompetitivePerformance Summer 2005Issue #1

Structure Follows Strategy“Realigning Without a Strategy Could Spell Disaster”

Why do so many executives, especially newCEOs, want to reorganize right away? And why dothey go to the white board and start drawing boxesand placing people names in them? They think theexercise is simple and can be done one afternoonbetween meetings…or maybe even in a meeting onanother subject. Back of the envelope organizationaldesign will lead to even more chaos than they canimagine. What some executive don’t understand isthat organization redesign is as critical as strategydevelopment and needs the proper thoughtfulness.If organizational realignment or designdoesn’t start with a strategic plan, it isalready off the rails. Structure mustfollow strategy! What are you realigningfor? Just to shift people around? Howridiculous is that?! But the reality is that ithappens far more often than you’d think.And as CEO, if you don’t have thepatience for a full blown plan, then at leasthave a vision of the future so you canredesign to an aspirational image of yourcompany down the road. Be smart about itto avoid mistakes.

Like any good process this one needs to start witha clear set of organizational realignment objectivessuch as:

Drive the organization toward a customer focusReduce the hierarchyMinimize organizational boundariesAchieve deep change throughout the organizationReduce the cost structure

To determine future needs, the existingorganization needs to be assessed in termsof its effectiveness and efficiency. Thismust be done objectively or change simplyfor the sake of change will occur. At thesame time looking at current priorities andthe needs for the future must be taken intoaccount. Normally, this requires acomplete organizational audit or review ofthe structure, people and manner in whichthe business is done. This need not belengthy, bureaucratic or excessive. But thefacts need to be placed out in the openfollowed by an objective pros and consanalysis.

Dobri J. StojsicSenior PartnerThe mistakes I just referred to are the following:

• Not assessing the strategic needs of the company -short term or long term

• Aligning to no particular strategy or vision for thecompany

• Just moving people around in boxes• Not considering modern management techniques

and restructuring around older concepts -functional versus market or customer segments

• Doing what’s easy versus what’s right for thecompany

• Restructuring to fit people’s personal needs notthe business needs

• Restructuring without the benefit of proper jobprofiles making people wonder what their new jobreally is

• Abdicating organization realignment to the HRdepartment to designThese are only some of the worst ones. But we’re

all guilty of this. Now in doing it right, I’m nottalking about a big bureaucratic process. I amsuggesting be patient, do the plan or your visionproperly, then align your resources to suit the needsof the plan or the challenges of the future. The mainobjective is to do it for a reason and not randomly orin a self serving manner.

Many organizational change processes do notconsider the following two major aspects:

Identification of existing organizational synergiesacross company boundaries, andCultural implications of any changes

Done with these in mind the redesign exercise shouldtake into account any major obstacles to could affecttransition.

With all of this prep, an effective process shouldallow for a number of organizational options toemerge and be considered. Each option shouldinclude the following:

Ability to implement the strategyClear function definitionsRole alignment within each function and acrosseach functional groupClear role definition in terms of a job profile

The pros and cons of each realignment option shouldbe evaluated and compared to each other with oneoption emerging as the most viable strategically, bestsuited for the organization and its times, and one thatcan be implemented with the least disruption.Disruption is inevitable but it should be minimizedwith a stage rollout plan. Too fast is as bad as tooslow.

Structure Follows Strategy

STRATEGIC SOLUTIONS

The organizational realignment affects people’sperformance in two major ways:❏ Organizational realignment can motivate

behavior. Through the definition of jobs, thecreation of goals, the development of measures,and the use of reward systems, people can bedirected and energized to behave in certain ways.

❏ Organizational realignment can facilitatebehavior. Once someone is motivated to behavein a certain way, the realignment (renewal) canhelp them do so. By providing methods andprocedures, by placing the person in proximity toothers with whom the person needs tocommunicate, and by providing necessaryinformation, the formal organization can helppeople perform tasks better.

Taken together motivation and facilitation offerpowerful tools for influencing individual behavior.When combined in a thoughtful, systematic way theformal realignment can have a positive effect onculture and have an immense impact on theperformance of the firm.

So get your directional strategy right then get yourorganization lined up behind it. Don’t rush it anddon’t cut corners. Done properly your people willembrace the changes and be energized about makingthe vision come to life. Moreover, you will be willpositioned to achieve your goals and be a bettercompany.

Enterprise-wide Strategy

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The Strategic Planning GroupTel: (416) 366-4774

www.tspg-consulting.com

The Strategic Planning Group (T.S.P.G.) is a full service consulting firm that can provide organizations with a widerange of advice, business tools and solutions. At T.S.P.G. our focus is on helping our clients solve their complex issuesto realize their ultimate potential, whether we are assisting in a particular functional area or helping to set the overallstrategy for the organization. Our full service approach combined with our commitment to helping clients realize theirultimate potential, results in an efficient and effective approach, creating great value for our clients.We want to be more than just consultants. For us to be successful in helping you we need to understand how youoperate and what challenges you are currently facing. We want to help you achieve your goals and your ultimatebusiness potential. To accomplish this we must be trusted and objective advisors to our clients by contributing ourknowledge, experience and thinking in ways that make a positive impact.We are growing rapidly and on the leading edge of thought leadership with a goal to add value to our clients.

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Page 5

ORGANIZATION DESIGN RECOMMENDATIONSPreliminary Description of Consulting Approach by T.S.P.G.

T.S.P.G. will make specific recommendations on structure and organizational alignment. Inherent here will bethe following considerations: streamlining, productivity, efficiency and the ability of each unit to handleincreased business in line with the longer term strategy. The expected output will describe synergies andcompatibility among the various units as well as overall operating effectiveness. Among specific organizationaldesign recommendations, we will also define the kind of leadership that will be required at all levels.

Assess ExistingStructure & Positions

(Observations & Interviews)

Determine FutureRequirements

(Review Strategic Plan)

Company CulturalImplications

IdentifyOrganizational

Synergies

AlignmentAlternatives

Organizational DesignObjectives/Criteria

OrganizationalStructural

Recommendations

• Best Option• Rationale• Reporting Relationships• Levels• Synergies

IdentifyOrganizational

Options

Review ExistingProjects & Priorities

(Gap Analysis)

(Gap Analysis)

Pros & Consof Each

Implications

OVI Survey

Organizational Infrastructure Review