One of the very
early speakers to my Vistage CEO peer group was discussing problems arising out
of any restructuring of the business and he made the point, very forcibly, that
the only valid reason for restructuring a business is to improve the service to
the customer.
I wouldn’t
disagree with the importance of that but with the small caveat that it isn’t
the only valid reason.
Restructuring is
like the seven-year itch. When a
business is in start-up mode the only valid reason for doing anything is to
make certain that the product or service gets into the market as effectively and
as profitably as possible.
In these early
stages the structure of the business tends to emerge according to the
experience and expertise of those involved in the start-up. Formal structure is usually not high on the
agenda.
As the business
develops and grows, it becomes increasingly noticeable that there can be
overlaps of responsibility, gaps here and there where nobody wants to take
responsibility and a glaringly obvious lack of processes and procedures.
However, events
take over and it becomes blindingly obvious that unless there is some sort of
formality then chaos and anarchy will reign.
Now comes the big
problem. What sort of structure do we want?
Very often the
classic structure of the triangle, apex upwards, with the business owner at the
top, seems to be the most obvious. It
leads inevitably to top-down management and lots of upwards delegation.
The big danger is
that the layout is frequently determined by the currently available people in
the business and this can lead to real problems in the future.
How often have I
heard the wail of distress from a CEO whose friend, in the early stages of the
business, “helped out” in some way.
Now look – ten years on and he is still there probably now in a senior position
and nobody knows what he there to do, least of all the incumbent himself.
NOTE: the worst
solution is to design a structure around the existing people in the business.
The best way is to
analyse the route forward for the business to decide where it intends to be in
the short and longer term.
This should lead
to a more considered shape for the business with proper lines of communication
and reporting together with a listing of what sort of individual will be needed
to deliver the objectives.
More often than
not he classic shape of a business is determined on a functional basis; what
functions will be needed to cover such as operations, marketing, sales,
finance, technical and so on, and then design the structure on this basis.
For obvious reasons
this can lead to a silo mentality with everyone defending their own patch and
the people it. It can work effectively,
of course, but it demands a high level of understanding and trust at the top
level.
In general the
matrix/customer led structure is better.
This divides the business according to the market sectors in which it
operates and then designs an appropriate layout with departments operating like
miniature businesses.
Whichever method
is decided upon, as long as the customer is at the heart of the decision making
process then there will be an enhanced likelihood of success.
Remember the
seven-year itch? It usually is around
the mysterious sever year mark that someone suggests that if we change the
structure things will be even better.
Beware! Remember that t’s not about the people
currently in the business. It is about
recognising that we must understand that the customer and his/her needs are
paramount and everything and everybody in the business knows and is dedicated
to that purpose.
Product, service,
marketing, sales, finance, technical all contribute to the customer led
experience. Everyone in the business has
the responsibility of delivering it.
It’s called the Pursuit
of Excellence with the customer at the heart of it all.
Without the customer there isn’t a business whatever
the structure may be.
Download my book "Leading to Success" from Amazon Kindle
Visit the Vistage UK Website
No comments:
Post a comment