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Sunday, 26 September 2010

Restructuring? Only If It Means Better Service for The Customer!

This week sees the annual Vistage UK Speaker Reception and it reminds me of the wonderful resource that we have in Vistage.

Looking back over many speaker sessions, I now realise how many of them have had a direct influence on the way that I look at business and, even in some cases, how I look at life.

One of my members recently discussed how he would like to restructure his business and that brought back a remark from a speaker that "the only rationale for restructuring the business is to give better service to the customer"".

That is a very powerful statement and brings into play many consequential thoughts.  A great deal of restructuring is done for internal reasons - we lose a key member of staff, the market changes in some way, suppliers change and so on.   Very infrequently do we assess how we deliver good service and then restructure to give even better service.

I recall a member of one of my groups who was a manufacturer of flavours and essences for the food industry.  He was experiencing Chinese Wall problems with his organisation which was, as is so common, structured on functional lines - vertical functions such as sales, exports, finance, technical, operations and so on.

Each of the functions seemed to be in conflict with another rather than acting as collaborators to satisfy the market needs.  Protectionism was the order of the day.  That meant that departments made sure that they were never at fault and a blame culture ensued with functions competing against each other instead of with each other.

He decided on a really radical approach to solve the problem.  Because the company supplied effectively four markets - savouries, desserts, soft drinks and exports, he decided to restructure on market rather than functional lines.

As a consequence, each team, dedicated to their own market sector, had sales, technical and operations people with finance and IT acting in a floating role with all the teams.

This matrix organisation had several benefits.   Firstly it served the needs of the customer in that there was a dedicated team for each market sector, who became more expert in the particular requirements of that sector, secondly, the teams started to work together because the blame culture dissipated and thirdly, the teams retained their competitiveness but in a smart way to the advantage of themselves and the business.

All in all it was a resounding success with dramatic improvements in performance and morale.

Its success is, of course, dependent on the business having a range of markets in which it operates although it is also feasible to analyse the current customer base to see if there is any way in which that can be divided into realistic semi-sectors.

Perhaps the big learning comes from the general need to get away from the standard functional organisation structure which by definition almost, contributes to introspection and protectionism.  In the end, it must be to the advantage of the customer and hence the business to root that out.

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To contact us, email to ivan.goldberg@vistage.co.uk


Kevan Hall said...

Good post.

A matrix organisation is always about the balance of power. If you could always choose the customer was more important, the geography, or the technical function etc… then we would not need a matrix, we could simply organise around the dominant interest group. A matrix is designed to balance the needs of multiple and competing priorities.

However this only works if we give the people in the middle of the organisation the "matrix middle" the knowledge skills and information to manage inevitable trade-offs between functional, customer and business line priorities.

If we don't, then the matrix will just lead to increased escalation, delay and frustration. As always the structure solves nothing is the way people work together that makes the difference between success and failure.

Readers interested in videos, podcasts etc on matrix management may enjoy www.global-integration.com

ivanjgoldberg said...

Thanks for the input Kevan. My post by definition has to be short so I don't normally go into too much detail but leave the reader to put his/her slant on it. I'm always grateful for comments especially positive ones!