From the Sponsor’s Desk – Reorganizing for Performance

In my last post, Maximizing Value, Optimizing Capacity, we looked at the challenges one organization faced in dealing with competing and conflicting demands across their various lines of business. The actions it took ensured the tactical plans fully supported the company’s strategic plans and priorities and optimized business and IT capacity in support of those goals.

In this post, we’ll look at the challenges one consultant faced trying to help a CEO manage eight different and growing companies with overlapping markets and skills. We’ll review the steps he took to position the CEO and his organizations for greater productivity and growth and the remarkable results they achieved together.

Thanks to R.B. for the details on this case.

The Situation

This CEO, a serial innovator, had developed eight different companies over the course of time to take advantage of synergistic opportunities that arose from customer comments and requests and ongoing business operations. He started out with a creative design organization, which opened up opportunities for on-line obituaries, recollections and wishes, which lead to self-written video obituaries (before death of course), and into funeral plans and services, floral orders and arrangements, online learning videos for a wide and growing range of skills and more. All the businesses were housed in their own spaces in a business park with a common cafeteria and food court, employing about 90 staff in total. However, the businesses were run as distinct entities. There was no sharing of common skills and services. There was no collaboration among the firms on common challenges and opportunities.

The CEO was concerned about the incremental costs he was incurring from running independent businesses, the demands on his time and the risks involved in using the same model, spawning more independent businesses, to tackle new opportunities. So he contacted a management consultant with a proven track record helping small and growing businesses like his implement organization and management structures to improve operating performance. A lengthy phone call and some reference checks convinced the CEO that he had found the right man for the job. Shortly after, the two met for a day at the client’s office, reviewing the current structures and key players. The CEO took the consultant on a tour, introduced him to management and staff and asked for the consultant’s thoughts and recommendations. The CEO bought the consultant’s recommendations which were then wrapped up into a contract.

The Goal

Implement a new organization and management structure that improves operating performance, increases overall staff productivity, reduces CEO time spent on operational matters and provides a platform for managing future innovations and opportunities. Any excess staff made available by the reorganization would be assigned as needed to deal with expected business growth. There would be no layoffs. Time frame – six weeks to design and implement.

The Project

The consultant proceeded to talk to everyone in the eight companies. Most discussions took about 30 minutes. The senior managers and key staff got an hour or more. He focused on five key factors:

1. The core operating processes, inputs and outputs
2. The major roles involved and the primary skills required for each role
3. Current skills and capabilities of each incumbent
4. Current likes, dislikes and opportunities for performance improvement
5. Readiness for change as indicated by satisfaction levels and aspirations.

The consultant had a conference room dedicated exclusively to the project. At the end of each day, with the assistance of a senior administrative assistant assigned to him for the duration of the project, he would retire to the conference room to map the day’s discoveries. He used Post-It-Notes on a wall full of white boards to reflect the process flows, the current organization, and current staff with their roles and skills. Lots of lines connecting processes, the current organization and staff along with notes, asterisks, exclamation points and question markets littered the available white space. At the end of the day and occasionally during the creation process, he would video the white boards’ contents to track the day to day evolution of his findings and observations. He would also invite senior managers to drop in to review progress and provide feedback. The CEO was welcome to visit any time.

Once he had a reasonable understanding of the current environment and a consensus from the CEO and senior managers that his diagrams represented an accurate picture of the current state, he returned to his office 600 kilometers removed from his client’s location. There he began deliberations on the future structure that would satisfy the project’s goals. He reviewed his video story board again and started to develop alternative solutions based on a number of criteria:

• Grouping similar activities
• Grouping similar skills
• Differentiating by product or process maturity
• Differentiating by skill availability

The consultant identified two alternatives that would satisfy the goals: a consolidated organization that would bring together all product lines in one corporate structure, group common functions and services together and place the unique elements under separate product managers and; combine all common functions and services in one company and leave what was unique to each product line as separate business entities. He then rated and ranked each alternative against the goals. The consolidated alternative achieved a significantly higher score. Returning to his client’s office, he reviewed the alternatives, thought process and findings with the CEO, then with the senior managers. After lots of discussion and a few changes to his findings and recommendations, the consultant had full agreement on his recommended alternative.

He then proceeded to fill the organization with actual people, create draft personal development plans for each manager position and develop communication and implementation plans for the rollout.

The Results

The consultant’s final report was presented five weeks after the start of his contract. It confirmed what had already been agreed to by the CEO and senior managers over the course of the project. It presented the recommended structure and the recommended placement of managers and staff relative to the core operating processes.

The new organization was implemented by the CEO and his senior management in one big bang seven weeks after the consultant began his assignment. The reorganization included the new structure, new roles and responsibilities and new reporting relationships for many of the staff. Overall, the CEO and his managers were pleased with the way the change happened and with the way the organization was functioning. There was a slight drop in some of the key performance metrics, as had been predicted by the consultant, but the numbers improved within six weeks and were 15% to 30% above plan after six months. The hiring needed to fill the identified vacancies took place expeditiously. The CEO was able to devote a much greater amount of his time to tactical and strategic matters and explore other innovations and opportunities. And perhaps the most telling indicator of success – the consultant received a large bonus.

How a Great Leader Facilitated a Successful Reorganization

The consultant succeeded because he employed a number of essential practices during the contract:

• His client was the CEO. The consultant made sure everyone he dealt with across the companies knew he was the CEO’s man. He leveraged the CEO’s passion for the undertaking and his willingness to explain and boost it to advantage. All the staff knew what was expected. They knew cooperation with the consultant was part of that.
• He made great use of the client’s physical plant. The centrally located food court became update central. It was the soapbox the consultant used with the CEO to keep staff engaged.
• The consultant used simple, informative tools to keep the management team involved and on side. He used post-it notes, story boards and the companies own online learning video technology. It was comfortable, non-intimidating media that enabled rapid change.
• He shared the journey with his stakeholders on a weekly basis, taking them through the thought process and interim conclusions and building their ownership of the findings and recommendations.
• Because the consultant’s office was in another city he used the senior admin staff as his eyes, ears and mouthpiece on the ground. In essence, he was ever present even though he was 600 kilometers away.
• He kept the engagement short. If he had added a month or three to the contract, he could have added more detail to the report, more consultation with the CEO and his management team, supervised the transition in person. But he made it known early on that his role was one of facilitation. The changed belonged to the CEO and his management. They needed to run with it as their own. And they did!

So, if you find yourself in a similar situation, leverage all those practices you know have been proven and add value. Engage the affected stakeholders right up front. Do things quickly, in four to six week intervals. And measure and report how you’ve done. Finally, put these points on your checklist of things to do in future endeavours so you too can be a Great Leader. And remember to use Project Pre-Check’s three building blocks right up front so you don’t overlook those key success factors.

In the interim, if you have a project experience, either good or bad, past or present, that you’d like to have examined through the Project Pre-Check lens and published in this blog, send me the details and we’ll present it for others to learn from and comment on.

Thanks

Don’t forget to leave your comments below.