“This is my favourite time in any change management project. We’ve gone live and the organisation is beginning to find its feet. It’s fascinating to watch how the new relationships develop, the bonds are created and the whole thing comes to life.”
My partner and I had just left the headquarters of a medium sized group who we had been helping through a major restructuring programme.
“I agree; these are exciting times” I concurred as we drove through their security gates. “I share your fascination with this stage of the process. It’s going to be really interesting to see how the group adapts to the new structure over the next few months. They’ve brought a lot of new people in; some of them in pivotal positions“
The group’s senior management team had embarked on a major restructuring programme some nine months previously against a backdrop of reducing turnover and profitability. Whilst similar downturns had been experienced by the majority of competitors in the sector it seemed that our group had fared worse than the majority. The group had grown both organically and by acquisition over the last 20 years and served a wide range of markets competing primarily on the technical superiority of their products.
“Yes, it’s that part that worries me most” my partner continued. “Their competitive position is driven by their technology edge which is vested in key individuals within the organisation. I’m not convinced that this will be best served by the degree of centralisation that is being proposed”
As with most programmes that are executed in such circumstances the major thrusts were towards increased centralisation to improve control and stripping out several of the smaller non-core businesses to enable the group to focus on the more profitable elements of their portfolio. The group had also recruited several executives into senior leadership positions within the group to bolster what was perceived to be a structural weakness of the existing team.
“I’m still not convinced that the leadership team really understand how their teams function within each company.” my partner continued “The primary influence in the majority of the companies is the technical expert who not only understand the products but can also relate to the markets they serve. These are the people that the teams really trust and look to for guidance not the management team.”
My partner had highlighted a key issue facing the group going forward. The restructuring programme embraced a significant increase in the level of centralised control targeted primarily at increasing profitability through better allocation of resources and leveraging the group’s position to drive down cost. This would inevitably lead to a clash with the existing culture of informal technical leadership within the majority of the group. These largely self-governing groups are the cornerstone of their competitive position.
It looks like it’s going to be an interesting few months…..