Introduction

In a world where costs are rising faster than income, corporate restructuring is going to be a possibility for many enterprises. This is even more the case when there is a clear need to improve customer service and/or build new capabilities (AI being a common example). The problem is that restructuring is often perceived as a blunt instrument with a high propensity for failure. Most of us can point to examples of clumsy or failed restructures. Fortunately, modern restructuring approaches offer ways to think much more broadly about the opportunities, design a higher quality structure, incorporate elements which make the structure work (e.g., metrics, approvals, and processes), and implement with empathy and discipline. So, in this article, these contemporary techniques are explained.

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The first of these more contemporary changes is a conceptual framework: this is the idea of the future operating model. Today, rather than simply thinking about a restructure, it is important to think about an operating model. An operating model is defined as all the elements of an organisation that need to fit together to deliver your mission consistent with strategy. An organisation does not just work by structure alone, it also works by process, ways of working, technologies, skill sets, policies, measures, and incentives (to name but a few). So, the introduction of the operating model concept means that we can avoid a trap that often happened in prior restructuring: that people do a restructure and hope for the best in all the other elements. The reality is that a restructure will only work well if the designers of the new organisation have considered sufficient pieces of the puzzle to make the future model work.

Learn more about how AI will impact Operating Models here

Now, having got that conceptual reality in your head it is important then to think about what has changed in terms of technologies that are available to make change happen more effectively, and how restructuring practise has evolved to incorporate these new tools and techniques. There are now technologies available that will enable you to capture effectively your current structure in detail (including headcount, FTE, critical activities and inter-relationships), the processes deployed in the organisation, and the nature of waste that may exist.

Leveraging Modern Technologies in Restructuring

This information on the current state of your organisation should be an important input into your thinking as to the new design, because this should ideally take as much waste, friction, and inefficiency out of the processes as possible. This is particularly the case if you’re hearing concerns from customers, complaints from staff, and are faced with unsustainably rising costs. These technologies are often inexpensive, for example operating model and restructuring tools are now available to allow you to model various versions of your organisational structure and be quite clear in the cost impacts of various options. And there is a plethora of process tools to help you capture and analyse all your operational processes.

Furthermore, once you have a good operating model or organisational design, there are tools that enable you to better design the metric systems and to better deploy the organisational changes. Most sophisticated organisations now base their metric systems around Value Driver Trees, because they transparently link value to a metric, which can be linked to the organisational structure in various ways. A Value Driver Tree will help you understand the decomposition of value and ensure that different parts of the organisation are responsible for delivering value elements. There are tools now to help you capture and quantify your value drivers, as well as measure performance on an ongoing basis.

Effective Change Management in Modern Restructuring

There are extraordinary tools which will help you in the change management itself, including testing staff’s responses to the change, consolidating staff feedback, and even executing behavioural nudges which enable staff to more smoothly adopt new practises, processes, or responsibilities. A change that is designed but not implemented properly has little value, so it is important to invest in the deployment stage and use the modern resources to support the changes in behaviours needed for success.

The question now arises as to “how do you fit all these pieces together?” The great news is that there are existing methodologies, steps that you perform, that will to a high degree of probability enable you to deliver on your planned restructure. Note that none of these methodologies eliminate the need for the basics, and of course most fundamental of all is clear-eyed and engaging leadership. It has always been the case, and it will remain the case, that leaders are clear about what changes are required, why it’s important, what it means for staff, and are able to communicate all the above in a cohesive manner. Fortunately, new technologies and channels make this easier to do, and can even help you craft the message (such as, “just think about AI and what it can do to help you”).

For example, a typical restructuring program will consist of the following steps, many of which will be in parallel.

1. Scoping the area of redesign required
2. Defining the objectives
3. Developing design principles (more on that in a separate presentation)
4. Understanding critical functions in depth, designing potential solutions
5. Choosing a relevant design concept
6. Preparing organisational designs and other operating model elements to execute on the concept, and
7. Developing an implementation plan (including change management)

Execution of the plan does require great leadership, as mentioned earlier.

Embrace Modern Methods for Successful Restructuring

So, if today you are using older methods and technologies for executing your restructure, you may be missing an opportunity. That opportunity is to think more broadly about the changes, deliver earlier benefits, reduce restructure risk, and do the work of restructuring and operating model design with fewer analytical resource, using the modern systems to help you do some parts. In conclusion, given that we ask our teams to change and we ask our organisations to change, it is appropriate that we also need to change in the execution of restructuring activity.