We’ve all seen it: A corporation’s strategy isn’t panning out and, as a result, the executive team announces a reorganization (reorg). In the face of failed strategic change, reorgs are a common solution.
We've all seen it: A corporation's strategy isn't panning out and, as a result, the executive team announces a reorganization (reorg). In the face of failed strategic change, reorgs are a common solution. A report by the Boston Consulting Group found that in a study of executives worldwide 90% recently carried out a reorg within their company.
Since reorgs are so popular it stands to reason they must be successful, right? Often, however, that's not the case. In the same study by the Boston Consulting Group, less than half of the reorgs reported were successful. So why do so many organizations often fall into the quick fix, reorg trap?
The Brightline Initiative finds that companies tend to design strategies across multiple business units. Then when it seems the strategy isn't working, executives conclude that the organizational structure wasn't able to support it in the first place. That's when a reorg seems like the natural solution.
Like any corporate dilemma, the answer is usually more complicated. Typically, the underlying issue is implementation: While organizations devote resources to designing a strategy they usually don't devote resources to putting it into practice. A better question than, "Should we reorg?" may very well be, "How do we identify the source of our current issues?"
Brightline created a set of guiding principles to help companies avoid common pitfalls like simply designing a strategy without knowing how to implement it. The very first principle is about making sure companies understand that strategy delivery is just as important as strategy design. According to a report developed by the Economist Intelligence Unit (EIU) in partnership with the Brightline Initiative, almost two-thirds of respondents said they view implementing strategy as an operational task as opposed to a strategic one. As a result of this misconception leaders think that designing a great strategy is enough and assume delivering on it will happen automatically (when in fact, that's far from the case).
Here are a few principles developed by the Brightline Initiative that leaders can rely on when thinking about how to implement new strategies:
Accept accountability for delivering on strategy. Developing a concrete system to analyze whether solutions are on track is critical. Leaders should closely track how well a strategy is being implemented so they can proactively identify challenges when they arise. The Brightline Initiative can provide guidance for companies undergoing periods of intense change on how best to track strategic initiatives.
Encourage smart simplicity : Be bold, stay focused, and keep it as simple as possible. In a fast-paced environment and a complex business landscape, there's value in simplicity. A strategy should minimize bureaucracy. Less bureaucracy will result in faster decision making, less complexity, and more transparency. Ultimately, smart simplicity will allow teams to be more responsive to changes, risks, and opportunities.
Fail fast to learn fast—and be sure to celebrate wins. According to the EIU survey, almost a quarter of respondents cited cultural attitude as a significant barrier to strategy implementation. To foster a culture of transparency business leaders should empower teams to experiment and mitigate uneasiness surrounding fear of failure. Develop robust plans but allow for missteps. Part of this process involves clear-cut communication across all tiers of the organization. Using simple, concise language and encouraging open discussion of problem areas is key to long-term success. It's also important to recognize and celebrate "wins" by publicly acknowledging when strategy succeeds.
It's important to pause, reflect, and plan for future growth if your company isn't delivering on its strategic objectives. A reorg is not always the most appropriate solution. Rather, your organization could be failing at a more fundamental capability: strategy implementation. The key is equipping your teams with the right resources to bring strategy from boardroom banter to practical application.