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Example

Business Unit reorganization

Situation
Michael, the General Manager of a Business Unit in a large and distributed enterprise, had formed the view that the structure of the Business Unit needed to change for it to be well positioned to take advantage of accelerating changes in the market place and in the underlying technology of its core products. The reorganization was not urgent, but it was important that it took place within the next 18 months. Michael had also read that two thirds of such organizational changes fail to deliver the intended benefits. This finding was consistent with his experience during his 15 years rising up through management ranks. He decided to begin to plan the reorganization, but to only commence the formal changes within his 18 month window when he believed he had the best chance of success.

ClusteringEffectively, Michael had decided to delay the reorganization until there was a strong clustering and alignment (connection) of success factors. Some of these success factors were outside of Michael’s control and all he could do was monitor their trajectory and be prepared to act when they were as strongly clustered and aligned as they were likely to be. He had varying degrees of influence over other success factors and he used the available time to maximize their clustering and alignment. Michael monitored and/or influenced the following factors:

  • Retirement of an influential and conservative middle manager. The middle manager was likely to be neutral or negative to the reorganization and his influence in the formal and informal structures of the Business Unit was such that even if he was neutral towards the changes he would reduce the likelihood of success. The middle manager had talked about retiring at various times over the past 5 years and Michael decided to use the available time to encourage and support the middle manager’s retirement.
  • Implementation of an Enterprise Information System (EIS) upgrade. An upgrade to EIS had recently commenced and, although it was going well, Michael believed he needed to wait until it was reasonably bedded down before starting his reorganization. First, it required the time and attention of people in his finance and human resources groups that were also key to the success of his reorganization. Second, the EIS implementation activities were a potential excuse for some key managers and supervisors to not fully engage with the changes required by the reorganization. But most importantly, the EIS had the potential to deliver information throughout the Business Unit that would highlight the reasons for and benefits of the reorganization and would enable all employees to monitor its success. Michael decided to work in the background with his finance and human resources teams to ensure the EIS was being implemented in his Business Unit in a way fully enables and supports the new structure.
  • Growth of the knowledge, experience and credibility of two new departmental managers. Over the previous year Michael had promoted two relatively young engineers into management roles and had ensured that their Professional Development Plans included elements aimed at their ability to work under ambiguity and uncertainty and to develop the trust of their staff. The two managers were developing well but Michael could see that their leadership abilities and credibility were now starting to grow rapidly. He believed that after another six months or so they would be even better placed to lead, drive and refine the required changes. In addition, by then their credibility and influence was likely to be strong enough to significantly reduce the impact of the conservative middle manager should he choose not to retire.
  • Likely strong Business Unit financial results. The upcoming end-of-year financial results for the Business Unit were going to be quite strong, continuing an increasing trend for the past two years. These strong results were in contrast with the relatively poor performance of some other Business Units in the enterprise. Michael was keen to ensure that he could emphasize that the reorganization was designed to position the Business Unit for further growth, not as a cost saving measure as was likely to occur in other Business Units. The formal release and communication of the Business Unit financial results would provide clear supporting evidence for this position.
  • Gartner technology report. Although, the longer term potential of the Business Unit’s core technology was obvious to Michael, he was not sure that all of his key people could see the situation as clearly. He had been monitoring the research activities of the Gartner Group and was aware that they were finalizing a comprehensive report into the status and long term potential of the technology. From various shorter announcements and articles by Gartner, Michael was confident that their view would be similar to his. The release of the report would provide external validation for the Business Unit’s strategy and the resultant need for the reorganization.

In summary, Michael could have commenced the Business Unit reorganization as soon as he recognized the need. However, he also recognized that there was a range of interdependent contextual success factors that were not as well developed or aligned as they could be. He believed that the chances of success would be much improved if he took the time to monitor and/or influence those factors and commence the formal reorganization only when their clustering and alignment were optimal.