Table 5-1

Areas to address in a reorganization when choosing between several options

Table 5-2

Potential top-down options

In both of these approaches, if you need radical change, there are benefits in seeking external expertise and innovative ideas. You might turn to colleagues in other organizations, academics, the literature, or consultants who may have seen different approaches that could inspire your future design. No matter who or what you consult, any design needs to be tailored to your organization: we strongly advise against the copy-paste approach.

We offer examples of both approaches below. In Amelia’s case, she is taking a top-down approach (as most substantive reorganizations do). But in light of the results of steps 1 and 2, a bottom-up approach would be worth considering, because only parts of her organization work badly.

Pitfall 4: Going Around Difficult Leaders

It can be very tempting to try to sidestep difficult leaders. As one of the executives involved in a reorg told us, “We needed more support along the way from our senior stakeholders and to bring them along the journey, but instead, we did it in isolation from them, as that was what we were primed to do.” But avoiding difficult stakeholders is always a mistake. John tried to do it, and what happened? One of those difficult leaders found out, and Amelia and her team were already on the defensive. This always happens: you think you can keep your plans secret, but the office rumor mill is too strong for you.

As the saying goes, it is better to have leaders in the tent than outside. It makes the discussions more difficult, but including everyone has two clear benefits. First, leaders see that their opinions are listened to and respected, which is more important than the final result (which may or may not be their preferred option). At the end of one particularly controversial reorganization, we were told by one business leader, “I did not agree with the design we decided on, but I cannot fault the process that got us to this decision, and I do feel that all my concerns were heard.” This was one of the highest pieces of praise we have received.

The second benefit of including difficult leaders is that you may learn some things that none of your fellow travelers would have pointed out. In doing so, you may develop a greater appreciation of the value of these leaders. As Nancy McKinstry, the CEO of Wolters Kluwer, told us: “I was quite surprised by which leaders succeeded in the reorganization. They were not always the ones that I thought would succeed at the beginning.” Of course, some of your team may be so allergic to change that you and they need to part company—but the time to do this is at the next step. Alienating them now will add no benefits.

Rob Rosenberg, HR director of DHL Supply Chain, told us, “Regardless of org structures, unless leaders begin to trust one another and take risks and chances openly with each other, it does not matter what blueprints you put in organizationally; they won’t work. I recall having to be quite patient in working through blueprints and rounds and rounds of discussions with leaders, but this is now proving to be very useful, as they bought into the decisions we made and felt part of them.”

In our experience, some of the leaders who are most antagonistic to an organizational change at the start of a process can become the people most committed to it later on when their input has been considered or their positions are changed. By definition those leaders are engaged in the process (far worse are leaders who are passive through the process) and, if properly listened to, can become hugely supportive of the change.

. . .

We will now share a few cases that illustrate winning ways to solve the pitfalls highlighted above. For the first pitfall—that is, skipping steps 1 and 2—there is a simple answer: don’t do it!

Winning Way 2: Cover People, Process, and Structure

The principles of this book cover both large and small businesses. To illustrate this, take the case of a family-owned general dentistry company. The head of this business, Maryam, bought a predominantly private, two-surgery dental practice in her hometown. The practice that she purchased had a firm base of satisfied patients, but it was losing money. There were two other dental surgery practices nearby, limiting the degree to which she could attract new patients and therefore grow revenues.

After investigating the accounts and meeting with the staff, Maryam concluded that the efficiency of the business needed to improve. However, she was adamant that, at the same time, the quality of the patient care should not be affected and, in fact, could be improved. Maryam set a target for profitability using benchmarks of similar practices, kindly provided by her accountant (see step 1). She then diagnosed three main issues behind the underperformance: poor utilization of staff (there were large gaps in the dentists’ days), overspending on unnecessary stock, and a lack of communication with patients outside their appointments, leading to lengthy periods between patient visits (see step 2). Addressing the patient-communication issue would not only improve revenues but also improve patient health.

Fortunately, one of Maryam’s friends, Andy, had experience in successfully turning around the performance of his own dental business. At lunch one day, Andy explained to Maryam how he achieved this. First of all, he established the position of an office manager (someone he trusted: his wife) and had all the receptionists and nurses report to her. He also introduced a hygienist, who was able to pick up on the practice’s growing workload, delivering simple procedures more economically than the dentists could. The dentists were then freed up to focus on procedures that were more complex. These measures, Andy assured Maryam, are now regarded as best practice. Andy had recently attended a national conference in which he learned that all the best dental businesses are implementing these improvements.

Should Maryam implement Andy’s best-practice organizational model? Certainly, it worked for him. But Maryam had her doubts. Although the primary aim of any dental practice is the care and treatment of the patients, it is still a business and needs to survive. Andy’s practice was three times the size of her own, focused mainly on a public-sector contract, and was facing growing pains rather than efficiency problems. Were Maryam to implement Andy’s advice, there would be no improvement to how her staff worked. Such a reorg would only create unnecessary hierarchy and envy and raise the cost base.

Instead, Maryam decided to develop her own ideas according to the particular issues she had identified. She developed an improved process for booking patients, working with the receptionist to help him understand what is required (a process and people solution). This improved utilization, but not sufficiently to close all the gaps in the dentists’ diaries. She therefore reduced the hours of the dentists and nurses (closing one of the surgeries for two days a week) to make better use of resources (a people solution). Maryam next turned her attention to costs. She changed the process for ordering stock, requiring her personal sign-off for orders above certain volume and price (process). And she trained the receptionist and nurses to locate and utilize stock already in the practice before reaching for the order book (people). Finally, with regard to communications with patients, she updated the receptionist’s role description and set clear expectations for calling patients (this last step, alone, is a structure solution).

With these changes, Maryam managed to triple the profits of the business in just one year and improve the quality of treatment and care for her patients (through better communications and an increase in regular checkups). She also improved the capabilities of her staff through training. Maryam is now buying another, similar practice to expand her business.

Winning Way 3: Explore Different Options

Our work with a European water company shows the benefits of coming up with more than one solution to the challenges leaders face in step 2. François, a seasoned water industry professional, had just been appointed head of field operations. As he surveyed his new organization, he realized that it was made up of a disparate patchwork of legacy organizations, each with its own structure, ways of working, and culture: a wastewater networks team, where many activities were outsourced to contractors; a clean-water networks team, which also used contractors, but carried out many more activities in-house; and a maintenance team, responsible for maintaining the water treatment works, sewage treatment works, and pumping stations. As an added complication, the clean-water networks team in particular was heavily unionized. Steps 1 and 2 had identified a 10 percent cost-reduction challenge, together with the need to improve management capabilities to run operations. François was used to driving efficiencies: he and his team already had ideas on the changes required. However, he wanted to make sure that his group considered a full set of options, that the complex process of developing an organizational concept was well managed, and that there was an appropriate forum for ideas to be discussed.

A team was therefore put together with managers from each of the different business areas, supported by us and a few other consultants. By holding discussions and brainstorming sessions with leaders and experts from the different business areas, the team generated a long list of potential bottom-up organizational changes. We even met with a union official to hear his ideas for addressing management and contractor inefficiencies. Each idea was explored in detail to uncover how it would work and what benefits and risks it would bring. Each week, the team would bring the potential organizational changes to a decision-making committee, which would decide which of these suggestions to take forward, which to discard, and which required further analysis and investigation before a decision could be made. The committee comprised not only the head of field operations but also the leaders of other organizations (water production, waste process, and capital projects), as changes to field operations would also have an impact on these three other organizations.

The ideas selected by this process included merging the management of the clean-water and wastewater network teams in four regions (versus the original six for the previous separate organizations). The frontline staff, of course, had to remain separated (you cannot start interfering with clean-water pipes after working with sewage!). However, there were significant management savings. To make this idea work, the process for planning, scheduling, and delivering work also had to be standardized across clean water and wastewater, and managers who came from one business had to be trained in the peculiarities of the other. In the maintenance team, too, the management of clean-water and wastewater activities, previously separated, were also merged, leading to significant savings. Again, process and people changes accompanied the structural changes.

Other ideas included removing a whole layer of middle management in the network teams (with savings partly reinvested in a training course to improve the quality of frontline managers); the amalgamation of two teams that were both focused on regulatory water testing; reducing the management numbers in the maintenance team to reflect better spans of control; merging the work of technicians in the maintenance team and those working in sewage treatment works; and improving the efficiency of clean-water network technicians through process improvements. These two final ideas were piloted in one region to confirm that the savings identified on paper could be delivered in practice. Given the high degree of unionization in the clean-water networks team, and the management’s concern about reducing the people cost of the change, savings in this area were achieved by insourcing other work previously carried out by the contractors. This also required a rewiring of the process and the retraining of staff.

One important point was the close involvement of HR in this process. Because the company was based in the European Union, we had to follow EU employment legislation (the regulations, incidentally, do not prevent you from making such changes; they just reemphasize the need to follow a proper process) (see appendix C). And because the need for savings was urgent, we worked quickly, delivering end products in the form needed by HR for consultations (whether this was an updated role profile in Word or an organizational structure drawn in a particular way in PowerPoint). In this way, we avoided creating masses of PowerPoint presentations that HR would later have to translate into the required formats later.

As with the majority of reorganizations—especially those that include significant savings, the loss of people’s jobs, and shifting power of leaders—progress was not always smooth and many of the conversations were painful and required substantial time and care from leaders. Displaced employees were offered substantial support in finding new roles outside the company. Occasionally, operational emergencies prevented leaders from attending a meeting. Sometimes, follow-up meetings were required outside the decision meetings when agreement could not be reached. All this notwithstanding, the weekly decision meetings provided a focus for the debate and decision making; managers fully led the work, and the handling of improvement ideas one at a time—rather than wrapped up into one overarching concept—kept the discussion focused.

Winning Way 4: Have the Leadership Debate Now

The importance of the leadership debate was made very clear to us by work we did together for a global media company. This company was navigating a seismic shift in the industry: from publishing—a high-margin but declining industry—to software, a lower-margin but fast-growing business. The experience not only showed the importance of leadership engagement but also illustrated how to identify issues quickly across processes, people, and structure (step 2) and the importance of developing different options, this time from the top down.

The company had grown through acquiring many smaller, local businesses. As with many media companies, the prevailing belief was that this was a purely talent-driven business and that processes and structure were much less important (one exception to the rule that structure is the predominant focus). This belief had prevented the company from consolidating activities and standardizing processes. Language was also a very important consideration, up to a point. Content had to be created, or at least translated, into local languages. And the editorial and sales staff had to be fluent in the local language. In a number of countries, below middle management, English was not commonly spoken. But the top two layers of management in every country were fluent in English, which was the company language, and many of the systems could be standardized even when language and content could not.

The company was defined by strong local leadership, and each business unit (whether in the United States, Europe, China, or India) was responsible for selling the full range of products. The challenge with this arrangement was that the company was not as focused on specific customer segments as it could have been and was unable to capture the benefits of global scale in these segments (each local unit reinvented the wheel for its customer segments).

The CEO realized that a change in the organization was required and asked us to help. Her team had already developed a potential future structure, in which central teams were created to develop new products and encourage the shift to software in each of the four areas of business but which otherwise left the local businesses pretty much as they were. Our role was to work out if this design was right—though we only had four weeks to do so. Fortunately, we had the benefit of a strong full-time client team, with a representative from the business and from HR.

Before doing anything else, we familiarized ourselves with the value opportunity, reading recent work from the company’s strategy team (step 1). Next, we conducted a rapid diagnostic of the company’s current strengths and weaknesses (step 2). We did this through a card-sort exercise (see chapter 4) in interviews with twenty corporate and local leaders from across the company and a wider survey of staff. The diagnostic, in itself, was also a way to engage with leaders about the change.

Through the diagnostic, we learned that the company’s local connections were a strength that needed to be preserved—especially in Europe, where there were not only language but also content differences across countries. Capable country-level leaders were another strength. At the same time, we learned that most of the existing processes were ignored and that this attitude seemed to be accepted in the culture—meaning that a purely process solution to the problem would not work. Finally, the leaders told us that while they understood the need for change, they were confused about what the proposed central teams would really do. Some managers saw the proposal as an incremental change; others as a fundamental shift.

Early on in the process, we agreed with the CEO that, rather than just improving the existing straw-man answer, we would also create alternatives for her and her team to choose from. The forum for this choice would be a workshop—a global meeting of twelve of the company’s top business leaders. We defined four organizational models: full business-line division, revenue-focused division, global product developer, and center of competence. These options broadly ranged from more radical centralization (full business-line division) to less.

As it turned out, the fourth, and least centralized, option, which limited the role of the divisions to developing global platforms and products and sourcing global content, was discounted by the CEO, as she did not believe that it would drive the change required. This incremental option had been the one most favored by the company’s leadership (naturally, because few people like change, so they often lean toward the option that affects them the least). Ruling it out therefore changed the game considerably. Remember, it is important to involve leadership teams in the choice, but the leader needs to set the boundaries of acceptable options; the process is not a democracy!

Our challenge then was to bring the three remaining options to life for leaders who had been confused by the debate so far and who, like most business leaders, were more comfortable with day-to-day business than ethereal organizational concepts. This also meant illustrating the options in terms of people and processes, not just structure.

On the question of people, we defined five critical roles that would generally be found in each of the three options, but which would act very differently in each: a head of one of the four business lines, a global marketing director, a regional managing director, a country CEO, and a sales and marketing manager. For each role, we created three “days in the life”—one for each option—showing how the role would differ for a full business-line division, a revenue-focused division, and a global product developer. We also developed indicative role profiles and pie charts to show how much time the person fulfilling the role would spend in each option. For example, the role of the country CEO would no longer exist in the full business-line division option. For the revenue-focused division, the country CEO would be responsible for local tailoring of products, sourcing of local content, distribution, and managing customer relationships, but would have no responsibility for strategy, sales, or platform or product development. And in the global-products option, the country CEO would spend his or her time on local sales and marketing, distribution, and customer relationships. In all three cases, the role would be very different from the role in the previous organization, where the country CEO controlled all activities.

For processes, with the help of experts from across the business, we drew a chart of the overarching business process that would apply equally across all locations and business lines: from strategy to local business plans, development of platforms and products, local tailoring of products, sourcing of global and local content, marketing, sales, distribution, customer relationships, and back-office support. For each of the three options, we defined the responsibilities of different organizations along our overarching process: with the business-line division, country business, and support services all represented by a different color. This chart provided a simple, visual explanation of how responsibilities would differ in each of the three options and where the handovers between different parts of the organization would take place. Often it is in these handovers where organizations experience problems, whether they stem from conflict between different parts of the organization or topics falling between the gaps.

Finally, we showed how each of the options would play out as an organizational structure (reporting lines). At this stage, we used schematic rather than detailed organizational charts, as the idea was to outline the concept, not to debate about the reporting lines and roles of particular leaders. This enabled us to identify the pain points associated with each of the options. For example, in the case of the full business-line division, the local businesses would not exist anymore (they would be divided up between the global divisions), but a whole series of local responsibilities would remain: representing the local legal entity (the country CEO), managing local support services that were not reporting to global shared services, managing the office and other property, and providing the social focus for the working community. This is actually a very common challenge in any company shifting from a local, country, or asset organization to a global one based on business lines, value chain, or function. In this case, we suggested that these functions should be owned in country by the business line that represented the biggest (or fastest growing) game in town. One issue that we had to clarify (and that many companies get confused by) was the difference between centralizing the reporting and centralizing the location of activities. For example, sales staff could report to a central function, but they would always have to be located locally, speaking the local language. On the other hand, the creation of an IT platform could be centralized under one manager and in one physical location, as long as there was a clear way to take into account local needs.

A document containing these options and the associated descriptions was sent to the twelve participants for the leadership workshop for them to read ahead of time. In planning this workshop, we were faced with another major challenge: how to ensure that the company’s leaders, most of whom had only experienced one way of working—in a geographically focused business—would be able to open up their eyes to the other options available. Our chosen solution was a technique called appreciative inquiry, an organizational approach developed by David Cooperrider and Suresh Srivastva in the late 1980s. In a nutshell, appreciative inquiry focuses on the positives of different options and is based on the observation that when people focus on positives, they tend to have a much more open mind and to be more creative. Finding problems is generally an easier activity and can come later.

In particular, our objective was to avoid the typical situation in a reorganization (and one with which you may be familiar), where the CEO and corporate leaders argue their thesis of greater change, the local businesses argue their antithesis of minimal change, and the consultant—like a magician pulling a rabbit from a hat—suggests the “middle option” as the appropriate synthesis. Relieved, everyone then aligns on the middle option as the least bad option that everyone can agree on. In our view, this way of reaching consensus is a mistake, as the middle option will always contain its own peculiar benefits and risks, which are rarely an arithmetic average of the other two options and can sometimes be worse than either. Moreover, an answer that almost no one wants feels like a poor basis for future progress.

On the day of the workshop, having provided a brief introduction and reminded people of the purpose of the day, we split the group into three subgroups, each covering one of the organizational options: full business-line division, revenue-focused division, and global product developer. On purpose, we placed strong-minded leaders with a particular preference in the group covering the option that they would be expected to hate. In this way, they would be forced to think themselves into an option that they had probably spent little time considering when they read the document we had prepared. Between these interested parties, we interspersed more-agnostic leaders. At this stage, we also asked the CEO to leave the room to prevent any issues of sunflower management (the bias that occurs when some staff seek to guess what their leader wants and then provide that answer, as a sunflower turns toward the sun).

We asked each group to prepare a case, advocating for the option that it had been given (with no negatives allowed). Each group would then present its case to the other groups and answer questions on it. We asked each group to tell us how its option would contribute toward three benefits: exploiting the benefits of global scale in each of the four business lines, maintaining knowledge of local markets, and promoting the shift from publishing to software. After this advocacy, the other two groups would get to shoot holes in the case, and the presenting group would have to defend it.

What we found when we ran this exercise was magical. In fact, a while later, one of the attendees jokingly accused us of employing hypnosis.

Each of the teams started to work on creating a case for its option. Since the participants, like most business leaders, were highly competitive high-achievers, the room quickly took on an adrenaline-fueled air, with flip charts produced and lists of benefits rehearsed. Released from feeling that they had to criticize the options, each team took its option and built on it: all of them created improvements to their options, making them more robust.

Going through the three presentations, which were all entertaining as well as informative, immediately made several things clear. First of all, with the most incremental option (center of competence) removed because it would have minimal impact, it was clear that all other options—including the now most incremental one (global product developer) would have a significant impact on the way the company operated. This was brought to life in particular by the process maps and day-in-the-life scenarios that we had developed (org charts on their own seldom highlight such issues). In fact, the middle option (revenue-focused division) would lead to the most conflict and complexity. At the same time, the benefits of the global product developer and revenue-focused division in meeting the criteria were not wholly convincing. Instead, it became increasingly clear through the debate, almost to the shock of the team that was presenting it, that the only option that would provide sufficient benefits to justify the disruption and the human cost of the change was the full business-line division.

For this reason, nine of the attendees, when asked after the presentations were complete, indicated a clear preference for this model. The remaining three also preferred this model, but expressed some justifiable concerns as to how the company would implement it. They were especially concerned about the disruption that it would cause colleagues, many of whose jobs would change, and the differences in mind-sets, behaviors, and capabilities required to make the option work. These concerns informed the approach to detailed design and implementation planning (to be covered later, in step 4). The CEO, who had reentered the room to hear the presentations, was shocked but also delighted, as the participants’ choice was also her preferred option for very similar reasons (although the team had substantially improved it). As she told us later, “There is always more than one right answer, so the process of how you bring people along and get them behind the new organization is really important. Through the workshop, we both came to a good answer, and, more importantly perhaps, we brought our leadership team along with us.”

With the input of the workshop, we were able to create draft designs for the overall business process, people, and structure of the four divisions. All in four weeks.

. . .

To reiterate the lessons from the cases above, let’s return to Amelia and her bad day.

Walking out of the meeting with the two consultants, Kevin and Al, Amelia has the suspicion that the top-down concepts they have been discussing are not going to work for her company. She has learned a few good ideas from the cases, but none of them provides the full answer she needs.

Instead, Amelia decides to hold a meeting with the experts from each of the market units and functions that make up her extended team. Each of them has, of course, been developing their own ideas on how to meet the cost reduction and efficiency targets demanded by the CEO. At the beginning of the meeting, Amelia shares what she has learned about the company’s competitors from the consultants. Fortunately, several people at the meeting have previously worked for competitors and are able to provide further details on how these models worked in practice (not only the high-level reporting lines, but also some of the approaches to processes and people). Amelia also reminds the attendees of the results of step 2—namely, the areas of the company that need to change and those that need to remain to maintain the company’s current strengths.

Amelia uses the meeting to get a full set of bottom-up improvement ideas. She has each expert present ideas and get feedback and encouragement from the others. This generates an atmosphere of friendly competition. By the end, she has a dozen options for organizational improvements, focused on the areas where the company is either experiencing challenges or maintaining its current strengths. These ideas cover a range of people, process, and structural issues. Amelia asks the teams to detail their ideas in single-page templates that highlight the benefits of the idea (in terms of cost reduction, value improvement, and safety improvement), its risks, and what it would take to implement.

Amelia then asks the CEO, John, to call a series of weekly decision-making meetings with his management team. Of course, there is opposition, with leaders complaining that they do not have time. But Amelia is persistent, reminding them of the value of the reorganization from step 1 and the early discussion that the leadership had about the time commitment needed for this change. John backs her up, and the meetings are booked in diaries. Leaders are requested to attend in person and not to send delegates if they cannot attend. (Amelia knows that it is impossible to have this debate over the phone, and that both for confidentiality reasons and for the team to build trust, it is important to keep the membership of the group stable.)

Over the next four weeks, Amelia, John, and his leadership team work their way through the organizational options. Amelia front-loads the options that seem clear into the first meeting, and most are quickly signed off. In the next two meetings, she presents the other options: some are signed off, others are thrown out, and a third category meets a mixed reaction—Amelia and her team are asked to do further work on these. For difficult cases, she invites some of the experts to present their own ideas. Their input improves the debate, shows the leaders that their own people are contributing toward the answers, and gives the experts an opportunity for exposure to senior leaders (as most people dislike reorgs, it is a good idea to make sure that they get some benefit from their participation).

In the final meeting, Amelia recaps the decisions made to date, notably the following: opex cuts of between 5 and 30 percent in organizational units; standardized roles and processes across different market units; a new centralized trading team, with a significant upgrade to its talent (10 percent of people to be replaced); a common capital process across the business, with a central team to ensure compliance, but responsibilities still left with the country market units; and a new training program for safety, with clarified roles in the business. Amelia then shows an integrated picture of what the new organization will look like—the impact on people, the new processes, and the overall organizational structure. In particular, she highlights the amount of change that will be required to roles in the organization and the likely number of staff affected. As this is merely a summation of decisions agreed on, the CEO and his team sign off on the design, although only after a debate about the human cost of the change. This human factor is highlighted by the team as something Amelia must consider as she begins detailing the changes and planning the implementation. At the same time, in informal discussions after the meeting, Amelia notes that many leaders are starting to wonder about what the reorg means for their current position and how they will be able to implement the changes.

How to Handle Communications in Step 3

• Staff and leadership needs: Staff still needs to understand what the reorg means for them and when they will hear about any impact on their jobs. Step 3 will not meet these needs, because the concepts that result will not get down to this level of detail. Given this, the most important thing that staff need to hear is the timeline for action. Leaders have much more tangible needs in this step because you are now deciding the shape of the organization and the responsibilities of each of its units. No matter how much you say that you are only dealing with a design and that people assignments will come later, leaders will start thinking what this means for them (with a tendency to assume they will stay in their existing jobs—which may or may not be true). Excluding them from decision making will exacerbate this misconception, as we showed above.
• What to communicate: At the beginning of this step, the message you need to clearly communicate to staff is the following: what work is taking place, who will be doing it, and when the results will be announced. At the end of the step, communicate the direction implied by the concept design and when staff will know what it means for them (in step 4). Avoid the temptation to stage an exciting announcement about your new functional organization, the fantastic return on investment it will generate, or the prediction that the design will be 20 percent more efficient. You and your fellow leaders may be excited about this achievement. Your employees, by contrast, will be frightened by any discussion of efficiency savings and will be uninterested in management metrics until they know the impact on their jobs. Leaders, again, are different. At the end of this stage and the beginning of the next, you should be appointing leaders to new positions and making them responsible for delivering the detailed design, rather than resisting it. When you include leadership in this way, you may find that some leaders will not succeed with the reorg or will decide that the new organization is not for them.
• How to communicate: Because you are increasingly getting into the details of how each business unit or function will work and are starting to appoint leaders to reshape these units or functions, it is appropriate that, in addition to continued central communications, more and more of the communications come from the leaders of the units, tailored for their part of the organization. For the broader workforce, for whom this step is less important, a simple conference call, e-mail, or blog post with, again, a mechanism for two-way communications is sufficient at this stage. For leaders, candid one-on-one conversations are required. Again, remember to track and discuss the results of communications. What are you learning? That way, you can identify the talented manager most at risk of leaving, rather than being surprised when he or she walks out for a new job just after you have announced this person as the head of an important new business line.

Step 3 Summary

How to Use These Ideas in Your Organization

• Remember to focus on people and processes as much as, or more than, structure.
• Decide whether you should take a top-down or bottom-up approach to the reorganization. Remember, a top-down approach (like the global media company) is appropriate if the company is going through a seismic shift or if the organization is fundamentally broken, and a bottom-up approach (like the water company) is appropriate if the organization works well with a few select issues. If in doubt, go for the bottom-up option, as it is easier to focus on changes that add value quickly, it minimizes the human cost, and it avoids breaking anything else. Use the templates in appendix D for implementing whichever approach you decide to take.
• Use the collective wisdom in your organization. You should hold brainstorming meetings with the staff closest to the action to generate ideas for improvements. You can also draw on external consultants, especially for more-difficult reorganizations and to understand how others have approached the problem, but remember that outside ideas should only supplement the input from your own organization.
• Put a lot of thought into how to run meetings with the leadership team to understand the trade-offs and make decisions. This could be through one big meeting to decide on the top-down concept (like the media company case) or through a series of meetings to thrash through bottom-up options (as in the water company case). Whichever approach you take, think through the likely dynamics between the leaders in the room. Consider having the meeting or meetings off-site if possible to get away from day-to-day issues. Make sure that you have the active support of the project sponsor (if you are a member of the reorg team) or that you provide active support (if you are the project sponsor).