Marc: Last time, you were talking about progressive leaders and how those are the kind of leaders who would be interested in a new paradigm.
Hobart: That’s right. They are the early adopters, the innovators. The new operating system and the organizational design that goes with it are not for the faint at heart, for the coward, for the run-of-the-mill leader. They aren’t for the leader who is obsessed with the bottom line and who isn’t focused on organizational issues.
Marc: So, leaders shouldn’t focus on the bottom line?
Hobart: Focus is different than obsession. The bottom line is a measure, but not even the most important measure. It’s part of the scorecard, not the whole scorecard. And it doesn’t tell you anything about how the game is being played, only if you were winning in one dimension. It’s like these leaders are trying to play tennis while staring at the scoreboard. Pay attention to the game and the score will take care of itself.
Marc: I get it. So, shall we talk about restructuring?
Hobart: If you want.
Marc: Let’s start with the goal. What is the goal of restructuring?
Hobart: Good question. Well most leaders who are restructuring are looking to do one or more of the following: 1) put their stamp on the organization, 2) shake things up because they’re currently not working, 3) align to a new strategy, 4) increase efficiency, 5) use it as an excuse to downsize, 6) put together groups that aren’t cooperating so they will have to work together, or 7) integrate two organizations together after a merger or acquisition. Of those, only #3 and #7 are valid reasons to restructure, and only a merger or acquisition is a reason to restructure the vertical dimension.
Marc: The vertical being the dimension that shows up on the org chart?
Hobart: That’s right. The approach leaders take is to restructure the vertical. There is seldom a reason to restructure that dimension.
Hobart: But with that being said, those aren’t really the best reasons to think about structure. The real reason to look at structure is to create a more agile and innovative organization.
Marc: What do you mean by agile? Isn’t that an IT development term?
Hobart: What I’m talking about is creating an organization that can navigate constantly changing conditions, and do so rapidly. You can’t be agile if your approach to change is to move boxes around on the org chart. That takes anywhere from 6 months to 3 years to accomplish, and even longer to deal with the aftermath of the actual restructure.
Marc: What about being innovative? Can you get there by restructuring?
Hobart: Absolutely not. Vertical restructuring is the antithesis of innovation. Vertical restructuring is not about doing something new, it’s about doing something that’s been done over and over again. That’s not innovation. Innovation has to be built into the fabric of the organization – into all the processes that are used to manage the organization. That means it needs to be part of the operating system you use for managing the organization. Vertical management 1.0, the operating system that underlies vertical restructures, is not innovative. Hell, it’s 60 years old so how innovative could it be?
Marc: Not very. So, you’re saying that if you want to be an agile and innovative organization, you have to change your operating system and stop restructuring the vertical dimension.
Hobart: That’s right. But people aren’t going to believe that vertical restructuring is not the answer unless we get into all the reasons why it doesn’t work.
Marc: Let’s pick up here next time.
Hobart: Okay. (And Hobart went back to his desk and started scribbling on his legal pad.)