Organization Redesign - The Perfect Storm is here

For a variety of unrelated reasons, this seems a great time to do an Organization Redesign and take a relook at the Structure of your Organization. 4 key trends that are causing this unique situation are :

The global Economic Downturn - this is the "Elephant in the room" issue that is having every organization re-evaluate its strategy & more pertinent, its Overhead expenses. The reasons are clear, but placed together, they are a heady cocktail.
1.The credit squeeze has increased cost of doing business for viable firms & the less viable ones are simply getting bankrupt.
2. Consumer spending / confidence is very low. Demand for products & services has tanked.
3. Inflation in commodities has shrunk Profit Margins, especially in the Manufacturing sector
All this means that men in dark suits & grim faces are prowling with sharp scissors, looking for savings.

The recent era of New Managers - The last five years, since 2003 have seen fairly sharp growth globally - a lot of it being driven by expansion, consolidation (read Mergers & Acquisitions) and growth in emerging markets, all this with the famous War for Talent. During this phase, a lot of new managers have taken up roles with relatively smaller spans of control. This has led to some structural inefficiency that is eating into preciously small margins & making the business respond slower to changes.

Organizational Response to Managing Complexity - Strategic Choices by companies have led to significant complexity. (Read the McKinsey Quarterly article http://tinyurl.com/42r9ey on this). The other BIG factors that have increased complexity is Technology interfacing with Business & Talent in ways not seen before. In fact Web 2.0 itself is probably going make significant disruptive changes in the way we manage People & Organizations (Read the Fastforward Blog on web 2.0- http://tinyurl.com/4splzx )

Growth focussed last 5 years - Most Organizations either execute well in the present or adapt for the future. Very few do both well. As organizations are getting a wee little breather from the scorching growth of the past few years; this is a good time to reflect on the synergy between the Organization Strategy & Design.
(Read Eric Beinhocker's book Extract - The Adaptable Corporation - http://tinyurl.com/3zket5 that talks about this)

So what does all this mean ?

In my view, simply that there are a whole host of reasons that will compel the Organization's architects & leaders to review the design. Its one of the more painful & clearly un-glamorous aspects of Organization Strategy. However, those who take this opportunity to review & perhaps tweak their Org Designs will be more nimble when the upturn starts. As an optimist, I will put my neck out & place a small bet that the economic situation will improve by Quarter 3 of 2009 -
Till then,
Happy Tinkering !!!

Comments

[Abhijit Bhaduri]

Hi Sanjay
Congrats on finally getting shackled to this fabulous way of reaching people. The trick is not in starting a blog - but in finding the enthusiasm to write original thoughts on a sustained basis (as if you would have never know this wise thought!!)
Good luck

[Seema]

Gr8 Boss !!

[Shantanu]

Hi Sanjay,

Sorry for the slow response to your invitation to visit your blog. My leave has been hectic and was compounded by intermittent internet failure.

Congratulations on launching your own blog. Your considerable experience, wisdom and style will undoubtedly be the fountainhead of many an interesting article - as evidenced by the ones already posted - and will become a venue for many to share their views.

I for one will visit it now and again. Indeed, I tried to become a subscriber to your feed but failed for some reason.

Cheers!

Shantanu