- Posted by metre22
- On August 19, 2015
- 0 Comments
- Business Structure, Metre22 Blog
Google recently announced a significant organization restructuring, creating a new holding company called Alphabet. The reorganization separates Google’s core internet business from smaller, ancillary growth efforts like their Life Science business (glucose-monitoring contact lenses) and Calico, an R&D effort focused on aging and related diseases.
Was the reorganization necessary? Only time will tell if it will unlock additional shareholder value. But we do know this: for any company, there are times in the growth cycle when the existing organization structure becomes a barrier to growth rather than an enabler of growth.
Here are five signs that indicate it might be time to assess your organization structure.
- New business opportunities suffocate under the weight of the core business. We’ll save the discussion for whether it is the right strategy to expand into new businesses and markets that are tangential to a company’s core business for another time. If it is your strategy – much like Google’s – then it is important to have a structure that allows newly launched or acquired businesses to get the attention, resources and focus required for them to succeed.
- The number of conversations on internal revenue and expense allocation outnumber the conversations on overall results, customer satisfaction and talent. Some companies spend inordinate amounts of time allocating and reallocating dollars at the end of each reporting period. There are meetings, emails, new allocation schemes and huge projects around activity based costing and transfer pricing policies – all in an effort to figure out which leader or group gets credit. If this is occurring in your company, the org structure and financial reporting approach probably both deserve a thorough review.
- You discover that separate sales teams from your company are pitching different solutions to a potential customer. You and your team are leaving a pitch meeting with a potential customer. You feel good about the meeting and are optimistic about the prospects of hooking a big deal. As you sign out in the visitors lobby, you turn around only to find a sales team from a different function within your own company ready to head in for their pitch meeting. It is bad enough when the org structure makes internal coordination difficult. But when confusion in sales, relationship management and service become evident to your customers, it might be time to take a closer look at how you are organized.
- It takes a rocket scientist to figure out whom to invite to meetings (you are granted an exemption if your company actually designs and builds rockets). A lack of clarity on who needs to be involved in project meetings, decision-making meetings, customer meetings—and even update meetings—can be a sign that the current organization structure is not helping you execute your strategy. When this confusion exists, many companies resort to inviting everyone they think might be needed, which further bogs down progress and kills efficiency.
- Your org chart has more dotted lines than a major airline’s route map. In most enterprises, dual reporting relationships are often a part of the organization design. An HR team in Asia may, for instance, report to both the APAC region executive as well as the Corporate HR executive at a company’s US headquarters. But occasionally, companies become convinced of a need to establish a third or even a fourth reporting relationship. When that starts to happen, it may be time to reorganize.