Reaction

The article “The Decision-Driven Organization”, co-authored by Marcia W. Blenko, Michael C. Mankins, and Paul Rogers, discusses and emphasizes that strategies based around structural reorganizations should be focused on the decisions that are most important and where in the company they’re being made rather than focusing on merely the goals of the organization as a whole. In fact, the authors point out through a series of examples, such as Chrysler, that structural reorganizations can actually have a negative impact on performance if they’re done for the wrong reasons. In the case of Chrysler, they restructured three consecutive years before going through bankruptcy with no notable improvements in the performance of the company. From the Daimler take-over, to Cerberus, and now Fiat, the focus has always been on improving performance by incorporating new ideas from outside organizations. While the book is still out on Fiat, none have proven successful and in fact, have mostly hurt Chrysler as it’s continued to lose market share to its competitors. (Ed Wallace, Business Week)

According to McKinsley and Company, failed structural reorganizations may also be due to a lack of trust among employees. A CEO who rather than “address performance problems directly and therefore decides to reorganize the company in order to dismiss low-performing managers or to stir up energy by shifting around complacent ones”, which potentially leads to “the lack of a convincing and motivating business idea--or suspicions that the official story is a smoke screen for other plans--leaves the door open for covert manipulation of the system. Instead of taking responsibility for the complex challenges of the reorganization, managers and other employees jump to the wrong conclusions about what it will mean for them and become defensive”. (news.cnet.com)

The views of “Bain and Company” and “Mckinsley and Company” I personally can attest to being true. In my profession as a Loss Prevention...