Taking organizational redesigns from plan to practice

20 Feb 2012 Sandeep Mehta

A quick post about a McKinsey Quarterly article with lots of interesting benchmarking info (Taking organizational redesigns from plan to practice):

Organizations often redesign themselves to unlock latent value. They typically pay a great deal of attention to the form of the new design, but in our experience, much less to actually making the plan happen—even though only a successfully implemented redesign generates value.

There are many reasons why organizational redesigns are risky (or may fail to generate results).  Here is a comprehensive list from the article:

This is explained by the results of the survey (not sure how anyone is able to estimate shareholder value generated by a reorg):

“Though a majority of respondents at publicly traded companies say their redesigns increased shareholder value, only a very small group of respondents—8 percent of those who have been through a redesign—say their efforts added value, were completed on time, and fully met their business objectives.

Here are some key takeaways: 1) Good reorgs take less than six months to implement; 2) they have clearly defined goals and objectives; 3) focus on how the new org would work (not just how it would look); 4) determine how the org cultures, processes, tools, roles and changed; and 5) leadership is fully engaged in change and not fighting it.

A key to success seems to be clear objectives on what the reorg is supposed accomplish (detailed goals about how the org will work, not just how it would look).  Here is some data about the importance of defining detailed goals:

Respondents are much likelier to say their organizations set broad goals than detailed ones for their redesigns (Exhibit 1). Notably, this is true even of redesigns that could have had very specific numeric goals.

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