When a company matures, but decisions are still made by a "three" people

 

If you've ever managed a business with more than 500 employees, you know that the structure takes on a life of its own.
Processes, roles, levels appear, and suddenly everything that was previously decided on the fly turns into an endless chain of approvals.
At one large company (we will omit the name for ethical reasons), we encountered this situation in 2013.
The company has been operating in the market for over 15 years in the business services sector and had about 1000 employees - and in fact it was held on three people: two owners and a commercial director.

 

Every Friday they gathered for “a couple of hours,” then for the whole day, then on Saturdays.
We decided everything: who is responsible for what, who can sign invoices, how departments interact.
A classic manual control system that relies on energy, not the system.

 

"We simply don't have time to solve everything. People need to start thinking and acting without us," is how the owners formulated their request.

 

This is where it all started first cycle of transformation.

 

The first transformation: from manual control to a mature structure

 

We conducted an organizational diagnosis using the Adizes methodology and saw a familiar picture:

 

• premature aging,
• high dependence on owners,
• dominance of the administrative style,
• weak automation,
• a stable but tired team.

 

The company held a dominant market share, was profitable, and its customers were loyal.
But there is no growth.

Tool: Diagnostics and cross-functional problem-solving teams

 

Before touching on structure or strategy, we started with diagnostics.
We carried out a comprehensive organizational diagnostics according to the Adizes methodology.

 

We accumulated over 200 issues, half of which had been building up in the company for years. Many of them indicated that management failures were at the root of the problem. not in people, but in the connections between departments and processes.

 

For example, sales expected speed from production, production expected clear technical specifications, and finance expected everything to be “agreed upon yesterday.”

 

So the first step was not to “fix departments”, and establish interaction between them.

 

For this we launched the system cross-functional teams — small groups comprising managers from different units. Each team was formed to address a specific problem and ensure that all departments interested in solving the problem were represented. We also ensured that the teams had real authority to solve the problem.

 

Each team analyzed one specific systemic problem from a wide variety of areas: from pricing to employee onboarding.

 

Their task was not just to “complain to the top,” but to develop a real solution, agreed upon by all parties. And then submit the decision for approval.

 

“For the first time, we began not to look for the guilty, but to fix the process together.”

 

These teams became the first experience of horizontal interaction in the company.
And it was thanks to them that a culture of shared decision-making was later born, without which it would have been impossible to build profit centers and a new structure.

 

Tool: Mission and Profit Centers

 

The next thing we did was help the company formulate a mission.

 

It wasn't "inspirational" in the startup sense, but it did provide clarity:

 

“We are a dynamically developing company offering clients a range of information, consulting and training services.
We strive to build long-term relationships with clients through a superior legal reference system, actively developing additional areas such as training and consulting, and strengthening our position in the regions through new client growth and improved service quality."

 

The mission resulted in the following major changes: Develop regions, focus on long-term relationships with clients, and launch new services, namely consulting and training for clients.

 

A mission is not a slogan, but an engineering task for designing a control system.

 

If you wrote “develop regions”, then the structure should include those who will be responsible for regional development, not during additional, but during regular working hours.

 

If they wrote “develop training and consulting,” there should be separate units responsible for the creation of these areas.

 

Which is what we did.

Then a new structure appeared:

 

• five profit centers (green) — by region.

They were responsible not just for sales, but for the entire economy of the region: income, expenses, customer base, and quality of service.

This is how we moved profit management from the control of one person to the level of specific managers in the fields.

This allowed us to see the real picture—where the company is making money and where it is losing money, and who is really driving the results.

 

• production blocks (red) — created content and ensured product quality.

Before this, all content was “generic”, without any focus on a specific audience.

Now production has become an internal supplier that works for “internal clients” – regional profit centers.

This immediately increased transparency: the greens stopped saying “they did a bad job on us,” and the reds stopped saying “they don’t appreciate us.”

Everyone began to understand what they were responsible for and for whom they were creating value.

 

• incubator of new directions — for consulting and training.

It was a conscious move: not to immediately turn new ideas into departments, but to give them space to grow, without the pressure of the current business.

The incubator allowed us to try, make mistakes, and test formats without destroying the main operating system.

 

Thus, the structure literally “translated” the company’s mission into management reality:

 

• regional development - in the form of independent profit centers,
• customer retention - through quality managers,
• new directions - through a separate incubator.

What worked

 

• Cross-functional teams spent a year preparing the company for horizontal collaboration.
• The established decision-making system for team work has increased the responsibility and involvement of managers.
• Solving problems that had not been solved for years increased motivation and energy in the company.
• Profit centers began to compete for efficiency rather than for the CEO's attention.
• The managers saw the numbers and started thinking about margins.
• Management maturity has increased, and profits have increased by 30% per year.

What was difficult

 

• Emotional resistance.
• People were afraid of the “new structure” – especially those who had worked there for 10+ years.
• The first RACI matrices (who is responsible for what) were difficult to create.

Tools

 

• RACI matrices delineate areas of responsibility.
• Goal Book - Each team has defined how their contribution impacts the mission.
• Colored budgets - “green” managers were responsible for profit, “red” - for cost efficiency.

The Second Transformation: When a Black Swan Destroys a Business Model

 

In 2016, something happened that no one expected. A key partner—a foreign company whose platform was used for legal databases—announced:

 

"We're winding down support. The product will be gone in a year and a half."

For the company, this sounded like a death sentence: the entire business relied on this system.

The reaction is shock. Then – a decision.

 

“If a partner leaves, it’s time to make your own product.”

Own online platform

 

The company decided to develop own online service.

 

It wasn't just a matter of "making your own product instead of someone else's."

 

It was transition to a fundamentally different business model and technological architecture.

 

Previously, the product was an offline format:

 

• local installation,
• periodic updates,
• a heavy system that was physically “brought and installed.”

 

The new product had to be: online, flexible, personalized, accessible from anywhere and on any device.

 

Main differences:

 

• SaaS model and subscription, and not a “box” license.

The client no longer buys the system forever—he signs up and can leave.
This changes everything: quality, speed of updates, customer focus, service model.

 

• Continuous updates, not "once a month/quarter" patches.

Lawyers and accountants must receive current legislative changes practically in real time.

 

• Web access + mobile access, instead of a permanent installation.

Previously, the system only worked on my work PC. Now it works from the office, at home, and on business trips.

 

• Personalized feed and notifications, and not a “common base” for everyone.

Each user sees only what is relevant to their profile and industry.

 

• Behavioral analytics and data mining.

For the first time, the company began to see what customers were reading, what topics were in demand, and where interest was waning.
Previously, feedback was conditional and delayed for months.

 

• Ability to quickly A/B test and launch new features.

There's no need to wait for a "version" to be released—you can roll out improvements continuously.

 

• Content by industry, and not “one database for everyone.”

This meant restructuring not only IT, but also content production.

 

In other words, the company was moving from the world an offline product with a heavy operating system into the world of digital services based on data, speed, and customer scenarios.

 

"It wasn't a system replacement. It was a transition from the 20th century to the 21st."

But it was impossible to talk about this openly – the team remained loyal to the old brand.

 

Therefore, development was carried out “in the shadows”: within the development department, that very incubator, in parallel with ongoing work.

 

Once the service was ready, the company faced the question: Who will sell the new service and how?

 

The first thought is through existing regional profit centers.

 

It seemed logical... and it would have been a disaster.

The employees were loyal to the old product, and so were the customers.

No bonus system would have made them sincerely sell the “competitor” to their favorite.

Solution: Switch to a product structure

 

The company made a risky but correct decision:

 

• the top level of the structure became grocery,
• each product is a separate profit center,
• appeared industry content teams (trade, services, production, public sector).

 

This decision was not born “in the SEO office.”

 

We held a series of sessions with managers, where the team literally restructured my thinking: from “we serve customers” to “we create a product that solves the customer’s problem.”

 

During one of the sessions, it became clear that the previous regional structure was hindering growth. Sales, content, and service were working in parallel, but not together.

 

It was necessary to create unified product bundles, where marketing, content and service are united around one industry and client.

 

Tools

 

1. Scenario modeling of the structure — We calculated three options for the future model and chose the product-based one as the least risky with the highest return, while retaining elements of the regional one.
2. Roles and Areas of Responsibility (RACI) — helped to quickly restructure processes between the new “green” and “red” blocks.
3. Open recruitment format for leaders — consciously used as a tool for cultural transformation: not to prescribe, but to give the opportunity to manifest.

 

"When they announced: 'We need industry team leaders for a new product,' people came forward themselves.

 

The head of HR said, "I want to go into business. Take me into retail."

 

This is how the first product teams were born – not from the top down, but from within the organization, people willing to take risks with the company. One of the key victories was that not a single employee was lost during this global restructuring—everyone found new positions.

 

What didn't work right away

 

• In the first months, the product sold poorly: the market was unfamiliar with it, and the employees were still “living in the past.”
• The old profit centers, by inertia, were drawing resources towards familiar products.
• I had to enter “"Sharing Taxation" — a procedure for protecting budgets, when the heads of the red divisions convinced the green ones what was worth paying for from their budget.

 

Only after a year the service reached 7% revenue from the old product, starting to capture the lower segment.

But the main thing is the company I learned to think in terms of products, not functions.

And strategically it was a breakthrough: the company cannibalized herself, before competitors did.

The third transformation: from service to product

 

By 2019, the company found itself in a typical growth trap.

 

It seemed like the new structure was working, the online product was growing, and the team had learned to think differently. But cracks were starting to appear under the hood.

 

Regional profit centers were no longer adequate. They were built for offline business: territorial sales, a customer base, and in-person service.

 

And now the company has - digital product, and a client in one region is no different from a client in another.

The boundaries on which the previous model was built simply disappeared.

 

The second pain is competition between old and new products.

Two teams were selling the same idea under different brands and with different implementations. One was familiar, stable, and profitable. The other was promising, but currently unprofitable.

 

In essence, the company started compete with yourself, and not with the market.

 

And at that moment it became clear: the structure that had saved the business three years ago was now holding it back again.

 

"To live, we must combine the old and the new. The food principle no longer works—we're eating ourselves."

Solution

 

The company has combined two products into a single ecosystem and completely rebuilt the model:

 

• At the top level, there is only one product line left,
• instead of regional profit centers there appeared industry (trade, services, manufacturing, public sector),
• and functional services were restructured to support digital logic: analytics, automation, content by topic, not by department.

 

Basically, the company moved from the service business to the product business, from "customer service" to creating digital solutions for different segments.

Production: From Generalists to Subject Matter Experts

 

The company's core business—content analytics—has also been restructured.
Instead of functional division, there appeared thematic teams: tax law, labor, real estate, etc.

 

At first, employees were afraid: “What if I lose my qualifications if I focus only on taxes?”

 

But the fears were not confirmed.

 

A few months later, people were saying the opposite: “Now I feel like an expert. I can see exactly who I’m helping.”

 

And if they got tired of it, they moved to another team.

 

The company has a new internal mobility and the culture of movement.

Digitalization and automation

 

In parallel, large-scale automation was underway: implementation ERP, digital tools, analytics, and, during the pandemic, a complete transition to remote work in one day.

 

“We just got up from our offices, sat at home and continued working.”

 

No one was fired.

They simply didn't hire replacements for those leaving, and the companyNaturally, it reduced its staff by 30%, while maintaining efficiency.

Culture of change

 

A year after the third transformation, we held a seminar for new leaders.

 

We ask the question:

 

“Which of you has remained in the same position, in the same department, over the past year?”

Out of 20 people, one raised her hand. one girlEveryone else changed roles, departments, or even professions. And that's not a problem. It's the norm.

 

"Yes, things change every year. And that's okay," they said.

 

This is how it was born culture of adaptation - without stress and panic.

What helped us get through three waves without losses?

 

• Transparency and trust

The company has never deceived its employees.
If they said that the salary would be maintained when changing positions, then that was the case.
This removed the fear of “losing one’s place.”

 

• Joint development of solutions

Yes, the same cross-functional teams.
Each structure, mission, KPI was created together with the leaders.
They understood not only “what was changing,” but also “why.”

 

• Subsequence

The transformations occurred in cycles.
The company practiced on “small forms” before changing everything.

Tools that actually worked

 

• Decision-making system for improvements – created transparency and increased the responsibility of employees and managers.
• Annual diagnostics of problems – allowed us to maintain the rhythm and make necessary changes in a timely manner.
• Restructuring – allowed us to redistribute work in a timely manner and maintain focus on strategic goals.
• RACI matrices — helped to clearly distribute roles and responsibilities.
• Books of Goals — synchronized the units' contribution to the mission.
• Colored budgets — made the connection between money and decisions visible.
• New product incubator — turned initiatives into real ventures.
• Synerteams (problem solving teams) — did not allow conflicts to fester.

Mistakes and pitfalls

 

• We tried to integrate a new product into the old sales system - it doesn’t work.
• Overestimated employees' readiness for digital thinking.
• The first attempts to delegate without reviewing powers caused chaos.

 

The main conclusion is - structure does not live separately from culture.

If the culture is not ready, the structure will collapse.

Results after 6 years

 

• 95% revenue - from the new product.
• 30% staff optimization without layoffs.
• Increased profitability.
• A team where “every year something changes, and that’s okay.”
• And a new challenge: the product becomes platform for a family of digital products.

New mission

 

“We serve the needs of businesses, legal and economic information in a secure digital space for transactions.”

 

This is no longer just an IT service. It's an ecosystem around which new ventures are being built.
And this is the beginning of the fourth transformation.

What should owners take away?

 

1. You can't change structure for the sake of structure.
   If the mission is not clear, the org chart will not help.
2. Trust is more important than processes.
   Without it, any transformation turns into “lossy optimization”.
3. It's better to practice with small changes.
   A culture of change is not built by PowerPoint presentations, but by experience.
4. Cannibalization is normal.
   If you don't kill your product in time, the market will.

Instead of a conclusion

 

When we look at this company today, we understand that transformation is not a project, but a way of life.

An organization can be alive if there is something inside it energy of meaning, and not just KPIs, instructions and reports.

 

"We used to be an airline that knew how to fly passengers. Now we're a company that knows how to build airplanes."

 

It is this phrase from the CEO that best describes what real means smart transformation.