Each company is aimed at growth and development. But at some point, any developing company faces questions: “What direction should we move next?”, “What is our uniqueness and how do we want to differ from competitors in the future?”, “Can we work more efficiently?”, “What steps will help you better comply with external conditions?” It becomes obvious that it is necessary to develop a strategy. The owners and managers of the company - independently or with the help of external consultants - develop such a document. But at the implementation stage, trying to implement the strategy, many companies begin to experience serious difficulties.
Most often, the obstacle is the organizational structure and its inconsistency with the strategy. You can compare the structure to a river bed along which water flows - if you don’t change the channel, you will end up at the same point.
The structure must be aligned with the strategy, and there must be a connection between them.
But finding this connection is not so easy. The fact is that the choice will have to be made from many variables. Moreover, changing the organizational structure takes even longer than developing a strategy. This is a rather complicated process. And if we rely on the opinion of Alfred Chandler, then first we develop a strategy, and then we form a structure.
Structure is a tool for implementing strategy.
However, we often see that successful companies are in no hurry to change their structure. Managers have certain doubts or concerns that can be divided into four groups.
- Difficulties in human resource management. Managers are afraid that, for example, old employees will not be in demand in the new structure, because the requirements for specialists will change. But it’s a shame to fire people. Or the opposite situation: the most effective and well-trained employees will want to leave because the new structure will not suit them. In addition, a change in structure is associated with a redistribution of power, and many managers do not want to stir up this “hornet's nest.”
- Fear of losing control over the management of the company and causing a crisis. In this case, managers may put off change for so long that a crisis ensues from inaction. But this crisis is no longer caused by growth, but by the illness of the company, and it is much more difficult to overcome it.
- Possibility of financial losses. In fact, a change in structure (barring a major reduction in staff) is likely to result in some additional costs in the short term. This can be an unpleasant surprise for managers, leading them to the erroneous conclusion that change must be stopped. As a result, they do not achieve their long-term goals, and financial losses cannot be recovered. A common reason for such decisions is the inability to plan the costs of changing the structure. This seems difficult, although calculating the costs of, say, building an additional workshop does not cause problems.
- Lack of understanding why the new structure is better than the old one, why it will help effectively implement the strategy, and through what mechanisms. As a result, the structure of the company is changed spontaneously, chaotically, focusing not on long-term goals, but on current challenges. This factor is the most serious of all four.
Since external conditions change quite quickly for most industries, the slowness and inefficiency of the company in changing the structure calls into question the implementation of the strategy. And ultimately the viability of the business as a whole. The manager needs to competently use the tools for selecting and building the business model that will be optimal for the company.
One of the important questions is how various structural variables influence each other, and how this ultimately affects the company's activities. Take, for example, the cost and quality of services. If a company increases prices, but at the same time the level of quality of services increases, the consumer will find this acceptable. But in the structure of the company it is necessary to lay down the very component thanks to which the company will ensure an increase in quality. Implement a motivation system so that wages reflect the performance of employees? Yes, this makes sense, but only if employees are empowered and can make the necessary decisions. And the wider the powers, the more it makes sense to emphasize the dependence of payment on the final result. By and large, the more decentralization is developed in a company, the more attention should be paid to motivation. The examples given show how individual variables are related to each other. That is, we begin to more actively use one variable, while the opportunity to receive income from another increases.
There is also feedback. For example, the company has introduced a flexible production structure, and significant funds have been spent. However, the range is narrow, does not attract consumers with its diversity, and the company does not have the competence to quickly introduce new products to the market. It turns out that the money on production was wasted. That is, when developing a business development strategy, a manager must first determine what key factors will help the company achieve success. At the same time, it is necessary to take into account the structural components that are responsible for these factors or may influence them.
If the company is already developing successfully at the moment, you should also analyze which structural principles contribute to this. The findings must be taken into account when planning changes so as not to destroy the basis of current success while the prerequisites for future successful reforms are being built. In addition, at the implementation stage it will help optimize costs. Figuratively speaking, if you are at the top of one mountain, but want to get to another, then the route should be laid at the maximum height between the two peaks, but be prepared to sometimes go lower. The main thing is that the manager understands that small downturns are inevitable, and this is not a reason to panic and give up on your goals.
