The Key To Successful Reorganization Of Enterprises

New chief executives often feel very stressed about corporate restructuring.

In fact, nearly half of the chief executives will implement some form of corporate restructuring within two years after taking office.

Now, the restructuring speed seems to be even more intensified. HP, NOKIA and Carter Peele recently announced structural reforms.

The ambitious restructuring plan, one after another, undoubtedly reflects the ups and downs of the economy.

Many companies are still struggling to get back to the path of healthy development.

Changing the organizational structure of an enterprise seems to be an effective way to shake the whole operation and bring better performance.

However, corporate restructuring is a risky investment in time, experience and resources, and there is very little reorganization that can really improve the business.

Chrysler has undergone three restructuring in the three years before bankruptcy and finally merged with Fiat - no reorganization really played a role.

Bain consulting recently conducted a study of 57 major reorganization cases and found that the restructuring case that really improved the company's performance was less than 1/3.

Some restructuring has even destroyed the company's original existence.

What is the secret of a few leaders who succeed in corporate restructuring? Effective restructuring is not just about changing the company's organizational chart, but improving the company's ability to handle major decisions.

They enable company leaders to make better decisions.

They accelerate the speed of decision making.

They also increased "

A good example is ABB, a large energy technology and automation company in Zurich.

The company was nearly bankrupt in the second half of 2002.

One reason for this situation is that the major decision-making processes related to the bidding of large energy projects include the negotiation with more than a dozen internal departments of ABB, where each department has its own profit targets and incentive mechanisms, so the whole process becomes procrastinating and often leads to no competitive bidding conditions.

The new CEO Jurgen Dauman (J rgen Dormann) analyzed the mistakes in decision-making, and then cut off the complex network by consolidating the functions of various departments and concentrating on the loss of accountability.

The reorganization has been successful - ABB has regained the ability to quickly give competitive bidding conditions - because the team knows that the purpose of the new architecture is to support and smooth bidding decisions and other equally important decision-making processes.

Why is decision-making so critical? If you think about it carefully, you will understand that the performance of an enterprise is actually the number of decisions it can make and execute.

If the new organizational structure does not bring better and faster decision-making and implementation process, it will be of little significance.

In fact, if leaders fail to figure out what decisions are crucial to the enterprise, who should be responsible for those decisions, and how the new architecture will help people better formulate and implement these decisions, redesigning the corporate organizational chart will reduce productivity.

For example, a few years ago, Internet company YAHOO reorganized three departments - the user department, advertisers and publishers, and technology department.

But the important decision-making process has been hampered, and YAHOO's management has to set up new positions and management positions to coordinate the three sectors.

Product research and development slowed down and cost increased.

Look at the recent restructuring of Ford Motor Co under the leadership of Alan Murali (Alan Mulally).

Murali has worked out a simple framework system to make important decisions in every stage of the Ford Motor Co value chain and to efficiently implement the infrastructure of these decisions.

Every week, he and his team are tracking progress in making and implementing decisions.

They stripped off some of the non core brands, such as Aston Martin, Jaguar, Land Rover and Volvo, reducing the number of production platforms, and starting to consolidate the relationship between suppliers and dealers.

Throughout the process, they decided to restructure the entire company from the original regional business unit architecture to a functional and geographical based global architecture.

This new architecture enables Ford's leading team to make important decisions better and faster, for example, a global automotive platform that is difficult to build under the old architecture.

Of course, Ford is still facing challenges, but so far, Murali's reform has helped Ford withstand the hurricane that is attacking the global automotive industry and made the company outperform its US competitors.

The turbulent global economy means that more companies will scramble to restructure in the next few months. Pay close attention to the results of restructuring. Those who succeed in making key decisions as the focus of restructuring are likely to be much more successful than those who are merely rearranging the organizational chart.