1837
n
Making far-reaching decisions
strategy was to create a new company and not be the sum of the
two previous companies. We decided either we create something
new or we would pay the price down the line.”
Acquisitions can be useful, but often only if they are utilized to
create something new that the companies could not have done
by themselves. Thus, it is tempting to avoid (integration) trouble,
by either quickly and entirely assimilating an acquired unit or
leaving it completely autonomous. But sometimes you have to
bite the bullet; integration troubles can also be the symptoms
of a much more healthy process, of organizational revitalization
and the creation of new value.
Change for change’s sake
When performed right, acquisitions might even help you out of
a success trap – or prevent you from falling into one in the rst
place. Because once you’re in such a trap, it needs quite a bit of
stirring and shaking up trouble to drag you out of it. A similar
role – and perhaps even better – can be played by reorganiza-
tions. Many of us have gone through one at some point in our
lives, and my guess is you did not like it; you might not have seen
its point, and found its logic dubious.
Have you ever worked for a company that changed its structure,
and you couldn’t gure out why? I did. Ages ago I was working
for a consulting company that was organized by “function”:
consultants were grouped into departments dened by “strategy”,
“operations”, “HR”, etc. But then the company decided that
it should really be organized by “industry”, that is, group its
employees into a division for fast-moving consumer goods, a
division for government, heavy industry, professional services,
etc.
And when people asked “why?”, the company’s management
would come up with convincing answers for why it was benecial
for consultants working on the same type of customer to be
grouped together. And people shook their heads in reluctant
understanding and grudgingly eyed up their new colleagues.
Business Exposed184
But I couldn’t help but think, “I could come up with equally
convincing reasons for why this company should (still) be
organized by function.” And that is usually the case for most
organizations. For example, you could easily come up with an
explanation for why a bank should create divisions organized by
geography; after all, people located in the same country often
need to co-ordinate and have a joint manager. Yet, you could also
come up with an argument for why they should be organized
by product type; after all, people working on the same product
(wherever in the world) should co-ordinate and learn from each
other. Similarly, you could come up with valid reasons for why
the bank should be organized by customer type; after all, big
customers often want one point of contact, regardless of the
product they require, and where they are in the world.
And I used to think, unless you can come up with very convincing
reasons for why being organized by “industry” is now really more
benecial than being organized by “function”, there is no justi-
cation for dragging everyone through a hefty reorganization.
But I’ve changed my mind. I now
believe that dragging everyone
through a hefty reorganization is
exactly what you should do (every
now and then), even if it is unclear
why.
Let me explain. There is value in
the process of reorganizing. Usually
people in an organization should co-ordinate with other
employees in their country, just like they should also co-operate
with others working on the same product (wherever in the world),
and others in the same function, etc. Yet, you’re going to have to
make a choice about what criterion you will use to organize your
departments. Once you’ve, for instance, chosen to group people
by function, inevitably, over the years, employees will start to
identify with others in their function; their networks in the rm
will be dominated by those people (because that is the people
they interact with most), and gradually they may become insular,
‘‘
I believe that
reorganization is exactly
what you should do (every
now and then), even if it
is unclear why.
’’
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