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Random thoughts – keeping you on your toes

Reorganization/ Process Redesign

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You may have heard this anecdote before, I was told it by a CEO who said it was a true story.  It presents an interesting perspective on when and why to undertake radical changes in your business.

When first appointed, the CEO who told me this story was given three envelopes by his successor.  He was advised to do the best he could but when the wolves were at his door and trouble in the wind the information in the envelope would help.

Envelope #1

His first couple of years went well but by the third fiscal year expenses were up and revenues flagging.  He opened the first envelope.

It said ” Give the stakeholders something to take their minds off the state of the business, implement a company-wide process improvement program.

He did this and the problems magically went away (at least the perception of them).

Envelope #2

After a couple of smooth years, the overall economy flagged and things in the business we again on a downward trend.  He decided to open the second envelope.

It said “Give the stakeholders something to take their minds off the economy.  Implement a company-wide restructuring.

He did this and the problems magically went away (at least the perception of them).

Envelope #3

After another couple of smooth years business problems were back.  The expense trend was on the rise, revenues were down.  Seemed like time to open the last envelope.

It said “ Prepare three envelopes for your successor”.

And the morale to the story is smoke and mirrors will work for a while but unless the root cause is addressed it will catch up with you eventually.

In large organizations, reorganization and process redesign can be a great way of deflecting stakeholders temporarily but ultimately the real issue will need to be resolved.

Random thoughts – keeping you on your toes

Re-organize

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A CEO I worked for many years ago told me a story about some advice he got from his predecessor. He was given three envelopes.  His predecesor suggested each time things got tough that he open one of the envelopes.

Things went well for the first couple of years and then hard times hit the company.  Pop went the first envelope – “Restructure” it said.  “Bury the losses in the financial adjustments, confusion will rein and you will coast out of difficulty.”

He followed the advice and it worked like a charm but about four years later the bad stuff cycled back.  The second envelope said, “Reorganize, everyone will be focused on the impacts to them, even the shareholders, they will overlook your current problems.  They”ll be resolved by the time the dust settles”

Again it worked for about three years this time.  And so, the third and final envelope was opened.  It said, “Write three letters for your successor”

Reorganize/Restructure

Yesterdays post drew some comments suggesting some organizations centralize and decentralize their operational structures  in cycles.  It immediately reminded me of the story I relate above.

Unfortunately some times these operational or organizational changes are in fact just smoke and mirrors on the part of a organizations leadership.

Diversion of attention is a well known tactic for retaining power.  To a large extent this is really true for a lot of Donald Trumps actions ( a lot of noise, little result) He is really good at leveraging this technique.