Company Reorganizations are like Whale Surgery
Company Reorganizations are like Whale Surgery
It's anatomy, not engineering.
Like many organizations, Company McCorporateface, Inc. goes through a manic-depressive cycle of boom (growth) and bust (re-organization/downsizing) every few years.
During the manic boom phase, the CEO develops an irresistible urge1 to “add value” for shareholders. He goes on a merger and acquisitions (M&A) spree and grafts new business units onto the Company à la Victor Frankenstein. He does this while yelling catchphrases like “CREATING SYNERGY” and “ECONOMIES OF SCALE” and “UNLOCKING SHAREHOLDER VALUE” to drown out the wails of workers who, made obsolete by the M&A, will soon lose their jobs.
Boom phases usually come during economic expansions, but not always.
During the depressive bust phase, a new CEO surveys her kingdom from the top of Executive Mountain. She scowls at the haphazard acquisitions made by her predecessor (financed by corporate debt) and shakes her head at the pet projects (“Initiatives”) growing like fuzzy mold all over the Middle Management Foothills. She decides to re-organize the Company in a way that makes sense to her. She consolidates functions, shuffles the org chart, and goes on a cost-cutting crusade. She even packages up a slow-growing business segment and sells it to some sucker another CEO2 the same way you’d sell a kidney on the black market. She does all this while yelling buzzwords like “BELT-TIGHTENING” and “EFFICIENCIES” and “REFOCUSING” to keep morale from draining down the toilet of despair.
This often happens during the Company’s lean years, but not always. Years of rapid, haphazard growth sometimes justify a hard reset.
Anatomy of a Re-org
When most people think of re-organizations, they take a “systems analysis” approach to problem-solving. They treat it like disassembling a washing machine into its component parts, figuring out how each part works, then building a better washing machine. Ideally, the New & Improved Washing Machine 2.0™ would be simpler, cheaper to manufacture, and include fewer redundancies.
But as anyone who’s ever been on the receiving end of a massive re-org would tell you: results are usually mixed.
(+) Silo-busting, done properly, has the intended effect – people who should’ve been talking to each other finally start doing so.
(-) Silo-busting, done poorly, will drag high-performing teams down to mediocrity.
(+) A one-size-fits-all approach creates simplicity, lowers maintenance costs, and enables volume discounts.
(-) A one-size-fits-all approach presents everyone with a round hole and forces them to fit their square-shaped, heart-shaped, and triangular pegs through that round hole.
That’s because the “washing machine disassembly” analogy only works when you’re re-organizing a production line that can be completely stopped, reworked, and restarted. Re-organizing a business is more like operating on a living, breathing creature; you have to keep it alive and functional while you rearrange its guts.
Worse still: the “washing machine” analogy becomes woefully inadequate once the organization sprawls past a certain size. We’ve never re-organized a Fortune 500 company before, but we imagine that it’s like trying to vivisect a blue whale while it swims around, eats krill, and defecates enough poop to fill a school bus3.
To conduct this re-org, the CEO wouldn’t be looking at stainless steel washers and circuit boards in a brightly-lit room; she’ll be fumbling around inside the whale’s slippery, fetid viscera with a flashlight. Every time she wants to make a change, she’ll have to operate on the whale without anesthesia, eliciting a spasm of pain through the entire organization. If the goal of the re-org is to cut labor costs, then “downsizing” is too hygienic of a term — try “amputation with a hacksaw.”
We think the “surgery on a living, breathing, pooping whale” is a much better analogy for a re-org than the sterile work of disassembling a washing machine, and we hope you agree. By treating the re-org as an engineering problem, we begin thinking of people as interchangeable cogs. But as any leader who’s ever been on the “change management” end of a re-org will tell you: human beings have their own motivations, various strengths and weaknesses, and resistance to change.
A re-organization always makes perfect sense to the architecs standing atop Executive Mountain. But the human element – that unquantifiable tormentor of precision mathematics – can single-handedly turn a beautifully-crafted re-org into a flaming fustercluck.
Sort of like a dog in heat.
Who happens to be in heat.
We couldn’t find reliable estimates of whale poop volumes (per defecation) in the scientific literature. However, we did learn that whale feces typically score 5-6 on the Bristol Stool Scale. Just imagine a blue whale pooping enough times to fill a school bus, okay?