Evolution Not Revolution – Part 2: The Re-Shuffle Hustle: Are You Restructuring or Reconfiguring?

During my tenure in various roles, I've been at both ends of organisational changes. A poignant remark made by a colleague during a failed restructuring attempt resonates with me:

"Does it feel like we're just re-arranging the deck chairs on the Titanic while the band plays on?"

In our previous instalment, we addressed the essential needs for a business to evolve to remain relevant and the primary drivers behind such changes. We also introduced a framework for embracing change, emphasising the metaphor of boarding the train of transformation or being left behind.

In this piece, we'll distinguish between two vital processes – restructuring and reconfiguring – and explore their impacts.

Restructuring vs. Reconfiguring: The Corporatised Economic Stampede

Restructuring, commonly associated with dramatic shifts in an organisation's structure, often comes to mind when a business faces declining revenues or misdirection. The media's portrayal of large-scale restructuring, driven by economic downturns where hundreds lose jobs, has ingrained in our minds a somewhat grim perspective on the matter. Phrases like "market turbulence" or "unforeseen economic pressures" often serve as explanations..

As a young child, I would often overhear my father and his friends discuss business over glasses of red wine at our dining table. A statement from one of his rugby mates, an experienced corporate banker, still rings true with me today:

"A company can restructure its debt liabilities and personnel as much as it likes! But without foresight and planning in place to absorb market changes by those in charge who are avoiding their responsibility to prevent these issues, the board will find itself back in my office within a year. How good is that, after all our we thrive on lending money."

As much as internal politics and accountability dodging can be a problem companies can also suffer from a corporatised economic stampede of sorts, one organisation makes the decision then other organisations think they are not aware of something going on and make an unfounded snap decision to do the same which acts like a set of domino's. How can we remain competitive and innovative if we are all doing the same thing?

The Elephant in the Room

So I guess the first question in my observation organisations fail to ask them selfs, Is this sudden surge towards restructuring a mere reflex action? In many cases, it's the most straightforward approach for firms, as trimming human resources, typically a significant expenditure, seems like an immediate solution.

To genuinely appreciate the essence of restructuring, one must recognise its original purpose: to ensure an organisation remains vigorous and adaptive. As firms perfect their processes and improve efficiency, it's natural for them to outgrow certain roles. This evolution could be seen as rendering roles redundant. Ideally, these 'redundant' resources should be reallocated towards new innovative tasks within the firm.

But here's the catch: If mismanaged, this phase, instead of leading to innovation, results in organisational cholesterol. Much like a human body, organisations consume resources, produce outputs, and invariably, some waste. And similar to an athlete, muscles initially used to perform repetitive and efficient processes sometimes are no long needed and are left to turn into to unnecessary 'fat' that slows down the organisation. Mismanagement of this 'fat' is where the true essence of restructuring gets lost, do we cut it out in the form of a restructure or redeploy it in the form of a reconfiguration and turn it back into useful muscle.

Consequences of Misguided Restructuring:

A hasty or ill-conceived restructuring that gets the above scenario wrong can lead to:

1. Erosion of company culture.
2. Disruption of efficient processes.
3. Loss of invaluable institutional knowledge.
4. An environment of mistrust and lack of loyalty.
5. Missed opportunity from innovations that will never be realised

A blend of both reconfiguration and restructuring can strike a balance, ensuring optimal functioning while preventing inefficiencies.

When to Use Which?

1. Restructuring: Ideal for responding to radical disruptions, like the 2008 financial crisis or unprecedented challenges like COVID-19. Such events require transformative actions to adapt to the new reality.
2. Reconfiguration: Best suited for incremental changes that reflect evolving customer needs and temporary market shifts.

The Evolutionary Mindset:

The crux is discerning between these two and deploying them judiciously. As leaders, we must champion evolution over revolution. Rapid and frequent changes can be as detrimental as stagnation. A key takeaway here is understanding the need for change without defaulting to redundancy.

As we anticipate the next piece in this series, reflect upon this: If restructuring is executed with genuine understanding, benchmarking, and devoid of self-preservation instincts, can we truly distinguish between an effective reconfiguration and a mere restructuring?

I appreciate your engagement and welcome insights or experiences around this pertinent topic that has, at some point, touched us all.