Corporate Transformation and Restructuring: A Strategic Approach

For multinational restructuring, the voice from the country level with first hand, local knowledge should be heard. Project management tools should be used, especially in complex projects. A company can use existing procedures or create new ones. Small-scale tests are needed to avoid a risk of big and costly mistakes affecting the whole organisation. This is the most important part of organisational restructuring process in its implementation phase. If a test is not successful, the whole organisational restructuring is in danger.

Large implementation projects are never mistake free. Companies should be ready to make the necessary corrections, as many times as needed. Some project objectives do not meet SMART criteria and results of restructuring are not fully measured and analysed properly. Insufficient internal communication destabilises the organisation too much during the process.

Limited co-ownership of the project at all organisational levels negatively affects the implementation.


Corporate Transformation and Restructuring: A Strategic Approach [Abbass F. Alkhafaji] on *FREE* shipping on qualifying offers. Transformation . people found the following review helpful. Go Transformational!By Tarifa. AjaifCorporate Transformation and Restructuring: A Strategic Approach by.

In the worst case scenario restructuring is tactical, with vague objectives, planned at top level only, without collecting feedback from all levels of the organisation, and with diluted responsibility. A great recipe for a total failure!

The Process Of Organisational Restructuring For Large Corporations

It can serve as a perfect example and inspiration for numerous organisational restructuring processes implemented in its year history. Nike started as a company selling footwear for runners.


Nike quickly realised that its consumers need specialised apparel and equipment to practice their sports, so the two business units were added to the product portfolio. The main reason was that, for example, products for soccer differ significantly from products for running by: It was much easier to respond to consumer needs and to grow distinctive category markets when the organisation reflected the category approach. Each sports category division includes footwear, apparel and equipment, but has also a team to manage category marketing, retail, visual merchandising, product development, and so on.

The transformation from footwear to BU divisions took several years, but the reorganisation from BU to categories was executed within 1 year. The competition followed by doing the same, but was unable to regain strategic initiative. Nike was established in Oregon, USA. It soon expanded to all other states, and then started business in Western Europe and on other continents. The big organisational restructuring innovation was the European headquarters as a service centre for all European countries which enable countries to be less staffed, more focused on sales and with less headcount needed to cover all functional departments in each country.

Nike worked as a matrix , where all functional and category positions are represented at all levels global, geography, country.

Leading organizational transformations | McKinsey

Marketing activities were integrated across all departments sales, marketing and retail and executed in each country, according to global guidelines , and with local adjustments. After Nike expanded to Europe and started in some countries with traditional logistics in the first couple of years, instead of having warehouses in each country, one central warehouse was built in Laakdal, Belgium, to supply all European customers from one place.

All Nike global factories shipped their products to Laakdal, and then, outsourced logistics companies delivered seasonal orders to the doors of Nike European customers. In the 90s, opening a huge warehouse facility in the middle of nowhere in Belgium, but close to the sea ports was a huge supply chain innovation, which simplified logistics and was a labour and operational cost saving compared to having warehouses in each country. The system did not work perfectly from day one, but gradually, Nike made it very functional and partly automated. In the early stage of its development, Nike met the demand by collecting orders from customers, ordering production at factories and delivering products to customers.

The idea of making customers order products, with the help of product samples and catalogues, 6 months before each of 4 seasons was revolutionary. It enabled better demand-based, supply planning, with less cash and logistics constraints. Any success in business depends on good interaction with consumers and high gross margin.

Axes of change

As the founder of Nike, Phil Knight, used to say: In the past, the main business partners for Nike were: Nike sales departments clearly reflected that approach. In a way, Nike was partly dependent on customer experience that their partners offered. Many of them were far from being brand enhancers and frequently decreased prices through aggressive discounting.

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Write a customer review. There was a problem filtering reviews right now. Please try again later. Corporate Transformation and Restructuring: A Strategic Approach by Abbass F. Alkhafaji is one of the greatest books I have ever read that talked about Transformational Leadership.

Change Management - Unit 1: Organizational Change

I have spent great time reading about Transformational leadership aspects, elements, concepts and importance. Most companies start their transformation efforts with very broad objectives—say, "to lead the industry in customer satisfaction. Successful efforts push over time for increasing clarity and specificity in top-down direction as change pushes toward tangibility at the front line. At one railroad, for example, the vision and goals started broadly "be the quality leader in the transportation industry" and became more specific "achieve the three Rs of precision execution: This clarity helped align other change efforts to make it evident how they contributed to the overall goal.

That way, a headquarters taskforce could redesign train scheduling while front-line teams attacked execution problems with individual trains. Although top-down efforts create the focus and the necessary preconditions for transformational change, they alone are not sufficient to achieve it. One of the biggest challenges to overcome is the widely held management view that "all we have to do is tell employees what we want, provide some training and rewards, and change will happen.

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But it falls far short when the change requires fundamentally new ways of doing business—like moving from a product to a customer orientation. In these cases, embedded skills, systems, and attitudes are usually so at odds with the new requirements that a much more intensive process is needed to retool the organization to effect lasting change.

What's needed, therefore, is to get large numbers of people throughout an organization in operations, support units, and business management teams alike aggressively and creatively working to improve performance. This, in turn, depends on the availability—or the creation—of disciplined processes for identifying opportunities and developing plans to close clearly identified performance gaps. Many such problem-solving processes exist, most of which are rooted in the Quality movement and share common principles: To be truly effective, however, these approaches must be tailored to the specific challenges, skills, and change readiness of a given part of the organization.


Innovations like TQM, reengineering, the learning organization, and benchmarking are certainly changes, but they require the fundamental revisions that can only be found in true organizational transformations--that is, in leadership style and organizational culture. Though companies spend a lot of time, money, and energy on a broad-scale quality program, or a training program, or a program to refocus their organization's culture, measurable downstream benefits—in, say, customer satisfaction or on-time delivery or cost reduction—fall well short of expectations. Today, however, generating and capturing such quantum leaps in performance lie at the heart of many CEOs' jobs. Teams are critical for all three axes. Some opportunities for breakthrough improvements in performance can be addressed only through a cross-functional core process redesign perspective, in which people, activities, and information are linked in new ways.

This requires, among other things, designing a methodology for setting appropriate goals and performance objectives, developing analytical templates to guide problem solving, and determining specific information needs that, of course, will vary by level and unit. For most parts of an organization, this effort will start simply and become more advanced over time.

Front-line operations will tend to focus on improving the cost, quality, or timeliness of products and services. At one railroad, for example, front-line teams in each terminal analyzed their operational delays and helped move on-time performance from 20 to 79 percent. Staff functions will tend to work on aligning their activities to increase the value of products or services through joint efforts with front-line operations. At one insurance company, finance and human resource teams redesigned planning and compensation systems to be consistent with desired new agent behavior.

Management groups will tend to concentrate on identifying the most attractive performance improvement opportunities and on designing the processes to exploit them. Over a two-year period, a steel company's management team started with relatively simple efforts to improve safety and housekeeping and moved on to design advanced processes to address yields, labor productivity, and throughput time.

The net effect of launching such team-based problem-solving efforts is much like getting a flywheel spinning. Initially, tremendous inertia exists, and the first cycle can be lengthy and difficult, requiring substantial energy from outside the group to get it started. But if the process continues to be supported and rewarded by management, momentum gradually builds, improvements are achieved, the problem-solving cycle runs a more regular course, and the promise of "continuous improvement" becomes a real possibility.

Tapping the brains and energy of thousands of people is powerful in itself, but there is a second reason for using bottom-up problem solving. In many cases, you already know what needs to be done, but you don't believe that people can change their behavior just because they are told—with good reason—to do so.

Leading organizational transformations

What does it actually take to create new behavior? Think, for a moment, about the mechanics of a golf swing. You know you have to set up square to the target. You know you have to take the club head back slowly. You know, because a golf pro has told you at one time or another, each of the fifteen things you have to do to hit a golf ball well. But knowing is not enough. You have to experience it. You have to be able to try it in a risk-free environment, get the feel of it.

In other words, you have to go through the process of finding the right answer yourself. For these reasons, bottom-up initiatives go far beyond the familiar "pilot testing and implementation. In most cases, intensive problem-solving efforts ultimately have to spread across an entire enterprise. With pilots, by contrast, the normal pattern is to try them in one or two isolated locations, watch them for a year or so, and then re-evaluate the effort. Bottom-up efforts go beyond simply implementing a new solution. They have wider objectives: These efforts depend on effective "problem solving for process"—that is, developing creative ways to involve people in improving performance and redesigning their work.

Again, this goes well beyond the top-down implementation of a solution defined by others. Bottom-up activities are not one-off initiatives.

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They call for successive rounds of effort to improve performance and build skills. There are, however, limits to what can be achieved through both top-down and broad-based efforts that fundamentally operate within existing organizational boundaries. Some opportunities for breakthrough improvements in performance can be addressed only through a cross-functional core process redesign perspective, in which people, activities, and information are linked in new ways.

The goal of CPR is to produce simultaneous, dramatic improvements 25 to 75 percent or more in cost, quality, and time by shifting the focus of work and decision making from hierarchical channels to new horizontal flows across functions, locations, and organizational boundaries. All companies, whether they recognize it or not, have a few three to five core processes that deliver the majority of an enterprise's value to its customers.

In a sense, of course, companies have always had cross-functional initiatives. But CPR takes them much further with its intense performance orientation, its focus on the few processes that drive value and competitive differentiation, and its support for the changes in organization structure, management, and communication systems needed to "institutionalize" new levels of performance. Top-down, bottom-up, and core process activities are not ground breaking in and of themselves.

What is important is that they are:. Organizations can perform well with less than perfect strategies, but not with unclear objectives. Especially during periods of change, it is easy to let attention drift away from tangible performance goals toward a more general concern for effecting the necessary shifts in organizational culture. But this puts things the wrong way around. The best way to change culture is to work on improving performance at the same time. When, for example, management and union are at loggerheads, direct attacks on each other's entrenched position are seldom a constructive way to more forward.

If, however, both sides can agree on new, shared performance goals—better on-time performance, say, or improved customer service—possible areas of cooperation begin to open up. Similarly, GE's "Workout" program may provide secondary cultural benefits in terms of how people work together. But the driving force and primary aim is to get them collaborating to solve a specific performance-related problem.

All three axes are worked on simultaneously and in a way that is mutually reinforcing. Emphasis will fall in different places depending on the problem and the goal. Where the issue is to do with strategic focus or direction setting, the main action will probably be top down; where it is front-line involvement, bottom up; and where it is multiple inefficient handoffs across functions, redesign of cross-functional core processes. But wherever the main action is, transforming performance levels requires integrated effort along all three axes.

Explicit attention must also be given to the relative emphasis paid to each axis. Putting too much weight on top-down efforts risks creating cynicism and confusion; excessive emphasis on bottom-up efforts means people may focus on issues that will not make any difference competitively; and a bias toward cross-functional processes could produce a solution so complex in design that implementing it is beyond an organization's capabilities. Teams are critical for all three axes. With top-down activities, it is essential to build a leadership team to integrate initiatives and lead the process; in bottom-up initiatives, there will ultimately be hundreds of performance-improvement teams working in every part of an organization; and in cross-functional efforts, process management teams have to come together across functions.

Transformational change is by its nature iterative. Although its phases overlap and interact, sequence does matter. Furthermore, you can also learn from the experiences of path-breaking companies that have preceded you. So a general road map may help managers plot their course or identify missed turnings that may be slowing progress. The goal of phase 1, which can last anything from two to twelve months, is to kindle an urgent need for change within an organization and to articulate a new sense of direction. The best efforts involve thought leaders throughout a company both to build support and to tap the experience of multiple constituencies in an objective assessment of the competitive environment, the organization's current capabilities, and the outlook for its future.

Whether the outcome is called a new vision, a mission, a strategic framework, or something else, what is crucial is that it states the rationale for change and defines broad performance and organizational objectives. Analyzing both marketplace and organization to highlight the need for change, the barriers to be overcome, and the potential payoff. Structuring workshops and other forums to help first the leadership group and then the rest of the organization reach a common vision and begin to identify the actions required to make the vision a reality.

Examining the experience of other companies undergoing change to help build courage and conviction—and to develop insights about how the organization could evolve. The goal of phase 2 is to translate the change vision into a much more specific set of performance objectives and to design processes that involve all three axes of change in order to engage the organization in achieving these goals. Senior managers almost always underestimate the importance of this structured planning phase.