There’s a classic Dilbert cartoon panel by Scott Adams from 1995. One of the characters is a cynical employee named Wally who spends all his time basically avoiding work. After his Pointy-Haired Boss announces yet another reorganization, Wally asks, “Did our core business change, or are you saying that every reorg prior to this was a misdirected failure?”
His boss then responds with a question. “Wally, when a car gets a flat tire, what would you do?” To which Wally replies, “Well, if I’m you, I rotate the tires and drive home.”
I’ve seen a lot of corporate reorganizations over the years. Even at the time they were announced, many of them seemed like uninformed attempts to remedy a poorly understood organizational problem. Products weren’t being developed rapidly enough, or the organization’s various functional groups were “siloed” and not cooperating, or customers were simply not being supported. Or any of the other organizational problems you have likely experienced.
So, the company responded by shuffling people around.
In hindsight, the numerous reorganizations rarely seemed to have made any long-term positive impact. In fact, the company’s ability to execute generally did not improve and sometimes arguably got worse.
Fortunately, effective strategy execution has been studied extensively. And analysis shows that reorganization by itself is actually an ineffective way of affecting change.
Management consultants Garry Neilson, Karla Martin and Elizabeth Powers surveyed 125,000 employees from over 1,000 companies on the question of organizational capabilities.
Among the highlights, when asked if they agreed with the question that, “Important strategic and operational decisions are quickly translated in action.” 60% of the companies rated themselves as weak.
Based on a survey of over 26,000 people from 31 different companies, the authors compiled a list of 17 fundamental traits of organization effectiveness, and weighted them according to their impact on an organization’s ability to execute.
These 17 fundamental traits were grouped into one of four different categories:
- Structure: Aspects of an organization related to reporting and hierarchy.
- Motivators: Those attributes related to true accountability and career advancement based on accurate performance appraisal processes.
- Information Flow: How readily and unfiltered information is communicated both internally within the organization and the information flow back/forth to the customers.
- Decision Rights: Aspects related to employees having a clear and unambiguous understanding as to who can make decisions and for what.
The results were surprising. And there are practical lessons you can apply to drive real change in your organization.
The research showed that the most important factor in improving strategy execution was not the structure of the organization. In fact, restructuring (or reorganizing) was the least effective factor in strategy execution.
What was more important by a factor of two, was Information Flow and Decision Rights. Having rapid and unfiltered information about the market and ongoings within the company is critical for informed and timely decision-making. While, providing employees with a clear understanding of who has what decision rights, avoids delayed decisions, confusion and second-guessing.
Thinking back on all the reorganizations I’ve experienced, not one of them involved addressing problems with Information Flow or Decision Rights.
Even Wally in the Dilbert cartoon hasn’t changed his thinking. In 2014, cartoonist Scott Adams shows Wally explaining to Dilbert his thoughts on getting into the strategic planning game. Wally says, “If I understand the job description, you basically hallucinate about the future and then something different happens.”
That’s about right Wally.
You can find the paper on “The Secrets to Successful Strategy Execution,” by Garry Neilson, Karla Martin and Elizabeth Powers, in its entirety at the Harvard Business Review here.