Restructures should answer to a strategy

I've seen a fair few restructures over the years, from both sides of the fence. The ones that work start with strategy. The ones that don't start with cost.

A restructure should be the answer to a question: this is our strategy, so what do we need to execute it? Too often, it's the other way around. Cost needs to come down so a restructure happens and the strategy gets fitted around whatever shape comes out the other end.

I've been inside organisations, more than once, where that's exactly what happened. Roles went, headcount dropped, the number got hit. But there was no real strategy behind the shape that was left. Neither ended well.

When a restructure starts with strategy, the questions are different. What are we actually trying to achieve? What capability do we need to get there? What structure supports that? The changes that follow have a reason behind them and that reason can be explained to the people affected by it, even when the answer is still hard to hear.

When a restructure starts with cost, the structure that comes out the other end might save money in the short term. But it wasn't built to do anything in particular; it's just a smaller version of what existed before.

None of this makes restructures easy. They're hard on the people going through them and hard on the people making the decisions. But a restructure with a clear strategic answer behind it tends to land better, even when it's difficult, because there's a reason for it that holds up under questioning, not just that “we’re saving money”.

If you're heading into a restructure, the question worth asking first isn't what can we cut. It's what this business needs to deliver on our strategy, and whether this change actually gets us there.

Photo by Javier Allegue Barros