Restructuring is often focused on short-term cost reduction, with workforce shrinkage playing a major role. There is the risk that restructuring addresses short term issues but does not position the company for long term value growth and preservation.
Step #1 Establish a common understanding of what success and business value will look like in the future.
Step #2 Set out the restructuring objectives, based on step #1. These objectives will be broader than short-term financial targets and consider things such as: reputation, customer retention, employee morale & ability to attract employees in the future, and the need for long-term investments, etc.
Step #3 Assign accountability for achieving objectives to specific members of leadership.
Step #4 Assemble a plan, which includes both short-term options (e.g. terminating current and planned consulting projects, eliminating discretionary spending, staff reductions) and longer-term options (e.g. continuing to investment in projects with clear business cases to grow and preserve value, continuing with select innovation and trials, reviewing and revising the organizational structure.)
Step #5 This may well be the hardest step. Determine the root causes of the need for restructuring.
- What changes to the board of directors and board oversight processes are needed?
- What changes to the executive team and the executive recruiting & development processes are required?
- What changes to the resource allocation process are needed? Can resources be better allocated to value growth and preservation initiatives? What is the right blend of long-term and short-term resources to provide the agility to adapt to changes in the external environment?
And don’t forget the foundational questions:
- Who are your target customers?
- How do your target customers, in their hearts and minds, perceive your competitive differentiated value proposition?
- What are your internal competitively differentiated delivery capabilities?
To enable discussion with your board of directors, advisory board and management, download the following one-page slide