How can restructuring grow value?

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

 

How can restructuring grow value?