The world is starting to recover from the pandemic. Many organisations are thinking and asking questions about themselves and their operating models. Many business model elements such as funding sources and supply chains have been disrupted and warped out of all recognition in the last 12 months. And as is often written, many restructures fail. This is daunting and yet, it also presents opportunities to do better than we did before.
This week I have been planning a project non-profit restructure project. There may been challenges to their cost base before, but Covid-19 has made this more acute. I’m going to posit that there are three main stages to an effective restructure.
1 Foundation phase
Past projects have taught me the need to establish upfront the true nature of the problem and the case for change. Get under the skin. Einstein is commonly quoted in saying if he had 60 minutes to solve a problem he would spend 55 minutes on defining it, and there is some truth to this. The problem may be more complicated or complex than first appearances indicated. It is worth doing that understanding.
And establishing the case for change is an essential. These kind of projects require grit and resilience to see through to the conclusion. You may need this as a lodestar to return to when the going gets stuff. And you will need colleagues to recruit to the cause. Useful insight can from from diverse perspectives across the business. Take those cross sections and you will find out more.
2 Discovery phase
The second stage is the discovery phase. Its subtly different to the case for change. This is about interrogating the information. I call it lifting under the bonnet of the finances. Take time to understand the organisations on a very granular level. Do make use of robust benchmarking data if you have it. Your finance teams should also have profound insight to give to this debate. Does your finance team whinge about practices in a certain team? Its time to probe their opinions — right or wrong — there will be some insight there to be had.
The other area of the discovery phase is thinking about what is required — what is the ideal state we need to get to. And in terms of defining the ideal state its worth thinking about what your organisation will be in five years time, and not just now. In a world of uncertainty things soon become obsolescent. Its worth exploring emerging issues in your sector and exploring with others anticipated future developments. Anything you can do to build in agility now will pay off later. No one wants restructuring to become an annual event.
3 Delivery phase
As part of the delivery phase it makes sense to have an appropriate project management plan in place. With plenty of firebreaks if you need them! Timescales need careful attention. If its going to be difficult news then we don’t want to drag that out. On the other hand, without enough time to go through the necessary steps we run the risk of the project failing. Its good to clear the decks of other projects and devote as much resource to the project, particularly at the key or difficult times. HR are your friends, get them on board as early as you can.
The other key area of delivery is the sharing of how it is progressing. I believe in the importance of transparency and as much as possible working out in the open. Keeping everyone included on progress is vital I think, you need to keep taking with you on the journey. And being able to monitor and share the benefits is really important. That visibility shows you have followed through on your commitment.
By the way, do share any literature you may have on restructuring. I have not found much on this in working out loud circles. I’d be interested to hear what you think.
So, some quick thoughts there. I’m falling back in love with the work of financial analysis this week. I have been enjoying using data to derive insight which I am pretty confident no one else has ever found first. Being the first to know something interesting about a sector is a pretty satisfying feeling really.
Book of the Week
Sean Carroll— From Eternity to Here — The Quest for an Ultimate Theory of Time
I love a popular science book and anything on physics or astronomy. I enjoyed reading Sean Carroll’s book — it was probably as well I didn’t read the wikipedia entry referring to it as not for the fainthearted! Its an impressive work covering so much ground. What made me read it so avidly was my abiding fascination with the concept of entropy. Things break, things go wrong, that’s the nature of things. The Universe tends to complexity and decay. But we humans still find ways to achieve amazing things. I find that weirdly consoling.