Why Organizational Transformations Fail

You can’t reorganize the way a business thinks by reorganizing the business.

~Stephen Parry

I can safely state that every company I worked for was attempting to make an organizational transition during my time there. Motivations varied from simply surviving, through adjusting to a new environment, to improving the whole business. Approaches to run a transition also differed, but one common part was a reorganization.

Oh, reorganizations. Who doesn’t love reorgs? Shaking everyone around. Bringing in good old insecurity and fear of unknown. Quite an interesting strategy to introduce a positive change, although the one which is most prevalent and often inevitable. Unfortunately, a strategy that has a pretty low success rate too.

After all, coffee doesn’t become sweeter simply because you stir it.

The interesting part, however, is that I can come up with an example or two in which reorganizations helped to make a transition a success, or even make it possible in the first place.

How come? The answer is hidden in Stephen Parry’s words at the beginning of the post. It’s not about the reorganization itself; it’s about changing the way business thinks. The problem with most reorgs is that they’re driven from the top, which usually means that the top of hierarchy remains the same. It also means that the way business thinks, which spreads top-down, remains unchanged.

If the organization’s leaders’ mindset remains the same, any change that is introduced down there isn’t sustainable. Eventually, it will be reverted. Depending on how many layers of isolation there are it may take some time but it’s inevitable. Prevailing mindset just goes top-down and unless you can address its source it’s a battle you’re not going to win.

I can think of, and have been a part of, reorganizations that shook the very top of a company, introducing new leaders and thus enabling the new way of thinking. Yes, the business was reorganized but this was neither the only nor the most important part of the change.

Because coffee doesn’t become sweeter simply because you stir it. Unless you’ve remembered to add sugar before, that is.

The game-changer here is mindset; that has to change in order to enable the successful transition. And I have bad news for you: it has to change at the very top of the organization. You don’t necessarily have to start there, but eventually it either happens or things, in general, remain the same.

So if you consider a reorg as a way to change how your business works, ask yourself a question: does this change affect the mindset of the organization’s leaders? If not, I wouldn’t expect much chance of success.

Besides, there are many ways to skin a cat. A reorg isn’t the only tool you have to change mindset across the organization. Heck, it isn’t even a very good one. Remember that when you start the next revolution just to see that virtually nothing changes as a result.

By the way, there is a neat application of this idea in a bit different situation too. If you want to preserve mindset across the organization when changing leaders, pay very close attention how new leaders think. Your company can be a well-oiled machine, but when steering wheel is grabbed by a guy who neither understands nor cares about the existing mindset, the situation is going to deteriorate pretty quickly. You just don’t want to hire Steve Balmer to substitute for Bill Gates.