Adapting to a "Structural Break"
McKinsey Quarterly's most recent issues have offered insightful articles about the necessity for rethinking some business practices to adapt to current conditions.
In this informative piece from the December 2008 issue, Richard Rumelt makes the case that we are experiencing not just a recession, but a "structural break" -- a sudden shift in the way business is done. Rumelt suggests that this shift will require not just belt-tightening, but detailed reworking of growth-based business structures and market strategies that so many companies have had in place to capitalize on previously favorable conditions. No organization can afford wasteful and time-consuming internal communications. Nor can the healthier business units continue to carry less-profitable units whose costs are hiding within the complex, multifunctional management structures we have built.
In short: the time to deliberately isolate business units' support structures, and collect data to identify areas of opportunity, is now.
Rumelt's conclusion:
"In ordinary hard times, the traditional moves are reducing fixed costs, scope,
and variety. But in hard times accompanied by structural breaks, you must
rethink the way you manage. Companies that survive and go on to prosper look
beyond costs to the detailed structure of managerial work. Several new issues
come to the forefront:
- How much extra work results from the way incentive and evaluation systems relentlessly pressure managers to look busy and outperform one another?
- Which information flows can you omit? Information that doesn’t inform value-creating decisions is a wasteful distraction.
- Which decisions and judgments can you standardize as policy rather than make in costly meetings and communications?
- How can you work with customers, suppliers, and the government to simplify their processes so that you can simplify yours?
Barr Corporate Success can help you develop and execute strategies which streamline processes, improve functioning of tight-knit teams, and produce a more effective, productive, profitable organization. Call (513-470-8980) or e-mail us to start today. Let's get to work!
