Align your organization with your strategy

A football play demonstrates how strategy drives structureJust over a week ago I made the toughest decision I have ever made as CEO of Three Pillar Global.  I laid off a handful of employees.  Unlike what you may expect, my primary reason wasn’t financial, it was strategic.  How could it be strategic to layoff good people? Structure flows from strategy.  People fit within structure.  We changed our strategy, which ultimately changed our structure.

A company’s strategy sets forth a plan of how it will reach it’s goals.  The strategy is a roadmap that describes the core initiatives and decisions that will propel it forward in pursuit of it’s vision.  The strategy is ultimately implemented by a team; it is critical that the team be organized in manner that allows the strategy to be implemented in an efficient and effective manner.  In other words, the strategy needs to drive the structure.  Unfortunately, this meant eliminating some positions.

Take for example a regional restaurant that defines it’s strategy as the following:

  • The region’s tastiest mexican food
  • Within an 8 minute drive from everyone
  • Exceptional customer service

This organization might organize around an executive chef, a corporate development officer, and an operations chief.  While working together, each leader is focused upon one of the key stratagem.  With this structure in place, the organization is aligned for success. If the strategy is a good one (disclaimer, I’m not a restauranteur!) and the right people are hired, this organization should flourish.

Now, take for comparison, our favorite restaurant’s chief competitor.  They are competing in the same market but have a different strategy. Their strategy calls for:

  • Something for everyone; a wide variety of food choices
  • Reasonable prices that even a family can afford.
  • No longer than a 5 minute wait for a table

Because they are targeting reasonable prices, our competitor plans for high volumes in fewer restaurants.  They have no reason for a corporate development officer.   The operations chief should be able to handle the real estate demands.  On the other hand, in order to maintain competitive costs, effective purchasing is essential.   A purchasing officer is added to the team.

Are you intentional about your organizational structure?  Does it map to your strategy?  One frequent mistake people make is to organize around people.  In doing so, organizations create inefficiencies and loose focus.

2 Comments Add yours

  1. Ron Hulen says:

    David,

    Thank you for the post. I wish more companies would explain their actions especially when changing strategic direction. Laying off employees for non-performance or financial reasons is a difficult task. Certainly changing the organization may require a new set of skills and experience than is available in the firm today. At the same time, employees are the company’s greatest asset and must be nurtured with care. As such, ensuring your exiting talent finds a good home is a key success factor to your firm’s success. You never know when paths will cross in both business and personal situations. One thing I am confident of, its a small world out there and finding the right people is a difficult task. Once you find them, making sure you continue to foster relationships with them both within the firm and externally is the key to success both now and in the future.

    Ron

    1. David H. DeWolf says:

      Ron,

      Your focus is spot on – the people. You’ve done a great job at articulating the balance that is required – care for the firm’s employees and doing the right thing for the company. It’s not an easy balance, but it’s a critical one.

      Knowing how hard it is to pull the trigger on a decision like this, I’d be willing to bet that many organizations fail to make the tough decisions they need to excel. I have come to realize that this is ultimately a greater disservice to everyone. When you allow misalignment to linger, employees aren’t setup for success and culture deteriorates. On the flip side, if you handle a reorganization with professionalism, compassion, and a genuine desire to help people land on their feet, all parties involved can make lemonade out of lemons.

      One of our former colleagues has actually thanked us for making the tough decision. It turns out that the individual has fallen into an situation that is more aligned with his skills and will allow him to excel.

      I look forward to sharing more stories at some point about the actual process and the lessons I learned by going through this difficult decision. I’m grateful to have had several advisors to lean on for advice through this process and am proud of the way it went down. Once I have a chance to reflect and more objectively discern what we did and did not do well I hope to be even more transparent. As you said, for too many companies, the topic is taboo.

      David

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