Just 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 its goals. The strategy is a roadmap that describes the core initiatives and decisions that will propel it forward in pursuit of its vision. The strategy is ultimately implemented by a team; it is critical that the team be organized in a 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 its 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 stratagems. 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 lose focus.