Low success rate for organisational redesigns

Low success rate for organisational redesigns
15 February, 2017 Rene Palne
In Insights, News

A McKinsey’s study from 2015 shows that less than a quarter of all organizational redesigns are succesful! McKinsey identify the main reason as a lack of structured approach, both in terms of preparation and execution. They suggest 9 rules to follow to significantly increase likelihood of success.

The study does not clarify whether this lag of structured approach is a consequence of lag of Capabilities, Resources, Executive attention or basically due to the often extreme time-constraints  these initiatives are executed under – Most likely it’s a combination of it all.

Related to this and looking at the same study, an article in Harvard Business Review, suggests that one of the root causes for the low success rate is low ambitions.. In my experience, the ambitions are almost never low in these re-orgs on the contrary they are sky high.. at least in the beginning.. Then reality takes over and the plans needs to be adjusted for organisational capabilities and available resources and then time constraints kicks in, leading to scope being changed and ambition level reduced to reflect the reality of the situation.

Both the McKinsey study and the HBR article do contain several really good insights on how to improve the chance of success. The McKinsey study suggest a solid 9 rule approach, that, if followed fully suggest an 86% success rate vs. only 25% if just following 3-4 of them.

McKinsey’s 9 rule approach to organisational redesign

  1. Focus first on the longer-term strategic aspirations
  2. Take time to survey the scene
  3. Be structured about selecting the right blueprint
  4. Go beyond lines and boxes
  5. Be rigorous about drafting in talent
  6. Identify the necessary mind-set shifts—and change those mind-sets
  7. Establish metrics that measure short- and long-term success
  8. Make sure business leaders communicate
  9. Manage the transitional risks

The HBR article suggest 5 great ways to organise for success – that, if applied on-top of the 9 rules will show additional performance benefits on the other side of a re-organisation.

HBR – 5 Step approach to succeed at organisation design

  1. Organize around competitive advantage
  2. Create boundaries between competitive and necessary work.
  3. Focus on the seams
  4. Distribute decision rights
  5. Design clear, meaningful roles

An unrealistic dream scenario

Concluding on these two well written and inspirational articles. There is one general flaw, both articles describes an unrealistic and dream like scenario, that does not fit the reality facing organisations and executives – time and resources are simply not available to follow all these points..  Therefore one needs to know exactly how to cut a heal (and a toe) to make ends meet while still maintaining a high ambition level.

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