I survived four reorganizations during my time working in corporate America. They all looked good on paper. None of them made a difference to our bottom lines. The reorgs didn’t address the real problems with our products and pricing. 

Moreover, like most reorganizations, it destroyed the relationships, experience, and tribal knowledge that expedite decision-making and improve performance. Reorganizations bulldoze those intangible assets into oblivion, ensuring that for six months at least, a company will be operating much less effectively.

People who study system dynamics refer to “fixes that fail.” Fixes that fail either create unintended—and problematic—consequences, or they exacerbate the original problem. For example, a company that wants to cut costs might choose to reduce maintenance on their machines. In the short term, costs do go down—the company saves money on labor, supplies, and replacement parts. But over the long run, machines begin to break down more frequently, product quality declines, and total costs eventually increase. 

Cities dealing with traffic congestion implement a classic fix that fails: they build more roads to increase capacity. Unfortunately, less congested roads encourage more people to drive, eventually leading to even more traffic than before. (A better fix would be to improve mass transit, or to change zoning laws to allow commercial and residential buildings to be built in the same place and reduce the need for so much driving.)

More often than not, reorganizations are a fix that fails. 

Why? Because customers have zero interest in how you're organized internally. They want good products and services at fair prices. If they’re not buying from you, the problem is almost certainly not related to the fact that you have a VP of Sales, and not a “Brand Warrior,” a Customer Service Director instead of a “Chief Happiness Officer,” or a head of research instead of a “Galactic Viceroy of Research Excellence.” (All of which are real titles, by the way.)

Changing people’s seats has about as much chance of improving your situation as changing the Weather Channel has of improving your actual weather. 99.9% of the time, the root cause of your problems is not the org chart. 

If your customers aren’t buying, you need to look at more fundamental elements of your company than the title on people’s business cards.

Does the product meet customer needs—or even better, exceed them? Is your service competitive? Is the price right? 

Understanding the real problem and its causes is the necessary first step towards a durable solution.

2 Comments