Ongoing Success Hinges On Optimizing the Ideal Business Structure

Companies need to reassess their strategies and structures to align with their mission and work to serve their customers effectively.

Ed Eppley
August 10, 2023

Many organizations are still grappling with the upheaval of where work happens – a structural change that continues to have HR leaders sifting through recent trends about working remote, hybrid, or fully on-site. And few would doubt that attracting and retaining top talent is an important success measure.

While many couldn’t have anticipated that kind of disruption, what about things you do see and can anticipate that impact ongoing success?

Look closely and you’ll likely see a strategic need for change, for self-initiated disruption long before your hand is forced. Chances are it will be more about structuring how the work gets done.  

Flexible strategies, flexible structures

As one would expect, when things aren’t going as anticipated or desired, strategies get reassessed and change is initiated. Changes I’m currently seeing inside companies are structural with a focus on the long-term health of the business.

Right now two long-time clients of mine are in the early stages of restructuring their companies.

Previously these companies operated on a regional, geographical model. But in the last decade, both moved to vertical structures where leaders became responsible for entire business units regardless of geographical location.

Today they are both weighing the benefits of switching back to geographical models.

But why go backward?

Structure in response to service

Peter Drucker said it this way: Businesses exist for the purpose of creating and serving a customer.

When a business finds it’s not serving the customer to the best of its ability, it would do well to follow Drucker’s other piece of wisdom: figure out the optimal structure and strategy to serve that customer.

In the case of my clients, nothing seismic happened to prompt the change. But subtle market forces – coupled with shifting needs of the customers and how best to serve them – were enough to prompt a strategy and structural shift to realize greater value for the customer and the company.  

For some leaders this can be difficult. Ego can get in the way of doing what’s in the company’s best interest – especially if that means abandoning a strategy that people bought into and believed in.

While it is in defiance of our best earlier thinking, sometimes old ways of doing things can appear new again – but with a modernized twist. It’s a reality leaders need to be willing to accept.

Change should be about optimization, not abandonment

Remember, the strategic intent of your business still exists. It remains in service to the customer. The way service is realized will continue to evolve.

When viewed through this lens, strategic and structural changes are less about abandonment and more about ongoing optimization.

Take the travel industry for example. Advancements in technology have transformed how we approach travel. We no longer require a travel agent or representative to book flights and accommodations, or reserve car rentals now that much of the work can be streamlined online, through phone automation, and self-serve kiosks.

The industry didn’t abandon customers, they empowered them and then deployed those resources elsewhere to support a redefined structure.

New solutions create new problems

Many large grocery chains also have embraced technology. Self-checkout is viewed as a convenience for customers and a longer-term play on efficiency for the grocer. But when the self-checkout structure is the primary answer with few if any other options, new problems arise. Shoppers who are not fluent with self-checkout, a lack of in-store help to troubleshoot problems, and longer-than-expected lines can see customer convenience evaporate quickly.

Conversely, take privately held Trader Joe’s, with its smaller footprint, limited selection, and the intentional absence of self-checkout technology. Instead of following the tech trend, they provide “a friendly and personalized shopping experience, and they believe that this is best achieved through face-to-face interactions with their customers.” By investing in labor and training, they pursue strategies and structures that align with their mission, and work to optimize experiences for their ideal customer.

The will to act

The rationale for change is clearer than we think and often is hiding in plain sight. It could be a shift in the market, increased competition, or candid insights from customers.

The question isn’t whether to act or not, but rather having the will to redefine what the strategy and structure should look like going forward. This is where the tyranny of the urgent can get in the way of focusing on the bigger strategic picture.

Implementing new strategies and structures will always be challenging, but ignoring needed change risks falling further behind. Kicking the can further down the road is, in its own way, a guarantee. You can expect the challenge will become more daunting. Even the best built structures need ongoing evaluation and repair if they are to remain viable.