Well, virtually and temporarily and privately. All organizations need an occasional re-shuffle; over time they get tired. Years of band aids and patches mask bureaucracy, non-performing people, bloated departments, and too many layers. Organizational lethargy results from everyone doing the same thing over and over. Fresh thinking is stifled. This needs a fix: Create a war room (a room with white board or blank walls); Gather several of your best managers; Dedicate the time it takes to fully go through the process. Put the current organization chart on one wall including all the individuals. Then announce that everyone is fired and all departments are dismantled. Rebuild the organization chart on the blank walls, thinking through the most critical issues that need to be addressed as your guide. Minimize the layers (difficulties from a large number of direct reports - span of control - is over-rated; difficulties of communicating through layers is under-rated). “Rehire” only those individuals that each of the managers is willing to take on (nobody is inherited; these are fresh “rehire” decisions). Re-create a brand new, re-vitalized, leaner, more effective organization. You’ve created a positive crisis atmosphere.
To turn a rag-tag mob into a lean and efficient legion, step into the war room. From the operating floor to the highest levels of management, Northern Ordnance Defense Systems had a long history of seeking the path of least resistance. The company had no idea how to win new business, and manufacturing and overhead costs were approximately twice the competitive level. A full 90% of its revenues were systems in their last production cycle. All existing major contracts would expire within two years, at which point the company had a 100% chance of financial collapse.
Every facet of operations was being done exactly the same way as yesterday, for about 10,000 yesterdays. Not a glimmer of improvement-oriented attitude shone in the corporate culture. Top management wasted everyone’s time pursuing trivia or little pet initiatives. Information systems were non-existent. Other than that….
Every defense system Northern Ordnance produced that wasn’t about to go into a fixed-price competition had already been replaced by completely new and different systems with technologies and manufacturing requirements well outside of the scope of anything the company had ever considered. The prototypes had already been awarded elsewhere and were in production by high-technology, highly competitive and wired-in suppliers. Northern Ordnance was a dead man walking.
Yet the company’s current financial performance was excellent with about $400M in revenues, $75M in operating profits and highly predictable performance, at least on a quarter to quarter basis. Because the current financial performance was so good, there was only faint recognition of the pending cataclysm. Even then, a “We’ve faced difficulties before and we’re still here” and “We’re a U.S. Navy national treasure” attitudes prevailed.
The general nature of the defense business, the frozen tundra aspect of Minneapolis, and the significant pending obsolescence made it very difficult to recruit a new top management team. I was faced with utilizing the management currently in place. They were competent and wanted to do well but were saddled with so much history that they’d become completely ineffective. Nothing would occur without a radical cultural change.
I gathered the management team together in a single room. The walls were covered with white boards and the door was locked. I welcomed the group with the following speech:
“I’ve now fired everyone in the organization, including you. By the end of the day tomorrow, we’re going to hire back those employees we need to carry out our mission. Let’s start by each of you telling me what your department’s job is and why you should hire back your people, one individual at a time.
“History is history. I don’t care what happened yesterday. All I’m interested in is what we do today, tomorrow and the next day. If you rehire a given person into your department by what we’re doing today and tomorrow, then you are responsible going forward for that person’s performance. If you don’t rehire them, then you aren’t. It’s that simple.
“Bury your prior mistakes. Don’t be the fall guy for something that was forced on you by prior management. Look forward. I’ll measure you on what you do, not what you did.”
Anxious energy permeated the room as each manager mapped out their departmental structure on one of the white boards. Explanations of how their department operated were awkward at the beginning. But after an hour or so, everyone got into it. They realized this was a new day.
By the end of the two-day session, we had rebuilt the organization at a much smaller size and staffed it with employees who could help their managers meet each department’s future needs. This process reduced overall operating expenses by more than 15 percent. Better yet, the organization was now targeted on issues in front of it, not those from the past.
The odds had been 100 to 1 for this company’s survival. The end result was excellent financial performance for the next decade!
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