How-to: What does a successful reorganisation look like?

From time to time, companies adapt their strategy in order to secure their long-term competitiveness. Perhaps certain markets have become more important. Or a new product changes the company's entire business model and value creation logic. Or an innovative business area deserves more attention. In these and similar cases, a reorganisation is the obvious choice.

Reorganisations are also typical after major personnel changes, such as a change in top management. It is not uncommon for new priorities to be set - and the organisation must position itself optimally in order to be able to pursue them effectively.

Time and again, however, we also see that organisations have grown historically and stick to existing structures and work processes for decades. However, as markets, society and technology are subject to constant (and ever faster) change, this means that at some point the organisation no longer fits in with its environment. This can lead to frustration among employees and managers as well as reduced performance. Then the time has come for a reorganisation.

The most important thing is to define the objectives of a reorganisation at an early stage. Every case is different. Is it about speed and innovation? Should the organisation adapt to new regional priorities? Or is it primarily about efficiency? Clarity is extremely important here - also with regard to the subsequent change process

Both the market and the employees' perspectives must always be kept in mind. Only organisations that create value for both customers and employees will be successful in the long term. It is important to clearly define in which phases of the reorganisation who will be involved, in what form and how. And, of course, at which level decisions are made on which issues. This is the only way to manage expectations of the reorganisation. This contributes significantly to the success of target-oriented planning and implementation of the reorganisation process.

Unconscious thoughts and attitudes - known as biases or heuristics - influence our actions, especially in situations of uncertainty. In his book Fast Thinking, Slow Thinking, Nobel Prize winner Daniel Kahneman talks about two systems. System 1 refers to simple, fast thinking. It helps us to categorise perceptions quickly, but also promotes biases in decision-making. System 2, on the other hand, comprises logical, rational thinking. System 2 takes a back seat, especially when we are under pressure. This makes us susceptible to cognitive biases. These include, among others:

• Groupthink: Here, group dynamics (especially in large groups) tempt members to make statements that they are not actually convinced of: "What do you think of this idea?" And then it happens quickly: "Oh, it's not so bad, is it?" "Well, if that's what you think... Then we can give it a try." This leads to decisions that are not necessarily rational because individual judgements are adapted to the expected group opinion.
• The fundamental attribution error: Here we shift the reasons for failures away from ourselves and shift them onto others: "The fact that this plan didn't work is only down to the people who didn't implement it properly. It's not down to the idea or the environment..."
• Representativeness heuristic: Here, experience, methods, models and production rules that have proven useful in the past are used. For example, a manager has learned to lead autocratically in a reorganisation and has experienced that this management style leads to the desired results with a firm hand. If the manager now uses this type of leadership in a growth case, it may no longer work. This means that the previous experience is not representative of the current problem. Nevertheless, we tend to fall back on old behavioural patterns if they have proven to be advantageous for us.
• Plan continuation bias: Here, plans are stoically pursued, even if there are clear indications that they will not work. For example, a board of directors decides to restructure an organisation. At some point, it realises that there are obstacles. But because they have decided to make the change and have already put so much work into it, they continue anyway, come what may - because what would it look like if they were to change direction again now?
• Overconfidence bias: "I can do it. Who can do it if not us as a management team?" Such an attitude can have positive effects because it also mobilises energy in other people. However, this assessment is often not based on reality. Self-perception and reality can diverge considerably and tempt decision-makers to take unnecessary risks.

These and other distortions usually have an unconscious effect. This is why it is particularly important for decision-makers and top teams to regularly coordinate and recalibrate. Only those who repeatedly bring in various external data points and experience can permanently reduce biases.

To anticipate this: Every reorganisation is fundamentally different and therefore every "typical" procedure can only be wrong. Nevertheless, a certain logic has proven itself in the sequence of individual steps. However, these can differ greatly from one another in terms of their concrete form.

1. The first step is to agree on the objectives of the reorganisation. A top management workshop is often suitable for this, in which common priorities are defined. These should be reviewed again at the end of the subsequent analysis phase.
2. In the as-is analysis, it is important to uncover the specific problems and potential for improvement. Surveys of employees, focus groups and structured interviews with managers and employees provide an insight into the issues that are "burning under everyone's nails". The works council can also be involved here. The information gathered forms the basis for subsequent decisions.
3. Various options for the reorganisation are developed in the design phase. These are created on the basis of the diagnostic results and further elaborated in the project team. The final selection of the appropriate organisation is often made by top management - but can also be underpinned by the intelligent involvement of managers and employees.
4. The organisational design should be reviewed before implementation. Use cases that come as close as possible to day-to-day work are used for this purpose and specific business processes are simulated. On the basis of these tests, the organisational design is continuously and gradually improved. The introduction of the new organisation should also be planned in this context (e.g. timing, gradual introduction vs. "big bang", framework conditions).
5. At the latest before implementation, proper communication and involvement of a broader group of employees should be considered (ideally earlier, see above). What is the story of the reorganisation? How can its advantages be communicated? What reservations might there be? How can these be addressed?
6. Day X, when the reorganisation is implemented, is always a challenge. To ensure that everything goes smoothly, it is important to prepare the main players, namely the managers, for this day in the best possible way, be it through a clear time structure for day X or the first week, assistance for team kick-offs, discussion guidelines or even basic sparring on the new role.
7. Follow-up: Day X is not the end of the reorganisation. The first few weeks afterwards are of crucial importance, as some of the problems of the reorganisation only become apparent when people are actually working in the new setting. A "pulse check" a few weeks after the reorganisation has been implemented with the help of a comprehensive survey helps to uncover weaknesses and make adjustments if necessary, but also to recognise successes. This can also be the foundation for further learning within the organisation.