Reorganization

The last day before the Christmas holidays, top management presented a reorganization of the company. Two of the three divisions will be merged, and then cut apart in another direction. It is like cutting a cake sideways instead of longways. It is fanfared with all the usual “leveraging strengths” and “stronger focus” and “driving profitability” buzzwords.

The key objective seems to be to serve the key customer industries better, at the expense of the lesser ones. It looks a lot like 80/20 thinking – the fact that 80% of the revenue typically is generated by 20% of the customers. However, 80/20 thinking has one flaw and that is the dynamic aspect – the evolution over time. The top ten customers today are not the top ten customers of ten years ago. Even in a slow business like mechanical components business, the landscape changes fast and a company that will be our key customer in five years is a marginal customer today. One of the thousands. And there is no way knowing which one it is.

On the other hand, there are undoubtedly advantages of the new setup. In some sense, the organization looks a little less complex, at least from the top. I believe in clear mandates and that seems more uniform across the board, which is good.

Many cynics are critical of reorganizations, because it is never really clear that it brings any advantage at all at the workfloor. It is often seen as a useless exercise by managers who want new titles. However, every organizational setup has strong and weak points, and it foces different people to work together, while they still know people in another part of the organization. In that sense, a reorganization is a way to strenghten the informal network, through enforcing new reporting lines and new colleagues, while people still see their old colleagues for coffee and gossip.  Therefore, I think that it is good to stir in the kettle once in a while.

An aside here, and advice for future reorganizing champions: Don’t announce before holidays. Then the worrisome among us will have sleepless nights when they need to reconnect with their family and friends. Do you think they will talk well about your company? Is this the advertisement you need? Do you think it is right to deprive them of their well-deserved time off from a demanding job?
Of course you yourself will see less torment, so you may sleep better after presenting your plans just before a long break…

One Billion Customers – Book and Idea review

The wet dream of every retailer – a single market with one billion craving customers – is shredded to pieces by McGregor in his witty account of his own adventures during twenty years as journalist and business leader in China. The concept of a “market” as it is traditionally used implies that it is easy to move goods around at a low cost and that the customers are a somewhat homogeneous group. China is more like a continent with vast cultural, legal and physical differences which makes the unity of the market an illusion – a fata morgana luring at the horizon with uncountable riches.

McGregor experienced from the frontier the intense power struggle between government agencies, the party, market actors and local chiefs. All scrambling to get ahead and to increase their influence. His accounts of his own experiences are the most hilarious and warmhearted parts of the book. However, the many likely hiccups are not explored in great detail. I think it is a difficult dilemma while writing a book like this. On the one hand, including personal weaknesses and failures makes the book more interesting. On the other hand, the author wants to look like a leading expert and resourceful adviser – the book serves as advertisement for his own consultancy services. We all want to believe that the advisers we hire are fault-free and perfect, after all the fees are substantial…

I wonder what I would choose to present in an account of my own adventures near and far? Would I dare to include the intimate shameful moments of my own weaknesses? The mistakes and fiasco’s? Wasted money and time and naivety? I am not so sure. Probably I would pretend that everything was well planned and went smoothly.

One million Chinese visitors at the World Expo in Shanghai the same day as we went.

McGregor weaves into the story the larger sweeps of modern China and a handful of illustrious examples of winners and losers in the wild-east era of the last decades. The story behind famous (in China) brands like Wahaha and Unicom gives a wonderful account how government relations can help and hinder but that the market pull is the real force today. It also shows that the organizational maturity of most companies today are in a similar position as the companies in the west were fifty years ago – completey dependent on the founder/leader. It is a lean and fast way of running a company, but with a single-point-of-failure, it is not robust. It is the startup-model.

An inspiring book and I am excited to experience first hand collisions with bureaucracy and government activities in Shanghai!