Redesigning Organizations for Market Changes

A consulting company that helped customer companies select and install various kinds of information technology systems was run by an entrepreneur who was fond of management courses and the latest books about new management techniques. He tried very hard to provide a company to his employees that allowed them to perform at their peak level. 

When he first formed the company, there were some competing companies like his, but he was able to prove to his customers that his consultants were better able to serve their clients than others.  His proof was that his employees had elaborate systems for sharing information. They were in touch with each other constantly, sharing notes from one company experience to another. They worked in teams, and spent time together comparing experiences and worked on improving their processes. 

They were organized by customer group types, and specialized in the skills needed in each type, and the problems of installation that were encountered in each kind of company they worked in.  Management spent a lot of time with these consultants, learning what their issues were and devising ways to change the system so that these issues were dealt with. 

After a few years it became evident that growth was not taking place as rapidly as in the first years.  Clients were haggling more about prices and not so interested in how different the consultants were from their competitors.  There were also fewer systems being installed and some of these were able to be installed without nearly as much outside help.  In other words, the market was changing.  It was moving from a competitive Jungle market to a commodity, or Battleground market. 

Simultaneously management began to realize that cost/profit ratios were becoming more and more negative.  The labor cost percentage was growing as they were able to charge less for services and fewer services were needed.  It was a new world.  The old organizational ideas were no longer valid, not because they were intrinsically wrong, but because the company was now in a new market.  The nature of installation did not need as much problem solving with the new systems.  The information sharing, team operations, and management attention were no longer positive differentiators. In fact clients were turned off by all this added work.

It was time to redesign the system to meet the new market conditions. Management needed first to re-think the strategy so that they were in the market they really wanted to serve and in which they could sustain themselves.  Then they needed to determine the kind of culture that would support that market situation.  Finally, they needed to redesign the system to fit that culture.

If they were truly entering a Battleground market, they could no longer survive as Hunters, but needed to become a Warrior organization to thrive.  Posted by Jack