The Limits of Structural Change

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Corporate America has spent the last few years in restructuring mode, drastically reorganizing processes in order to wring profits from a battered economy. However beneficial these efforts may be to the bottom line, say the authors, a reliance on restructuring has had unintended negative side effects, as hierarchies that once controlled the direction of many companies become less relevant, and loyal employees become increasingly disheartened by disruptive — and often short-sighted — strategies. In response, companies resort to even more restructuring, frequently with less than optimal results.

The authors recommend that companies shift away from knee-jerk responses such as restructuring and hierarchy building toward a transformation of established corporate structures, a wider distribution of knowledge, and the use of modern performance-measurement systems and technologies. Citing examples at BP, North Carolina's Duke Power and W.L. Gore, the authors claim that only companies developing their advantage upon the agility and flexibility of their processes, people and technologies can build lasting value for their company, customers and employees.

Jeffrey A. Oxman is a founder and principal with MPact Consulting, a management consultancy focused on business performance improvement, with offices in New York, Chicago and Dublin. Brian D. Smith is a senior adviser with TPI Inc., a sourcing-advisory-services firm, with offices in the United States, Europe and Australia. Contact the authors at jeff@mpact-consulting.com and Brian.Smith@TPI.net.

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