Business Restructuring (BR): Essential Steps

We have talked about Business Restructuring and touched on what it is, why it is needed and the pros/cons of its implementation. Having submerged so much below sea level, let’s touch the sea floor by talking about how to win with Business Restructuring.

First off, as a reminder:

  • Business Restructuring is the act of changing the business model (strategic & operational) of an organization to transform it for the better.
  • It is a way of ensuring and improving the organization’s productivity.
  • Restructuring occurs when a business decides to reorganize its operations to increase the operational effectiveness.
  • Being under financial duress is a popular reason but not the only reason to restructure a business. In fact, we believe that many organizations that reach a point of financial duress before deciding to restructure, ignored an earlier need to restructure to embrace occurring or required growth.

That being said, the very definition of BR presents it as an awesome game changer and it is, especially when done right. Winning with BR requires a business to take some essential steps before, during and after the change it brings.

The Business Restructuring process typically involves diagnosis, planning and implementation.

1.    Diagnosis- Know your WHY.

Just like taking a medication without proper diagnosis and prescription is bad and may open you to avoidable health risks, undergoing a BR without diagnosis may land a business in the very wrong place.

Making a diagnosis is not just about identifying the presenting symptoms of a problem. There is a need to go deeper to identify the root cause. Although, this stage of business restructuring is about knowing your why, problem solving methods like the “5-why” methodology makes it clear that asking ‘why’ only once will most likely show you the symptoms of a problem and not the root cause.

“5-why” is a technique used to explore the cause-and-effect relationships underlying a particular problem by repeating the question “Why?”. The answer to each additional ‘Why’ helps teams drill down a bit further, until both the nature of the problem as well as the solution becomes clear.

2.    Planning

A popular saying like “to fail to prepare is to prepare to fail” is not just popular for the nice wordplay, it definitely holds water.

Generally, we can say that planning is an important phase that increases the chances of outlasting a challenge in almost any path, and Business Restructuring definitely requires some good level of planning.

A BR Plan must be created and it needs to show (at least):

·      Why restructuring is needed

·      What it is required

·      How to implement the resulting strategies.

Guidance by an expert is a requirement to create and implement a solid plan.

3.    Implementation

Have you heard about Change Management? It is the biggest deal when implementing ‘the plan’. The truth is the plan may be easy on paper but when it is time to set the ball rolling, heads may roll alongside. If the wave of change is not properly managed, it may be a traumatic process for everyone involved, even for those that remain. A case in point is the #France Telecoms Restructure project which saw over 26 people committing suicide within 18 months of the restructuring project, due to the way it was implemented.

As a leader in the organization, you must not forget that people are emotional beings and changes from what they know is capable of launching them into an emotional turmoil. So be prepared to stand by your team as they go through the first two phases of change (shock and anger) and motivate and applaud them as they continue through the last two phases (acceptance and commitment).

Effective communication is a germane component of change management. A time for change is not a time to hoard information and make the staff start guessing what is going on, neither is it the time to ignore their questions. Clearly communicate what needs to be done, who is responsible for getting it done, and the timelines for implementation. As an effective change manager, follow-up is key to ensuring that what needs to be done gets done.

This is not the end, there is more to come. But first, we will like to hear your thoughts on this article. Please leave a comment and reaction. Thank you for reading and sharing!

Previous Business Restructuring: The Pros and Cons

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