Business Structure: why it Matters

Business Structure: why it Matters

June 26th, 2012 // 2:41 am @

I was taught a long time ago, the way to business success was, Strategy, Structure, and People. It has proven an invaluable lesson over many years.

How you structure the business, and it’s people is critical to the effective implementation of your strategy, by focusing resources, and by helping staff work more effectively towards your strategic goal’s.

Firstly there is the overall business structure. Companies rarely do more than one core thing well, and if a company tries to do multiple things they tend to be fairly bad at all of them. My experience has been if you have a company with multiple business’s splitting them into as separate divisions as possible is the best way to achieve focus.

At Heinz in Hungary we had three very different business’s, Baby food, branded Heinz foods, and commodity canned vegetables. Managers simply could not focus effectively on these three very different business’s. Once we had division broken the business into separate divisions, the relevant management groups could effectively focus on the issues of “their” business, and results improved significantly.

People also work best when in a clear structure, not just an organogram on the wall, but a real understanding of where they fit into the company.

The goal is to have Authority, knowledge and responsibility for individual issues with one person. Too often the person making the decision has the authority but not the knowledge, or will not be held responsible for the result.

People within organizations are happier when they clearly understand their place in the organization. When it becomes unclear decision-making quality deteriorates, and staff become confused.

Too many organizational charts look lovely with many dotted lines, but have little impact on people’s real work, and as such are useless. Time spent really thinking through how people can work best together in the real world is time well invested.

Good structure will focus resources on your corporate goals, make your staff more effective, and happy.



Category : Blog &Key Business Success Drivers

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