Why restructuring often fails.

The PPT guys advice plans to manage volatility through layers and reviewers i.e. countering complexity with complexity…more inspectors, multiple reviewers. The result is a “higher cost structure, an artificial sense of risk management, and insulating people(employees) from the heat of the market.

In 80% of cases, one common solution by Suit Guys will be “Cost Cutting” and firing people. Companies often end up cutting R&D as it occupies lot of resources or shifting R&D to low cost locations.That is the worst mistake to make. R&D is brain of any organization and helps in survival in toughest of times. The return on good mind is far far far higher than any other function in the company.

One area often ignored is big marketing spend. Often the expenses are disguised as brand building . I have been repeatedly saying that marketing cash can only make “Sand Castles” and not “Brand Castles”.

For Big Companies, the opposite has to be done i.e.simplification strategy, a goal of cutting overheads and increasing efficiency across the board.

If a company has high percentage of people doing the job of Postman without value add (which often is the case with bloated organizations), its demise is certain.

Companies who fail to learn from history are bound to repeat it .

Cost of Business

 

BusinessRnD Spending PercentageSpend on RnD

 

~~Inspiration from Jeff Immelt and Others..!

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