Critical Care for Companies^®

Turnaround Step 10: Reorganizing the Business

Action Management Process (AMP) Step by Step 

For greater effectiveness and cost efficiency

Typically reorganizing a business is a costly, complex and time consuming activity. Since you are in the midst of a business turnaround, you have neither the time nor money for the "typical" corporate reorganization. To that end, I have included a very powerful tool called AMP to assist in rapidly reconfiguring the business.

I will assume that you have conducted the Pareto analysis (80/20) and that you have determined the 20% of business units, products, services, etc. that contribute most to the bottom line and that your organization is most qualified to produce. With that information, you are now in a position to restructure the organization…this usually means flattening it out. The resulting structure will be more efficient, effective, and because it will require less staff, much more cost effective.

Go through the tool step-by-step. It works best if you work through this with your turnaround team. In a nutshell what you will be doing is identifying the mission of your new organization based on the Pareto analysis. From there you and your team will determine what people, services, etc. absolutely must be in place (called Critical Success Factors-CSFs). You then break apart the CSFs into their components (called Fundamental Components-FCs). You may have heard the adage of "form follows function". The function of the organization will now have been determined, and the form or organization and infrastructure will flow from this analysis.

Step One:  Identify Your Mission

• Identify your core products or services-what you must accomplish or deliver. A Core product or service is what you deliver directly to a customer that your customer cannot do without.
   

• Identify your direct customers and identify beneficiaries and sponsors-if any. Direct customers make decisions about and pay for your products and services.  Beneficiaries benefit from products and services but do not make decisions about them. Sponsors influence or enable a project, event or initiative. Key point: Your mission must identify the direct customers, however, it is often helpful to identify beneficiaries and sponsors.  They could show up in either Mission or CSS.
   

• State why you are in business or why your organization exists (why you want to start the organization).  What important purpose does it serve? What outcomes are you committed to achieving (your purpose)? A strong mission statement frequently start with the answers to these “why” questions.
   

• Bring your products and services, customers, and purpose together in your mission statement.  Consider beginning your mission statement with the purpose. Bringing it all together. The input should be organized into 3 categories; the what (products/services), for whom (direct customers, beneficiaries-sponsors), and so that (the purpose). Discuss the above with the group and circle all that there is group consensus on. Take a break and have someone write on a separate flip chart page the purpose (so that), the what (products/services), and for whom (target market).  Use bullet points and don’t wordsmith at this point. Hang these sheets up front where all can see.

Here are some other important points about mission:

• State what you want to accomplish (Visioning Stage…it is OK to dream a little here)

• The mission must be right if the organization is to be able to focus on the factors that lead to success.  Mission statements identify precisely why you are in business, what you do and for whom.

• A well defined mission Provides direction, Promotes a sense of shared purpose, Gives a clear idea of the result or outcome that is expected. The mission should answer What, For Whom, and So That...

Step Two:  Identify Critical Success Factors (CSFs)

Key points concerning CSFs:

• By definition those few things that must “be right” or “go right” for you to be assured of succeeding in your mission.
   

• They are factors you directly control or can significantly influence.

You first need to answer the questions pertaining to what must go right or be right in:

• Understanding your customer’s needs
   

• Creating the product or service to meet those needs
   

• Delivering the right products and or services
   

• Servicing the customers

The first step in identifying your critical success factors is to “brainstorm” all those things that seem to be important and are critical to the achievement of your mission.

Now attempt to group all of the ideas into 5-7 categories of similar ideas so that they are easier to deal with.  Some categories could be Certification, Customer Service, Sales & Marketing, Financial Reporting Systems, etc.

One way to do this is to look at each brainstormed idea and ask the group what category this could go under.  Let’s say it falls under Sales & Marketing.  Write the category on a separate flip chart and number it #1.  Then whenever you come to another idea (have the ideas first numbered 1-50 or whatever) that falls under the category of Sales & Marketing, write the #1 next to it using a different colored ink.

At this point you have some level of organization.  You could even write the idea numbers under the various categories on the separate flip chart page for quicker reference.

Additional points to consider:

• Determine what must go right to achieve the mission.

• The starting point for thinking about critical success factors is the mission.

• To determine critical success factors, ask two questions:

• What must go right/be right in order for you to accomplish your mission?
   

• What, if it went wrong, would jeopardize or even destroy your mission?
   

• Try to have no more than 7 critical success factors for a given mission.

• It takes experience, careful thinking, and judgment to identify your critical success factors properly.

• Here are some general guidelines that can help.

• Stay focused on the mission and the fundamentals.

 Step Three:  Identify Fundamental components

The sequence:

• Identify the fundamental components that underlie each critical success factor.
   

• Select the fundamental components (FCs) deserving most attention (DMA).
   

• Identify those environmental conditions/factors (current and future, internal and external) that have, or may have, an impact on the FCs deserving most attention.
   

• Assess whether the evidence (the facts) support your identification of which components deserve attention.
   

• Specify the environmental conditions affecting your plan as precisely as possible.
   

• Basically this step entails doing a WBS on the CSFs (getting to the components of each CSF) and conducting a Risk Analysis/Risk Mitigation on the high priority FCs.
   

• To begin to identify your FCs, ask yourself, “what does this CSF really mean or require?
   

• Continue this cycle until you feel certain that your overall CSF has been totally and adequately described and “decomposed”.
   

• Identify the supporting elements (fundamental components) that contribute to each critical success factor.  Asking the questions, “ Which means?” or “Which Requires?” can help you. 

• Determination of those FCs requiring the most attention by asking:

• Which FC components represent significant problems or opportunities?
   

• Of these, which FCs are most critical to our mission?
   

• On which are we most prepared to focus?
   

• Which need the most immediate attention?

 Step Four:  Identify Gaps

Gaps are differences between current performance and what is required to achieve your mission. Gaps may exist between the level of performance required relative to each critical success factor for you to accomplish your mission. Once the gap is identified and stated, you are in position to set objectives to close the gaps.

Step Five:  Set Objectives

Specify what result you will accomplish to contain, reduce, or eliminate a gap. A well stated objective is:

• A statement of the result which you are committed to achieving.
   

• Specific.  It states what is to be achieved.
   

• Measurable.  It answers the questions: by how much, how many, or how well?
   

• Time-bound.  It says when the result will be achieved.
   

• Accountable.  It identifies who is responsible for the objective.

Step Seven:  Develop Action Steps and Implement  (develop a budget along with the project plan)

List the activities that must occur to reach an objective. Determine the specific actions you will take to achieve the results (objectives) that you have committed to accomplishing. Once the general approach is identified, consider the following points as you develop action steps:

• Milestones-What are the significant points of process along the way toward completing an action?  These points are usually marked by something observable, such as a product or a condition.
   

• Target dates-Specify when key actions have to be started or completed.
   

• Resource requirements-Consider the resources  needed to carry out an action, including money, skills, and information.
   

• Possible obstacles-Note the situations that could prevent you from achieving the objective, the likelihood that they will occur, and what you will do it they occur.
   

• Responsibilities-What individual will be accountable for carrying out one or more actions?

 Step Eight:  Monitor Performance

Track your progress; make mid-course adjustments. Tracking involves collecting and analyzing information to answer three questions. Are the objectives being achieved in quality, quantity and time? Are the objectives closing the gaps?

Effective monitoring systems:

• Focus on critical points.  They track interim results and milestones that are critical to closing the gaps.

• Produce timely information.  Ideally, the system highlights emerging problems so that timely corrective action can be taken.

• Are cost effective.  Simple put, the value of knowing something must exceed the cost of finding it out.  Focusing on critical points helps assure an economical system.
   

• Point the way to corrective action.  A system is of little value if it does not facilitate action.  Information must help the accountable person to make decisions about resources, organizing, staffing, and directing.

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