{"id":17167,"date":"2024-06-11T08:46:25","date_gmt":"2024-06-11T08:46:25","guid":{"rendered":"https:\/\/www.walkme.com\/blog\/?p=17167"},"modified":"2024-06-11T08:46:25","modified_gmt":"2024-06-11T08:46:25","slug":"organizational-structure-change","status":"publish","type":"post","link":"https:\/\/www.walkme.com\/blog\/organizational-structure-change\/","title":{"rendered":"5 Key examples of organizational structure change"},"content":{"rendered":"\n

Changes to organizational structure have ripple effects across a wide variety of business functions. The broad impacts of these changes make change management <\/a>essential. Failure to manage these changes can result in pushback from employees, damage to core business metrics, culture clashes, and high levels of Uncertainty.<\/p>\n\n\n\n

On the other hand, managed change can garner significant returns in organizational performance, such as decreased costs, improved morale, Lower failure rates, and reduced employee frustration and resistance<\/a>. As with any other change management project, a sophisticated, well-structured approach is the key to success.<\/p>\n\n\n\n

Change management adoption should begin with a comprehensive understanding of the drivers behind the change. A thorough review should be undertaken to identify all stakeholders, determine their needs and objectives, and estimate the cost of change.<\/p>\n\n\n\n

The project team should develop an action plan that includes timelines, processes, and metrics based on solid change management principles.<\/p>\n\n\n\n

Organizational structural change often results from financial or emotional turbulence in the workplace. <\/p>\n\n\n\n

For example, McKinsey reported<\/a> that in the wake of the COVID-19 pandemic, over 90% of companies expected to see more structural change projects in the coming years.<\/p>\n\n\n\n

Although no two projects are the same, the experience of companies can be beneficial. This article will briefly overview organizational structure change before describing five prominent examples of corporate structure change projects.<\/p>\n\n\n\n

Top 5 examples of organizational change<\/strong><\/h2>\n\n\n\n
\"Top<\/figure>\n\n\n\n

Examples of organizational structure changes provide insights into best practices and lessons learned from others who have undergone similar processes. By studying successful and unsuccessful restructuring efforts, change agents can identify common challenges and practical solutions we can apply to our projects. Additionally, understanding the motivations, strategies, and outcomes of different restructuring efforts can help us to better understand what might work best in specific business situations.<\/p>\n\n\n\n

Going through structural change is one of the biggest challenges in effective organizational change management. The following five examples show that it can be done \u2013 even for complex and mature organizations.<\/p>\n\n\n\n

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  1. Microsoft under Satya Nadella<\/strong><\/li>\n<\/ol>\n\n\n\n

    Satya Nadella\u2019s restructuring of Microsoft aimed to eliminate internal competition and unite the company\u2019s employees around a common goal. Upon taking the CEO role in 2014, Nadella implemented a new organizational structure focusing on reinventing productivity and business processes, building an intelligent cloud platform, and creating more personal computing. <\/p>\n\n\n\n

    The formation of the AI and Research Group by merging several teams was a key move in this restructuring. This move brought many engineers and computer scientists together to focus on artificial innovation across all Microsoft product lines.<\/p>\n\n\n\n

    Nadella\u2019s restructuring also brought a new mission for Microsoft employees to \u201cempower every person and every organization on the planet to achieve more.\u201d This new mission brought the employees a sense of purpose and direction and improved morale and employee engagement.<\/p>\n\n\n\n

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    1. Toyota\u2019s decentralization supports safety improvements<\/strong><\/li>\n<\/ol>\n\n\n\n

      Toyota\u2019s divisional organizational structure underwent significant changes in 2013 in response to the safety issues and related product recalls that started in 2009. <\/p>\n\n\n\n

      The previous structure was criticized for its slow response times to address safety concerns due to its strong centralized global hierarchy, which was more like a spoke-and-wheel structure with all major decisions being made at the company\u2019s headquarters in Japan. All individual business units did not communicate with each other, and all communications had to go through the headquarters.<\/p>\n\n\n\n

      However, after the 2013 reorganization, Toyota\u2019s new organizational structure has three main characteristics: a global hierarchy, geographic, and product-based divisions. The company maintains its global hierarchy but has increased the decision-making power of regional and business unit heads, leading to less centralized decision-making processes. <\/p>\n\n\n\n

      All business unit heads still report to Japan\u2019s global headquarters. This new structure aims to improve response times and communication between different units, leading to better decision-making and addressing safety concerns.<\/p>\n\n\n\n

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      1. Google becoming \u201calphabet\u201d to enhance innovation<\/strong><\/li>\n<\/ol>\n\n\n\n

        In 2015, Google restructured itself into Alphabet, a conglomerate with several subsidiaries, including Google. The restructuring suited branding, positioning, and profit and loss reporting.<\/p>\n\n\n\n

        Google\u2019s restructuring as Alphabet has had several effects. Firstly, it created a more focused structure, with Google as a subsidiary, allowing for more transparency and accountability for the various businesses under Alphabet. <\/p>\n\n\n\n

        Secondly, it helped the company diversify its revenue streams, creating separate companies for various businesses and ventures, such as Google, Waymo, and Verily. <\/p>\n\n\n\n

        Thirdly, the restructuring allowed for better management of the different companies, as each had its own CEO and management team. Overall, the restructuring of Alphabet has improved the structure and organization of Google\u2019s various businesses, allowing for better growth and success in the long term.<\/p>\n\n\n\n

        The restructuring of Google into Alphabet was a strategic move that allowed the company to retain top talent, create internal competition, and separate its high-potential ventures from the parent brand. The restructuring has the potential to boost innovation and entrepreneurship within the company.<\/p>\n\n\n\n

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        1. British Airways cuts staff in the 1980s<\/strong><\/li>\n<\/ol>\n\n\n\n

          British Airways underwent a significant restructuring effort in the 1980s, a crucial turning point in the airline\u2019s history. The 1980s were a difficult period for the airline industry globally, and British Airways faced numerous challenges, including high fuel costs, intense competition, and a struggling economy. British Airways realized it needed to take action to survive and remain competitive.<\/p>\n\n\n\n

          In the early 1980s, British Airways launched its \u201cBuilding for the Future\u201d program to restructure the company, reduce costs, and improve efficiency. The program involved the introduction of new technology and automation, the closure of underperforming routes, and the reduction of staff. British Airways also sought to improve its image and customer service by investing in new aircraft and improving in-flight amenities.<\/p>\n\n\n\n

          The restructuring efforts paid off, and British Airways emerged in the 1980s as a much stronger and more competitive airline. The company\u2019s financial performance improved, becoming one of the world\u2019s leading airlines. The changes during the restructuring set the stage for future growth and success, and British Airways remains a significant player in the global airline industry today.<\/p>\n\n\n\n

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          1. Disney is shifting its focus to streaming<\/strong><\/li>\n<\/ol>\n\n\n\n

            In 2021, The Walt Disney Company underwent an organizational structure change to streamline its operations and prioritize its streaming services and direct-to-consumer business in response to the growing impact of the COVID-19 pandemic on its traditional media and entertainment businesses. The restructuring involved consolidating specific business units, eliminating some positions, and realigning resources to support the growth of Disney\u2019s direct-to-consumer offerings, such as Disney+.<\/p>\n\n\n\n

            The impact of Disney\u2019s 2021 restructuring is not entirely clear, as the restructuring is still ongoing, and its full effects may not be fully understood for some time. However, some of the expected outcomes of the restructuring include increased efficiency and cost savings, a sharper focus on key growth areas such as streaming and international markets, and the realignment of certain business units to better support the company\u2019s overall strategy. <\/p>\n\n\n\n

            The restructuring is also expected to significantly impact the company\u2019s workforce, with many layoffs and other anticipated reductions as part of the cost-saving measures.<\/p>\n\n\n\n

            Why do companies go through organizational structure changes?<\/h2>\n\n\n\n
            \"Why<\/figure>\n\n\n\n

            The cause of a company restructuring can vary depending on the organization. Generally, it is triggered by internal or external factors that change the company\u2019s environment. These changes may include decreased market demand, new customer expectations, changing technology, and shifting economic trends. Companies may also restructure due to corporate mergers, acquisitions, or other strategic initiatives.<\/p>\n\n\n\n

            As such, they might decide to go through such a change for one of the following reasons:<\/p>\n\n\n\n