Why Organizational Restructuring is Essential for Company Growth and How it Should Be Managed

June 7, 2017 Vincent Tran 1

Company/Department restructuring can be a restless time for many employees from top to bottom. Upper managements often struggles with determining the logistics such as time, cost, and purpose while also factoring work politics. Mid to lower level works are faced with anxiety about losing their job or being transferred to an unfamiliar, and in some minds potentially hostile, environment. Despite the risk, a company must be willing to adapt to the changing needs or it will not thrive. A couple examples of companies that could not adapt in time would be Kodak and Blockbuster.

 

Blockbuster 

Blockbuster was founded in 1985 as an Amepic 1rican based movie and electronic entertainment rental company. The company was in peak condition back in 2004 with around 60,000 employees and 9,000 stores worldwide. It’s strange to think that this video renting giant would decline so rapidly. It’s been 13 years since its peak and no one I know uses blockbuster, let alone find one of the few dwindling Blockbuster stores scattered here and there. Now the reason why they failed is still up for debate. Some believe that a reason for their downfall would be their failure to adapt the digital age succumbing to Netflix. Others believe it was due to the Blockbusters internal management issues. Regardless of the reason, Blockbuster failed due to its inability to properly manage, or even accept, change for the better.

 

Kodak 

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A similar case occurred with Kodak. Kodak was founded in 1888, which makes them roughly 128 years old! Despite its longevity, you can ask anyone on the street, and they can tell you that Kodak has fallen from its “glory days”. In fact, it was so well known back during its peak that its tagline “Kodak Moment” has been used in the past to refer to a moment that should be recorded. Unlike Blockbuster which failed to adapt quick enough to compete in the digital era, Kodak had the technology to be one of the leading companies in digital cameras.

The first DSLR camera was created and presented by Steven Sasson and Robert Hills in 1989 to Kodak. However, Kodak never embraced this new technological advance due to their profits in camera film sales. And because of that, Kodak fell short during the digital camera boom causing them to file bankruptcy in 2012.

 

Some of you may be wondering right now “But those scenarios don’t apply to my company.”

 

It’s there that I would challenge that statement. All businesses have room to grow. Especially since we are in now in the digital era where automation and digital reporting have become a staple in business. How did we ever do things in the past without email? Face-time? Or even cell phones?

The point is that change is inevitable and if it means restructuring is needed then so be it.

But what is the “correct” way to be an agent of change? To be honest, there is no “one size fits all” response. However, here at the Dot, there are three pillars we follow in managing change.

Clear Vision and Communication: As obvious as this may sound to some people, a clear vision and communication are not always properly executed. It may have been effective in the past to send a letter or email notice to your employees and expect them to comply, but this method is not as effective in towards work environment. This especially true for the incoming millennial workforce where they are more accustomed to clear communication and individuality.

Support from Upper Management: As with many initiatives, support with upper management is essential to implement change. This is not to say that is impossible to be an agent of change in a grass roots direction but it is a lot more difficult without support.

Maintain Strong Relationships: Building and maintaining relations to those affected by the change is essential which is why the point person in charge should be well known to those involved and would be willing to address and discuss any dissatisfaction if it were to arise.


The Dot’s Practice

As easy as it is to just preach best practices, it’s better to describe its use in a real scenario. Recently, the Dot had undergone some restructuring of its own in order to specialize its service according to the growing marketing trends that they have analyzed. In this article, we will be discussing how and why these changes were implemented.

What Changed and Why?

The Dot Corp, a multifaceted business-to-business company whose services include large format printing, printing, fulfillment, digital solutions, and direct mail had recently overhauled the organizational and physical structure of a couple of its departments in order to expand their service and volume to two segments of their client base, Medical/Biological Research and E-Commerce. In order to expand their services, they reorganized two of their buildings allowing them to specialize in in these two services.

The primary building being reorganized was their Pullman facility.

Prior to the remodeling, the Pullman facility served as the Dot Corp’s bulk fulfillment, e-commerce service, and direct-to-garment product line. Their other facility, the Standard building, focuses more on specialized value adding fulfillment services, data solutions, and direct mail. Prior to this point, jobs were allocated to certain buildings depending on their needs.

E-commerce and online auctions market were areas that The Dot Corp determined to be a growing market. Since this market is still young, it is still in its growth cycle which means that there is a lot of room for new businesses to enter the market. Despite the high competition in this market, the low barrier to entry means that there are more potential prospective clients. And with the increase of more disposable income people have these days, specifically the US, the market is expected to grow at an annualized rate of 13% in 2017. A couple key success factors contributing to the success of an e-commerce business is the ability to control one’s inventory (availability) and the ability to provide superior after-sale services.

In today’s world where people want things as fast and as convenient as possible, it is easy to lose a customer. For example, have you ever went to buy a product from a vendor only to find out that they are out of stock? If you do not have any form of customer loyalty to the vendor, they would just look for another vendor that would provide a similar product. This scenario has become more prevalent these days in a digital driven society. In the past, for a brick-and-mortar store, customers would just check again later for product availability, assuming that the item wasn’t an urgent purchase. This is why having strong inventory manager is a strategic advantage in this market.

Amazon’s shipping standard is considered a benchmark, e-commerce business, with a few exceptions, have to provide the product as quickly as possible without cutting too much into their product cost. It is a competitive advantage to be able to ship your product immediately and free of charge as opposed to charging for shipping and not having the product arrive until weeks later. depending on the product shipping time may vary, but overall the faster your ship the stronger your are competitively in that e-commerce market.

The Dot Corp recognizes these advantages and places an emphasis on in both of these areas. Currently, their account managers monitor and communicate with The Dot’s clients in order to ensure inventory remains consistent with the current and projected demand. On top of that, they also price their services based on the number of jobs as opposed to a flat rate. For example, if the clients business slows in January, the Dot Corp will charge less because there are fewer orders being shipped out. Because of this, the client saves money during the times that would have caused them to be in the negative. Not only this, but they also focus on customizing jobs to specific specifications provided by the client. This is especially relevant in e-commerce as retailers such as Nordstrom would want the product shipped to them different than say, Sears. This after-sale value adding service is what can push the client to have a stronger competitive ground in the e-commerce market.

As for The Dot’s focus on medical and biotech companies, the Dot Corp has a strong background with medical and biotech companies in the past. Because of this, The Dot Corp placed a heavy emphasis on HIPAA regulations, direct mail, and database management systems. With the expansion of the Pullman facility, this may lead to more room to focus on this strength in their standard facility.

Buildings by Functionality Prior to Reorganization

Standard Facility:

Direct Mail, Digital Solutions, Kitting & Customizations, and Fulfillment & Distribution

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Pullman

Bulk/Large Item  Fulfillment & DistributionE-commerceDirect-to-GarmentPullman Facility

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How was change facilitated?

Back in Jan 2017, there was some initial discussion about potentially remodeling the Pullman facility. The two reasons why they decided to push this initiative forward was due to brandings and operational endeavors.

Going forward with this project, the main goals of this project is to:

  • Improve work environment
  • Better represented brand
  • Workstation improvement
  • Quality of the work environment

In Feb 2017, the initial planning phase took place. The project lead drafted a budget to be reviewed. Once the budget was approved, remodeling began. The most challenging aspect of the remodeling phase is the operational aspect. Even though the remodeling was going on, the Dot had to ensure that it did not disrupt the operational functions.

In order to accomplish this, all of the office staff had to relocate to the work floor. Moving the office workers to the production floor would be challenging if it were not for the clear communication management had.

During construction, additional costs were found, not due to unexpected problems but with additional improvements. The initial budget was altered over time to meet these additional costs. The overall proves took roughly a month for a couple more weeks to the final touches light decorations.

Physical changes:

  • Seven office => fifteen office
  • Branding image through the feel of the environment
    • Concrete floor
    • Color walls
    • Colored office item

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