Basically all large corporations have been through their share of organisational changes. From organisation by products, by geography, by function - a combination of two or even using all three at the same time. Many of these changes are driven by need to better reap economies of scale, create a greater capability focus or align with customer segments.
However, to quickly make a new organisational model successful top executives must focus much more on getting the new divisions to work together rather than making each division work. For example, a wholesale bank wants to change its functional structure (universal sales force cover all products and one production unit manages all financial products) to a product oriented structure (multiple product line division where sales and products are in same division). The natural tendency would be to focus most management time on getting each new product division to work well but the structure will help that happen.
Management attention should instead be focused on what the structure will not give you, e.g., coordinating sales opportunities across divisions for very large account, sharing best practices for administration etc. Vice versa if the move is the reverse, from production to functional orientation, the CEO should make sure there are mechanisms in place, e.g., processes, incentive mechanisms, for making sure the individual functions integrate well, e.g., that there is a clear handover from sales to production.
About the authors: This article was written by a team of consultants from Oleto Associates, a strategy consulting firm based in Denmark. For more information please visit www.oleto.com.