Business Reorganization Quotes

With a Masters in Management from USC, I did some consultant work in Reorganization, New Products, and Change. Amazon was smart to have me as a Beta and got my advice for free. Amazon was the only company who did because for other companies, it wasn't. But what I got from Amazon is a good understanding of how they operate, the culture, and the people behind the business - Strong by Kailin Gow

One of the major prompts for businesses implementing change is the evolution of technology. As new technologies emerge or new use cases emerge for existing technologies; markets are forced to reorganize and therefore businesses are prompted to reorganize in response to that.

Rapid business growth, increased downsizing, frequent reorganizations, mergers, acquisitions, and joint ventures have inadvertently increased the number of attractive employment opportunities for individuals with psychopathic personalities

Once upon a time, maybe the greater entity of [REDACTED] cared about the souls within its walls, but that all changed when the Benefactors took over. New initiatives were put into place. The company was restructured, reorganized to suit the needs of the business.

people who still live in societies that are socially immobile or antagonistic to entrepreneurship are typically disincentivized from investing in their own futures. Why, for example, should a person study (invest in his or her future) if university tenure is awarded on the basis of nepotism rather than on merit? Why should a person build a business if that enterprise can be stolen by a well-connected army general? So, the organization and reorganization of human capital also depend on an idea, namely, on the idea of progress or the belief that the future can be better for individuals and their descendants.

However, the enormous superiority of contemplation over activity of any kind, action not excluded, is not Christian in origin. We find it in Plato’s political philosophy, where the whole utopian reorganization of polis life is not only directed by the superior insight of the philosopher but has no aim other than to make possible the philosopher’s way of life. Aristotle’s very articulation of the different ways of life, in whose order the life of pleasure plays a minor role, is clearly guided by the ideal of contemplation (theōria). To the ancient freedom from the necessities of life and from compulsion by others, the philosophers added freedom and surcease from political activity (skholē),10 so that the later Christian claim to be free from entanglement in worldly affairs, from all the business of this world, was preceded by and originated in the philosophic apolitia of late antiquity. What had been demanded only by the few was now considered to be a right of all. The

We live and do business in the Information Age,” Barack Obama once complained, “but the last major reorganization of the government happened in the age of black-and-white TV.

There’s a tendency for those unfamiliar with cooperatives to look down on them as the leftovers of the mainstream economy, implying that if these ideologically driven people simply reorganized themselves into “normal” private companies, they would be more efficient and productive. In fact, just the opposite is true: Cooperatives often enter into economic activities that private businesses will not take on. The most fertile period of cooperative growth was during the Great Depression. Rural electric cooperatives spread across the American plains when it became clear that other investor-owned and municipally owned utilities were uninterested in wiring up sparsely populated regions. Credit unions, as we’ll soon explore, have seen an upsurge during the recent financial crisis.

attitude, the cosmetic’s department would be busy. Women buying new lipsticks and earrings and men looking lost, trying to remember what perfume their wives had worn for the last twenty years. The new store manager had assigned inexperienced sales clerks to cosmetics. They wouldn't make the customers any happier. Why did each new manager think a reorganization would make everything better? Marissa swung her Rabbit into the parking space and waited for the

There are other problems more closely related to the question of culture. The poor fit between large scale and Korea’s familistic tendencies has probably been a net drag on efficiency. The culture has slowed the introduction of professional managers in situations where, in contrast to small-scale Chinese businesses, they are desperately needed. Further, the relatively low-trust character of Korean culture does not allow Korean chaebol to exploit the same economies of scale and scope in their network organization as do the Japanese keiretsu. That is, the chaebol resembles a traditional American conglomerate more than a keiretsu network: it is burdened with a headquarters staff and a centralized decision-making apparatus for the chaebol as a whole. In the early days of Korean industrialization, there may have been some economic rationale to horizontal expansion of the chaebol into unfamiliar lines of business, since this was a means of bringing modern management techniques to a traditional economy. But as the economy matured, the logic behind linking companies in unrelated businesses with no obvious synergies became increasingly questionable. The chaebol’s scale may have given them certain advantages in raising capital and in cross-subsidizing businesses, but one would have to ask whether this represented a net advantage to the Korean economy once the agency and other costs of a centralized organization were deducted from the balance. (In any event, the bulk of chaebol financing has come from the government at administered interest rates.) Chaebol linkages may actually serve to hold back the more competitive member companies by embroiling them in the affairs of slow-growing partners. For example, of all the varied members of the Samsung conglomerate, only Samsung Electronics is a truly powerful global player. Yet that company has been caught up for several years in the group-wide management reorganization that began with the passing of the conglomerate’s leadership from Samsung’s founder to his son in the late 1980s.72 A different class of problems lies in the political and social realms. Wealth is considerably more concentrated in Korea than in Taiwan, and the tensions caused by disparities in wealth are evident in the uneasy history of Korean labor relations. While aggregate growth in the two countries has been similar over the past four decades, the average Taiwanese worker has a higher standard of living than his Korean counterpart. Government officials were not oblivious to the Taiwanese example, and beginning in about 1981 they began to reverse somewhat their previous emphasis on large-scale companies by reducing their subsidies and redirecting them to small- and medium-sized businesses. By this time, however, large corporations had become so entrenched in their market sectors that they became very difficult to dislodge. The culture itself, which might have preferred small family businesses if left to its own devices, had begun to change in subtle ways; as in Japan, a glamour now attached to working in the large business sector, guaranteed it a continuing inflow of Korea’s best and brightest young people.73

Homeowners can’t use bankruptcy to reorganize their mortgage loans, because the banks have engineered the bankruptcy laws to prohibit this. Young people can’t use bankruptcy to reorganize their student loans, because the banks have barred it. But big businesses now routinely use bankruptcy to renege on contracts with their workers.

you find yourself unable to stop micromanaging, ask yourself if your team has a problem. You may have to reorganize or bring in some more talented people who have the capacity to earn the right to be delegated to. If your team continually drops the ball you are right to micromanage until they don’t drop the ball or you get some new team members.

here are the basic steps to organizational design: 1. Figure out what needs to be communicated. Start by listing the most important knowledge and who needs to have it. For example, knowledge of the product architecture must be understood by engineering, QA, product management, marketing, and sales. 2. Figure out what needs to be decided. Consider the types of decisions that must get made on a frequent basis: feature selection, architectural decisions, how to resolve support issues. How can you design the organization to put the maximum number of decisions under the domain of a designated manager? 3. Prioritize the most important communication and decision paths. Is it more important for product managers to understand the product architecture or the market? Is it more important for engineers to understand the customer or the architecture? Keep in mind that these priorities will be based on today’s situation. If the situation changes, then you can reorganize. 4. Decide who’s going to run each group. Notice that this is the fourth step, not the first. You want to optimize the organization for the people—for the people doing the work—not for the managers. Most large mistakes in organizational design come from putting the individual ambitions of the people at the top of the organization ahead of the communication paths for the people at the bottom of the organization. Making this step four will upset your managers, but they will get over it. 5. Identify the paths that you did not optimize. As important as picking the communication paths that you will optimize is identifying the ones that you will not. Just because you deprioritized them doesn’t mean they are unimportant. If you ignore them entirely, they will surely come back to bite you. 6. Build a plan for mitigating the issues identified in step five. Once you’ve identified the likely issues, you will know the processes you will need to build to patch the impending cross-organizational challenges.

Reorganizations that ignore Conway’s law, team cognitive load, and related dynamics risk acting like open heart surgery performed by a child: highly destructive.

We need to change the ways in which we talk about humanity and the environment and in order to do so, we need to change the way in which we think about them, not an easy task given that we use language to think and our languages make us conceive the environment as detached. A possible way out to help us approach problems, without being drawn back by the mental models that fail us, is Systems Dynamics (Meadows 2008; Sterman 2012). Unfortunately, Sterman explains, most efforts made by individuals and institutions to enhance sustainability are directed at the symptoms and not at the causes and systems (any system) will respond to any change introduced with what is known as ‘policy resistance’, that is the existing system will tend to react to change in ways that we had not intended when we first designed the intervention (a few examples are road-building programs designed to reduce congestion that ends up increasing traffic or antibiotics that stimulate the evolution of drug-resistant pathogens—for a longer list and further explanation see Sterman 2012, 24). Systems Dynamics allows us to calculate scientifically the way in which a complex system will react to change and to account beforehand for what we usually describe as ‘side-effects’. Side effects, Sterman argues, ‘are not a feature of reality but a sign that the boundaries of our mental models are too narrow, our time horizons too short’ (24). As Gonella et al. (2019) explain: ”As long as we consider the geobiosphere as a sub-system (a resources provider) of the human-made economic system, any attempt to fix environmental and social problems by keeping the business as usual, i.e., the mantra of economic growth, will fail. The reality tells us the reverse: geobiosphere is not a sub-system of the economy, economy is a sub-system of geobiosphere. As systems thinkers know, trying to keep alive at any cost the operation of a sub-system will give rise to a re-arrangement of the super-system – the geobiosphere – that will self-reorganize to absorb and make ineffective our attempt, then continuing its own way.” (Gonella et al. 2019)

Free at last to admit what many employees and observers had long known, Nadella declared publicly that one of Microsoft’s biggest mistakes had been “to think of the PC as the hub for everything for all time to come.” Acting on this conviction, Nadella scaled back the influence of the Windows division and redirected investment toward Azure, Microsoft’s fast-growing cloud business. In 2018, the Windows group was reorganized out of existence, with its staff transferred into the Azure and Microsoft Office teams.

With this in mind, here are the basic steps to organizational design: 1. Figure out what needs to be communicated. Start by listing the most important knowledge and who needs to have it. For example, knowledge of the product architecture must be understood by engineering, QA, product management, marketing, and sales. 2. Figure out what needs to be decided. Consider the types of decisions that must get made on a frequent basis: feature selection, architectural decisions, how to resolve support issues. How can you design the organization to put the maximum number of decisions under the domain of a designated manager? 3. Prioritize the most important communication and decision paths. Is it more important for product managers to understand the product architecture or the market? Is it more important for engineers to understand the customer or the architecture? Keep in mind that these priorities will be based on today’s situation. If the situation changes, then you can reorganize. 4. Decide who’s going to run each group. Notice that this is the fourth step, not the first. You want to optimize the organization for the people—for the people doing the work—not for the managers. Most large mistakes in organizational design come from putting the individual ambitions of the people at the top of the organization ahead of the communication paths for the people at the bottom of the organization. Making this step four will upset your managers, but they will get over it. 5. Identify the paths that you did not optimize. As important as picking the communication paths that you will optimize is identifying the ones that you will not. Just because you deprioritized them doesn’t mean they are unimportant. If you ignore them entirely, they will surely come back to bite you. 6. Build a plan for mitigating the issues identified in step five. Once you’ve identified the likely issues, you will know the processes you will need to build to patch the impending cross-organizational challenges.

Reorganizations that ignore Conway’s law, team cognitive load, and related dynamics risk acting like open heart surgery performed by a child: highly destructive.

Our strategy was basically a hub-and-spoke approach to growth. We worked to reorganize the portfolio into a cluster of stations in high-growth areas, such as Denver or Tampa, and then bought other stations in the same region—allowing them to share management and programming and shore up their regional advertising bases.

Being busy is most often used as a guise for avoiding the few critically important but uncomfortable actions. The options are almost limitless for creating “busyness”: You could call a few hundred unqualified sales leads, reorganize your Outlook contacts, walk across the office to request documents you don’t really need, or fuss with your BlackBerry for a few hours when you should be prioritizing.

The most important lesson to derive from this chapter is that many of us are managing our companies with a logic that originated in the 1920s and 1930s, a logic that might not be appropriate to the situation in which your company finds itself today. GM’s approach proved highly lucrative during the period of growth and oligopolistic isolation from global competition that extended until the 1970s. It became our model and accepted management practice, and is still taught in business schools today. That means, for many of us the way we currently manage our companies is built on logic that originated in the conditions faced by companies in the U.S. automobile industry during the late 1920s. The problem is not that the logic is old, but that it does not incorporate continuous improvement and adaptation. If our business philosophy and management approach do not include constant adaptiveness and improvement, then companies and their leaders can get stuck in patterns that grow less and less applicable in changing circumstances. The solution is not to periodically change your management system or to reorganize, but to have a management system that can effectively handle whatever unforeseeable circumstances come your way.

Owing to a debtor’s ability to reject contracts of nearly all types, a bankrupt company is frequently in a position to become a low-cost competitor in its industry upon reorganization. Unprofitable, high-cost facilities are closed or sold, above-market lease costs are reduced to market levels, and a company’s overstated assets are typically written down on its books to fair-market value, thereby reducing future depreciation charges. The bankruptcy process can sometimes serve as a salutary catharsis, allowing troubled firms the opportunity to improve their business operations.

In 2012, President Obama signed the JOBS Act into law. This bill, among many other things, included the ability for private companies like Gumroad to sell shares to the general public, making it possible for almost anyone to invest in the business. On March 15, 2021, the legal limit for regulation crowdfunding went from $1.07 million to $5 million. These new rules also allow for “testing the waters,” allowing companies like Gumroad to see how much demand there is to invest in the company before committing to a crowdfunding campaign. I believe that crowdfunding will reorganize the funding landscape. There will always be a place for venture capitalists, but who better to fund a business than its customers, who understand how valuable its offering is? And once founders can vet demand before committing, we should see the numbers skyrocket. In the old way, the number one downside of raising money was that you created two distinct sets of stakeholders: your investors and your customers. This new practice will allow entrepreneurs to minimize complexity by turning customers into investors. All of a sudden, you have a single group of people you are serving: your community. I can speak from experience: On March 15, 2021, I used Regulation Crowdfunding to allow some of Gumroad’s creators to become part-owners. In 12 hours, we raised $5 million from more than 7,000 individual investors. Now we have thousands of our creators as our investors too, keeping our interests more cleanly aligned. For the businesses that neither need to bootstrap completely nor want to go the venture-backed path, I’m hopeful that Regulation Crowdfunding will offer a middle ground. But the ultimate long-term goal remains profitability (read: sustainability). Once you’re in control of your destiny, you should never let it go.

One of the worst disconnects of a business software development effort is seen in the gap between domain experts and software developers. Generally speaking, true domain experts are focused on delivering business value. On the other hand, software developers are typically drawn to technology and technical solutions to business problems. It’s not that software developers have wrong motivations; it’s just what tends to grab their attention. Even when software developers engage with domain experts, the collaboration is largely at a surface level, and the software that gets developed often results in a translation/mapping between how the business thinks and operates and how the software developer interprets that. The resulting software generally does not reflect a recognizable realization of the mental model of the domain experts, or perhaps it does so only partially. Over time this disconnect becomes costly. The translation of domain knowledge into software is lost as developers transition to other projects or leave the company. A different, yet related problem is when one or more domain experts do not agree with each other. This tends to happen because each expert has more or less experience in the specific domain being modeled, or they are simply experts in related but different areas. It’s also common for multiple “domain experts” to have no expertise in a given domain, where they are more of a business analyst, yet they are expected to bring insightful direction to discussions. When this situation goes unchecked, it results in blurred rather than crisp mental models, which lead to conflicting software models. Worse still is when the technical approach to software development actually wrongly changes the way the business functions. While a different scenario, it is well known that enterprise resource planning (ERP) software will often change the overall business operations of an organization to fit the way the ERP functions. The total cost of owning the ERP cannot be fully calculated in terms of license and maintenance fees. The reorganization and disruption to the business can be far more costly than either of those two tangible factors. A similar dynamic is at play as your software development teams interpret what the business needs into what the newly developed software actually does. This can be both costly and disruptive to the business, its customers, and its partners. Furthermore, this technical interpretation is both unnecessary and avoidable with the use of proven software development techniques. The solution is a key investment.

Finally, the legitimization of the corporate holding company [1890] established a business structure that lessened the threat of competition by allowing for the elimination of competitors. The merger movement followed and horizontal combinations of productive capability reorganized industry into large blocks of corporate power.