Table of Contents
- 1 Business Reorganization of Your Company Takes Planning
- 2 What is a business reorganization?
- 3 The small business reorganization act of 2019
- 4 A word or two to describe what I mean by “Fixing the Leaky Pipe”
- 5 Answering the “What Business Are We Really In?” question
- 6 What if you are not in a powerful position to drive this debate?
- 7 What to do if you can’t find any major leaks to fix?
- 8 General FAQ’s
Business Reorganization of Your Company Takes Planning
Small businesses tend to go in business cycles, and as the market environment in competitive landscape shifts over time, it becomes imperative that the small business look at business reorganization.
Now the business reorganization can take on many forms from reshuffling budget allocation, looking at the employees and staff, and maybe a deep dive into the strategic approach to the market.
What is a business reorganization?
The reorganization is an attempt to extend the life of a company facing bankruptcy through special arrangements and restructuring to minimize the possibility of past situations reoccurring.
The small business reorganization act of 2019
Since the 2005 amendments to the Bankruptcy Code, small business debtors have continued to struggle to reorganize effectively under Chapter 11 of the Bankruptcy Code. On Friday, August 23, 2019, President Trump signed the Small Business Reorganization Act of 2019 into law in an effort to address some of these issues.
Look at these two lists, first the one on What’s OUT in terms of key vectors driving the goals and design of businesses throughout the naughty nineties, then the What’s IN list now, describing the key parameters in place today:
|WHAT’S OUT||WHAT’S IN|
|Sailing with the wind||Sailing into the wind|
|Time is the enemy||Waste is the enemy|
|First mover advantage||First prover advantage|
|Growth at all costs||Cash-flow positive at all costs|
|Early markets and tornadoes||Bowling alleys and main street|
|Catching the next wave||Fixing the leaky pipe|
|Horizontal markets (breadth)||Vertical markets (depth)|
|Vendor-centric messaging||Customer-centric messaging|
If your company, along with every other funded startup and IPO graduate of the past seven years, was designed for the conditions on the left in the table above, you will have drawn some conclusions by now about the reasons your organization is struggling to adapt to the new conditions on the right.
Since we are all older and wiser after the 2007 recession, I think most people have convinced themselves that the new conditions are not about to go away, so we need to adapt our organizations to the new rules. Or go back to 2001. Remember that?
Well, if everyone in the software business was so convinced of this new reality, I would have expected to see more enterprise software and systems companies reinvent themselves, not just by surface shuffling of functions and new messaging statements.
But by reexamining the most critical question of all – and one that businesses in more mature industries are accustomed to posing, to keep themselves focused on the right activities and priorities – which is, “What business are we in?”
In the next few paragraphs, I would like to offer a simple and quick approach that any management team can use to jumpstart the process of re-energizing their business. This can be valuable to those high-tech companies in which management and employees may have lost the sense of what noble cause they are fighting for.
A word or two to describe what I mean by “Fixing the Leaky Pipe”
OK, if we agree that catching the next wave and its corollary, vendor-centric messaging, are on the hot list of what’s Out, whereas fixing the leaky pipe and customer-centric messaging are on the list of What’s In, let me first explain what ‘leaky pipe’ we are supposed to fix, and what this has to do with our products and services.
Your business reorganization should start with an honest audit. If you are looking at marketing, then do a marketing audit.
This folksy term is a down-to-earth way of calling your customer’s attention to the holes in their operational processes that are leaking money, as – with a manufacturer, for example – they move through design, manufacturing, distribution, service & warranty phases.
For instance, there might be individual leaks in sub-optimal product designs, excess component inventory, scrapped work, engineering changes, order cancellations, returned products, repeat service calls, or customer attrition.
Our rationale for addressing this set of concerns is simple: whereas in an up-economy, every company focuses more on increasing competitive advantage, market share, and revenues, thus often neglecting to see how wasteful their internal processes are.
In a down economy, companies look inside for ways to cut waste and thus costs, and they are less willing to invest in projects aimed at new market opportunities. Learn how to create more leads.
Thus, our advice to every tech company trying to establish its new business, or sustain continued growth, is to focus on finding the chronic leaks in enterprise customers’ processes that their products and services (can) help to fix.
Answering the “What Business Are We Really In?” question
Taking this further, it makes logical sense, if you want to connect with your target customers, to align the goals of your business with their biggest concerns.
Matrix Marketing Group helps businesses find out the “why?” Then take that into developing a communication architecture that drive a sales response.
Your business reorganization needs to answer why. Why are you in business? Why should anyone care?
Thus, my simple proposition is this: instead of continuing to describe your business in terms of the products you make or the services you deliver, you reframe it in terms of the ‘$50M’ business problems that your offerings help corporations to solve.
Thus, if your business is defined in these terms, “we make a,b,c software products for large enterprises in x,y,z markets” (and statements like these make software companies sound undifferentiated), just do the following experiment.
Redefine your business in terms like these: “We are in the business of solving $50M+ operational problems in d,e,f business processes for mid-sized enterprises in these main markets.” You need to get specific about the actual leaks that your technology is most suited to address, and about which companies have benefited.
If you encourage discussions throughout your organization based on a close look at your existing base of customers, in most cases you will be able to construct a sentence or two that say more about the actual value you bring to the world, than is clear in your current, more product-centric messaging.
Besides being able to use this new view of the essential purpose of your business to reassess (a) what your category should be called (i.e., adopting more of a business application name than a technology-focused name), and (b) what your best market penetration strategy should be going forward, you will see your existing customer base and your current pipeline in a new light.
And, for organizations that have come through three, six, or ten RIFs during the past thirty months and maybe in a somewhat dejected state, you will see a positive effect, as people in every functional area, from developers to service consultants, felt new energy about the company’s mission.
Your business reorganization will go smooth if transparency exists.
What if you are not in a powerful position to drive this debate?
I believe that anyone in the organization can spark the debate. If you are a front-line employee, just use every meeting opportunity to ask “what $50M+ corporate problems do our products and services help to solve?” If you are a middle manager, do the same.
Business reorganization don’t have to be painful if everyone is onboard.
Better still if you have frequent contact with customers and prospects, take every opportunity to ask them what major leaky pipe problems they are addressing, and even which of these, they see your products addressing. Then you can bring their testimonials into the discussion with your colleagues.
If you are between jobs and interviewing with new companies, one of the first due-diligence questions I suggest you should ask your interviewer might be “what major leaks in customer processes does your company’s technology help to solve?”
By-the-way, depending on the answer you get, you may decide that this company is too unrealistic to know what business value it could deliver, and thus has fewer chances of succeeding – or you may decide that this is an opportunity for you to show them how to look at their business in a new way.
What to do if you can’t find any major leaks to fix?
Ah if this is true and you have turned up every rock without success, it may force you to conclude that your business is not viable in today’s unforgiving corporate climate.
At least, you could console yourself that it’s better to know this now than to keep on investing energy and resources in something that may only serve the purpose of being a feature in someone else’s critical problem-solving offering.
Let me know what you think.
Have something to say about your thoughts on business reorganization?
What is a business reorganization?
The business reorganization is an attempt to extend the life of a company facing bankruptcy through unique arrangements and restructuring to minimize the possibility of past situations reoccurring.
Why perform a business reorganization?
Corporate restructuring can be driven by a need for change in the organizational structure or business model of a company, or it can be driven by the necessity to make financial adjustments to its assets and liabilities. Start with a marketing audit.
What is a RIF?
A reduction in force (RIF) occurs when a position is eliminated without the intention of replacing it and involves a permanent cut in headcount. A layoff may turn into a RIF, or the employer may choose to reduce their workforce immediately.