Stephen Heidari-Robinson and Suzanne Heywood on How to Get a Reorganization Right: Part 1 of a n interview by Bob Morris

heidari-robinsonstephenStephen Heidari-Robinson was a leader in McKinsey & Company’s organization practice, heading the firm’s work on energy-sector reorganizations and on the practicalities of implementing reorganizations across all sectors. Stephen was UK Prime Minister David Cameron’s energy and environment adviser. He has also worked as a vice president at Schlumberger, as head of a not-for-profit focused on Asia, as an analyst for a private equity player, and as a UK civil servant. He currently runs his family business and holds the post of Adjunct Senior Research Fellow in Energy Technology and Policy at Oxford University. Stephen was educated in history at Oxford and London Universities and is a fluent Persian speaker. He lives in Surrey in the UK with his wife, Neggin.

heywoodsuzanneSuzanne Heywood was a Managing Director at Exor Group, and sits on the boards of a number of companies, including The Economist Group and CNH Industrial, and is Deputy Chair of the Royal Opera House. She started her career in the UK Treasury and then worked at McKinsey & Company, where for several years she led the firm’s work on Organization Design. Suzanne was educated at Oxford and Cambridge Universities. She spent her childhood sailing around the world – the subject of another forthcoming book, Wavewalker, which includes her recollections of being shipwrecked in the Indian Ocean, an operation without anaesthetic on an isolated atoll, and teaching herself through correspondence to gain at university. She lives in London with her husband, Jeremy, and her three children.

Their book, ReOrg: How to Get It Right, was published by Harvard Business Review Press (November 2016)

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Before discussing ReOrg, a few general questions. First, who has had the greatest influence on your personal growth? How so?

What a great starting question. I would say my wife, Neggin, who, from a work perspective, has helped me to focus and – to the extent possible – stopped me from launching too many ships at the same time. From a personal perspective, she has made sure that I don’t get too busy to ignore my own health needs (making sure I got my arthritis treated, for example). Professionally, I am indebted to many of the people I worked with at McKinsey – of whom Suzanne is one of the most important. My colleagues helped me develop throughout my career and also listened to and supported me through personal set-backs.

Heywood: I had an unusual childhood, growing up from the age of 7 to 17 on the schooner, Wavewalker, sailing around the world. That meant I barely ever went to a ‘proper’ school. The person who influenced me most was someone I never met in person at that time – in fact I only met them last summer. His name is Roger and he was my biology teacher at my correspondence school, a deeply inspirational person. His influence was profound since he believed that I could get to university from my unpromising beginnings and he went well beyond what was needed to get me through my course..

Years ago, was there a turning point (if not an epiphany) that set you on the career course you continue to follow? Please explain.

Heidari-Robinson: I guess the biggest turning point was when an Oxford academic, Clive Holmes, visited my school in Leeds, England, and encouraged me and my classmates to apply to Oxford University. Only one person had gone to Oxford from my school before and it was certainly not something that had been on my mind. In the end, I applied to his college as I had no other means of judging which one was the best fit for me. The education I received there shaped everything I did from that point onwards. Since that point, there have been no similar epiphanies. While I can tell a decent enough, post-facto story of why I have done the things I have done in my career, the reality is that I have always chosen challenges that seemed most interesting at the time. It seems to have worked out so far.

Heywood: For me the most profound turning point in my career was the decision by Somerville College at Oxford University to give me a place to study Natural Sciences when I had few recognisable school qualifications and had in fact not studied some of the requisite courses for my degree. They took a huge risk on me and that decision profoundly changed my life.

To what extent has your formal education been invaluable to what you have accomplished in life thus far?

Heywood: I had little formal education before I went to university although, as a child, I taught myself for several years by correspondence (not an easy thing to do when you don’t have an address or access to teachers). More valuable was the on-the-job coaching that I had at McKinsey, the way in which I was taught to think at University (at both undergraduate and degree level) and the experience of overcoming the challenges of my childhood which I think helped to make me resilient to set-backs.

Heidari-Robinson: Well, my formal university education was in history and architectural history. This might seem like an odd academic background for someone who ended up working as a vice president in that epitome of engineering companies, Schlumberger, or who now works with Oxford University scientists on battery technology. But my degrees taught me critical thinking and how to make structured, logical arguments, both of which have come in handy in business.

What do you know now about the business world that you wish you knew when you went to work full-time for the first time? Why?

Heidari-Robinson: I wish I had known that the most important thing you gain in business is the contacts you make. There are so many people from my early career days that I should have stayed in touch with. I do my best to address that these days, staying in touch with as many of the people I meet as I can.

Heywood: What is most important in the business world is the same as in the rest of your life – it’s all about people. It’s easy to think, starting out, that the best companies are the ones with the best strategies and the best processes. Of course those are important – as is having the best organisational design. But none of that matters if you don’t have motivated people with the right skills. That is why we spend so much time in the book on people – how to communicate to them during a reorg and how to make the change happen with the least disruption possible.

Of all the films that you have seen, which – in your opinion – best dramatizes important business principles? Please explain.

Heywood: A good example is The Martian. It illustrates an important business principle: frugal innovation. We often think that the companies with the most money will innovate most effectively. In some sectors that is true because innovation is expensive (pharma is an example). But in many sectors not having cash leads to more innovative change. This principle is very clear in The Martian. With very few resources, after he is abandoned on Mars, Mark Watney is incredibly innovative – figuring out how to grow potatoes, burning hydrazine to make water and so on. With each set back he innovates more. It is a very good illustration although I hope most companies would not resort to trapping their R&D departments on Mars to make them more productive.

Heidari-Robinson: David Lean’s Lawrence of Arabia is a tremendous study in leadership and charisma.

Here are several of my favorite quotations to which I ask you to respond. First, from Lao-tse’s Tao Te Ching:

“Learn from the people
Plan with the people
Begin with what they have
Build on what they know
Of the best leaders
When the task is accomplished
The people will remark
We have done it ourselves.”

Heidari-Robinson: Quite right – in most cases. However, with reorganizations you are typically dealing with a business process that most of the people would not have voted for, given the choice, and, for a time, decisive leadership is required, before the chairs are rearranged and normal engagement with people can return. The worst thing you can do at the start of a reorg is to be too consensual, asking people how they feel all the time: what they feel is insecure because of the reorg; and what they what they want is for you to get on with it, so they know what the future holds for them! This question of when to be decisive and when to be consensual, is one of the tests of leadership.

From Michael Porter: “The essence of strategy is choosing what not to do.”

Heywood: I strongly agree with this. It is also the essence of good organisation design. Bad design is taking all the elements of your organisation today, rattling them around like lego bricks in a tray and sticking them back together again. Good organisation design means really thinking through what your company needs to do to be successful and only keeping those elements – and possibly growing them substantially.

From Richard Dawkins: “Yesterday’s dangerous idea is today’s orthodoxy and tomorrow’s cliché.”

Heidari-Robinson: And the same for the latest organizational fad: yesterday, it was organise like Google; today, the organization with no reporting lines; tomorrow, who knows? What does not change is the process you need to go through in designing and delivering a new organization: working out whether it’s worth it; understanding what’s right or wrong with your current organization; choosing what you’re going to change; detailing out that change and planning to implement it; and then checking it worked – the five steps we have in our book. We both wish we’d had a book like this 10 years ago and we’re confident it will still apply in another 10 years.

From Isaac Asimov: “The most exciting phrase to hear in science, the one that heralds the most discoveries, is not “Eureka!” (I found it!) but ‘That’s odd….’”

Heywood: The biggest “that’s odd” realisation for us in doing reorg work was sitting in a client’s board room, listening to them outline their new organisation structure and realising (“That’s odd…”) that they could not tell us what the organisation was good at doing today and had no idea how they would need to change their systems and processes (indeed if they would have to change them at all) to make the new structure work. That was just one of the instances that motivated us to write this book. It’s unfortunately common for organisations to misunderstand what should be part of a reorg. Changing reporting lines alone changes very little at all – as we say in the book, the fact that my boss’s boss’s boss reports to someone new does not make me do anything different when I walk in tomorrow morning, take off my coat and sit down at my desk…

From Thomas Edison: “Vision without execution is hallucination.

Heidari-Robinson: What a very apt quote in relation to reorganizations. Too often leaders take the foot off the gas pedal when they have a high level wire diagram of the new organization. Whereas, in our experience, it is the execution phase (what we call “the plumbing and wiring”) which is the most difficult. Very few organizations do this well.

Finally, from Peter Drucker: “There is surely nothing quite so useless as doing with great efficiency what should not be done at all.”

Heywood: Another excellent quote. The essence of a good reorg is to stop activities that are not benefiting customers and to allow activities that are benefiting them to be more effective. Of course this is over simplified – some organisations may have many or less clearly defined customers or have other stakeholder requirements – but it’s a good starting point. We once worked with a bank, going through each team in their finance department, asking them what the purpose was of what they did each day. Some teams really struggled to answer that in a meaningful way. “We take papers from team A, stamp them and give them to team B” is not a purpose. If you can define your purpose you can confirm it’s valid (it really does benefit customers directly or indirectly) and then stop doing activities that don’t contribute to it.

Most change initiatives either fail or fall far short of original (perhaps unrealistic) expectations. More often than not, resistance is cultural in nature, the result of what James O’Toole so aptly characterizes as “the ideology of comfort and the tyranny of custom.”

Here’s my question: How best to avoid or overcome such resistance

Heywood: One of our beliefs is that if people are engaged in creating the change they are much less likely to be resistant to it. It is not possible at all stages and on all questions, but whenever you can, consult and engage. Even if people do not see their own ideas in the final product, the fact that they have had the opportunity to input their views will make them much less likely to resist the final answer.

During the next (let’s say) 3-5 years, what do you think will be the greatest challenge that CEOs will face? Any advice?

Many of the challenges will be industry specific – regulation in the financial services sector, disintermediation in retailing, the shift in how people consume advertising being just three examples. But there are also trends that are cross sectoral such as the use of big data. A big challenge for CEOs will be adapting their organisations to meet this change. Most companies reallocate resources very slowly – if this cannot be accelerated they are in danger of being out-competed by faster moving new entrants.

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Stephen and Suzanne invite you to check out the resources at their website. Here’s a link.

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