Is the structure of your business holding you back?Matt D'Cruz 4th December 2017
Not long ago I spoke to the CEO of a magazine publishing business, one which has been doing pretty well by the standards of the wider market. Its advertising and subscription revenues are holding up reasonably well, but growth has stalled. One reason for this is that the business is siloed by discipline, rather than by product range – so that the editors, salespeople and marketers all sit in different reporting lines, with minimal communication between them. The publishers, the people who might be expected to come up with new revenue streams – from events to online content marketing solutions – have responsibility for their revenue numbers but no direct control over their sales teams. As a result, they have fewer levers to pull and no way to put their plans into action. The result is a dearth of new ideas in the business, while the reporting lines make it difficult to attract the kind of talent who might be able to take the business forward.
Another example is a B2B publishing company with decades of success behind it. The organisation was, for many years, organised as a set of business units whose managers were incentivised purely on profit, rather than on revenue or other KPIs. For a long time, this worked. But it also disincentivised business unit heads from making investments for any new projects that wouldn’t turn a profit in year one. This meant that they weren’t really able to build the kind of data and information products that can yield huge subscription revenues but also have high start-up costs. The world of business media changed, but the business was unable to change with it. The result was stagnation, while several talented senior managers left in frustration.
Then there’s the case of the director at a large and diversified media and information business, who was bemoaning the slow pace of product innovation and development. This individual agreed with my contention that a good Commercial Product Manager or Product Director is the key to a successful information business. I’ve gone on about this before. The only problem was that the product team sat within a centralised technology function over which he had no control. The product people therefore were encouraged to value technical priorities over commercial concerns, were working on far too many things at once, and it became very difficult for business unit heads to get anything new off the ground.
All three of these examples have one thing in common: they’re the result of bad structural decisions, usually made years ago and never updated for a changing media landscape. Most business leaders would agree that “we’ve always done it like this” isn’t good enough, but many don’t know how to change, or lack a sufficiently clear idea of what ‘good’ looks like.
These are vital questions because, ultimately, the business structure affects everything: your ability to launch new products and future-proof your business; the happiness of your staff and your ability to attract new talent; the success of your editorial, product and commercial teams; and, of course, your top and bottom line growth. If things aren’t going to plan, there could be underlying structural reasons, and any kind of business change that doesn’t address these is likely to be inadequate in the longer term. Replacing two-thirds of your sales team isn’t going to help if there are structural barriers that prevent even the best ones from reaching their potential.
Change requires several key ingredients. It requires business leaders with real vision and forensic attention to detail, and the ability to push through major changes to a business while keeping the teams motivated and onside; it requires a real desire for change, and a team that is willing to adapt. But, first of all, it requires recognition that change is needed.
If any of the above rings a bell, we would welcome the chance to talk to you. Over the years, we have worked with enough organisations to recognise the symptoms of frustration and stagnation that mark a sclerotic business – or a business that is simply unable to reach its potential because of its structure. We have advised dozens of clients on structures that are more functional and help drive success.
To learn more, please feel free to call me or Martin on 020 7692 0530. We’re always happy to talk.
Martin Tripp Associates is a London-based executive search consultancy. While we are best-known for our work in the TMT (technology, media, and telecoms) space, we have also worked with some of the world’s biggest brands on challenging senior positions. Feel free to contact us to discuss any of the issues raised in this blog.