The Hindu Business Line : The limits of restructuring

LARGE WORLDWIDE CORPORATES, a relatively recent species in human history, have drawn traditionally on two ancient models for their structure: The imperial armies and the Church. Armies and churches have thrived on unquestioned discipline, conforming to standard procedures, norms and rites, loyalty to the team, obedience and lifelong dedication; and promise in return a way of life, security, assured social status and, within limits, career progression. Such a structure had served imperial ambitions of nations at a time when colonialism held sway and in the case of the Church, continues to be relevant to their social purpose in more modern times. When firms expanded overseas in the 20th century, they inevitably took the hierarchical pyramid shape, which is still their most popular structure. In the event, the recent upheavals in Unilever have only served to underscore the fact that it is hard it is to make such a model work within commercial contexts and the management structure it has sought to put in place is an exercise in exploring alternative models of functioning.

While the jury is still out on the alternative model of governance, this much can be said with certainty: Companies must recognise that the nature and purposes of the business organisation are fundamentally different from the organisational purpose of the older estates namely the Crown and the Church. What is even more noteworthy is what they do not have but firms do — the need to compete profitably for the share of the consumer's mind and wallet, against rivals and in a market that measures their worth daily. They must inevitably be externally focused and driven by the survival need — to constantly innovate and improve, be prepared to upset the apple cart occasionally, and jettison precedent and precept if need be. This suggests that the solution to mounting competitive pressures does not always lie in restructuring, but in becoming nimble-footed and flexible, learning to live with change and ambiguity. No wonder few organisations last more than three or four generations in their original form.

In controlling a mammoth organism over vast distances, sub-units and country managements, the choice of emphasising region, product-business, or function is never likely to be fully resolved by diktat. It must be supported by a leadership sensitive to people as consumers and employees; a culture of negotiation, trust and willingness to debate objectively — one that is internally as harmonious and apolitical as humanly possible. Yet, a successful transnational corporation is often the opposite, a collection of highly educated, sharp, and aggressively ambitious managers who can become too engrossed in career progression and power to the detriment of the organisation. Meanwhile, the human mind yearns for absolutes, to know for certain "who in the end calls the shot, who decides where we are going". Alas, such certainty is seldom found on this earth, least of all in complex organisations. So, multinationals lurch from one restructuring to another, buying and shedding businesses, often against all business logic, in order to keep up with current fashions. Perhaps, this too is a reason why scandals, financial collapses and boardroom crises are a constant feature of life on the fast lane.

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