Every two to three years, the same pattern: results are off, collaboration stalls, management is dissatisfied. The diagnosis comes quickly: “We need a new structure.” New reporting lines are drawn, divisions are merged or split, spans of control are changed. Six months and significant friction losses later, the new structure works—more or less. But the old problems remain. Only the interfaces have shifted.
Most reorganizations do not solve the problem they are meant to solve. Because the problem is not structural, but a leadership or cultural issue that reproduces itself in any structure.
A managing director I advised was facing his third reorganization in five years. The first had replaced the regional structure with a functional structure because the regions were working too much in isolation. The second had rolled parts of it back because the functional structure had destroyed customer proximity. The third was meant to introduce a matrix organization that would combine both. I asked him a question that visibly unsettled him: “What exactly will change through the new structure that could not be changed through better leadership within the existing structure?” It took him a long time to answer. And the answer was: less than he thought.
This is not an argument against every reorganization. It is an argument for honestly checking—before reaching for the organizational chart—whether structure really is the problem. Because an organizational chart only defines the boxes. The real work and the real conflicts happen in the “white space” between them: in the interfaces, the informal agreements, the way people talk to one another across division boundaries. You can move the boxes around as often as you like: if you do not change the behavior between the boxes, you have gained nothing. In corporate jargon, this is aptly called “box shifting.” Three levers help you distinguish whether you are dealing with a genuine structural problem—or just box shifting.
Alfred Chandler coined the phrase “Structure follows strategy.” What is often forgotten is that Chandler meant structure should be a consequence of strategic decisions, not the other way around. In practice, structure is often used as a substitute for strategy. The direction is unclear, so the organization is reorganized. Collaboration is stuck, so reporting lines are redrawn. Accountability is diffuse, so a matrix is introduced.
Before you reorganize, ask three diagnostic questions. First: Is the problem structural or behavior-based? If two divisions do not collaborate, is that due to the structure—or because the division heads do not trust each other, pursue conflicting goals, or are trapped in a risk-avoidance culture? A new reporting line changes nothing about a lack of trust. Second: Have you fully leveraged the existing structure? Many structures work better than expected when leadership operates consistently within them. Third: What exactly should be different after the reorganization? Not “better collaboration” or “more customer proximity”—those are wishes. Instead: Which specific decision paths will be shorter? Which interfaces will disappear? If you cannot name that precisely, you are probably solving the wrong problem.
| Signal | Structural issue (reorganization can help) | Leadership/cultural issue (reorganization solves nothing) |
|---|---|---|
| Divisions do not collaborate | Conflicting targets, no shared KPIs | Missing relationships, no trust, silo thinking as a culture |
| Decisions take too long | Too many approval levels, unclear responsibilities | Fear of mistakes, reverse delegation, nobody wants to decide |
| Lack of customer proximity | Too many layers between the client and the executive | Internal processes matter more than customer feedback |
| Innovation stalls | All resources tied up in day-to-day operations, no breathing room | Risk aversion, mistakes are punished |
A division head I supported during the introduction of a matrix summed it up after six months: “We spent half a year defining new roles, clarifying responsibilities, and resolving conflicts that did not exist before. During that time, we barely worked on our actual goals.” This is not an exception. It is the norm.
The visible costs—consulting fees, communication effort, new IT systems—are only the tip of the iceberg. The invisible costs are higher: loss of productivity during the transition phase, which typically lasts six to twelve months. Loss of informal networks and established working relationships that took years to develop. Turnover, because the best people read reorganizations as a signal that leadership does not understand the real problem. And change fatigue: every reorganization consumes change capacity that is then missing for the truly important transformations.
The honest calculation: a reorganization typically costs an organization twelve to eighteen months of focus. Not because the changeover takes that long, but because the aftershocks reverberate for that long. When you weigh that against the expected benefit, a reorganization is often only worthwhile if the structural issue is truly so severe that it cannot be solved within the existing structure.
There are situations in which a reorganization is the right answer: when strategy has fundamentally changed and the structure no longer fits the strategic direction; when an acquisition or merger brings two organizations together; when structures that have grown over years are so convoluted that nobody can see through them anymore; when governance requirements force a different organizational design.
In these cases, reorganize—but do it once and thoroughly rather than three times and half-heartedly. Many organizations do not suffer from the wrong structure, but from an endless series of partial reorganizations that are never fully completed. Middle management gets used to permanent provisionality and stops investing in the current structure because the next change is coming anyway.
Do not underestimate the human dimension. Behind every box in the organizational chart is a person wondering what the change means for them. Communicate early, honestly, and concretely. Plan the stabilization phase from the outset. And above all: do not try to reorganize away the culture you actually need to change. If the problem is silo thinking, new silos will emerge no matter how you draw the boxes—as long as the incentives reward silo thinking. Structure can enable behavior. But it cannot force it.
First: Is a reorganization currently on the agenda in your organization? Can you name in one sentence the specific problem it solves that could not be solved within the existing structure? If you cannot formulate that sentence, you may be solving the wrong problem.
Second: How many reorganizations has your organization gone through in the last ten years? If it was more than two, ask yourself: did each one solve the problem it was meant to solve—or did the problems merely shift?
Third: Take the most pressing problem in your organization and ask: what would change if we did not change the structure, but changed leadership behavior within the existing structure? If the answer is “probably most things,” you can spare yourself the reorganization.
Reorganizations are tempting because they are visible. A new organizational chart is tangible, presentable, communicable. Changing leadership behavior is none of those. Behind it lies action bias: when numbers drop, management must demonstrate the ability to act. A new organizational chart immediately creates a sense of momentum and control. Coaching a toxic division head or working through conflicts does not make for nice slides, but it is more sustainable.
The next reorganization is always easier than the next honest conversation. That is precisely why you should become suspicious when the reflex kicks in.
Build bridges instead of blowing up silos – Why silo thinking does not disappear with new organizational charts, but through targeted connections.
Break the risk-avoidance culture – When nobody decides, what helps is not a new reporting line, but psychological safety.
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