concluded that Ford needed a major overhaul of a “convoluted management structure riddled with overlapping responsibilities and tangled chains of command” (Hoffman, 2012, p. 142). He flattened the hierarchy, cut out two layers of senior management, and increased his number of direct reports. He sold off secondary brands like Volvo and Land Rover and streamlined Ford's product line to aim for fewer models with higher quality. He implemented what had worked at Boeing: a matrix structure that crisscrossed the already‐strong regional organizations with upgraded global functional units. So, for example, the head of communications or purchasing in Ford Europe would report to both the regional president in Europe and to a corporate vice president back at headquarters in the United States.
Mulally believed this structure would bring the balance Ford needed: “It made each business unit fully accountable, but also made sure that each key function, from purchasing to product development, was managed globally in order to maximize efficiencies and economies of scale” (Hoffman, 2012, p. 143). He emphasized teamwork, collaboration across divisions, and an end to blaming, hiding mistakes, and hoarding cost figures. Division presidents were instructed to act as one company, not as airtight silos.
It worked. After losing market share for thirteen straight years, Ford gained share in 2009, turned a profit in 2010, and achieved its highest profits in more than a decade in 2011. Mulally turned 65 that year amid speculation about when he would retire. Board chair William Ford III expressed the hope that he would stay forever, but Mulally chose to retire three years later in 2014.
Principles of Successful Structural Change
Too many efforts to change structure fail. The Beth Israel, and Ford Motor Company initiatives succeeded by following several basic principles of successful structural change:
They did the hard work of carefully studying the existing structure and process so that they fully understood how things worked—and what wasn't working. (Many efforts at structural change fail because they start from an inadequate picture of current roles, relationships, and processes.)
The change architects developed a new conception of the organization's goals and strategies attuned to the challenges and circumstances of the time.
They designed the new structure in response to changes in strategy, technology, and environment.
Finally, they experimented as they moved along, retaining things that worked and discarding those that did not.
CONCLUSION
At any given moment, an organization's structure represents its best effort to align internal activities with outside pressures and opportunities. Managers work to juggle and resolve enduring organizational dilemmas: Are we too loose or too tight? Are employees underworked or overwhelmed? Are we too rigid, or do we lack standards? Do people spend too much or too little time harmonizing with one another? Structure represents a resolution of contending claims from various groups.
Mintzberg differentiates five major components in organizational structure: strategic apex, middle management, operating core, techno structure, and support staff. These components configure in unique designs: machine bureaucracy, professional bureaucracy, simple structure, divisionalized form, and adhocracy. Helgesen adds a less hierarchical model, the web of inclusion.
Changes, whether driven from inside or outside, eventually require some form of structural adaptation. Restructuring is a sensible but high‐risk move. In the short term, structural change invariably produces confusion and resistance; things get worse before they get better. In the end, success depends on how well the new model aligns with environment, task, and technology. It also hinges on the route taken in putting the new structure in place. Effective restructuring requires both a fine‐grained, microscopic assessment of typical problems and an overall, topographical sense of structural options. Putting the most talented people in a confused or inappropriate structure is a sure route to failure.
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