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Horizontal versus vertical--two restructuring approaches to the same vision
PFCA Review
|January 3, 1996
Summary
Organizational restructuring involves horizontal or vertical approaches, each with unique cultural and operational challenges. Choosing the right path requires evaluating trade-offs and aligning with organizational goals for successful implementation and savings.
Area of Science:
- Business Strategy
- Organizational Development
Background:
- Organizations often face the need for significant change through restructuring.
- Two primary models for restructuring are horizontal and vertical approaches.
Purpose of the Study:
- To compare horizontal and vertical restructuring strategies.
- To guide organizations in selecting the optimal restructuring path.
Main Methods:
- Analysis of cultural and operational challenges for each restructuring type.
- Evaluation of differing savings streams associated with horizontal and vertical paths.
Main Results:
- Both horizontal and vertical restructuring aim for a unified organizational vision.
- Success is contingent on a strong foundational strategy for either approach.
- Distinct cultural ('us vs. them') and operational ('to leap or not to leap') trade-offs exist.
Conclusions:
- Organizations must carefully weigh the specific challenges and financial benefits of each restructuring model.
- Tailoring the restructuring initiative to align with unique organizational objectives is crucial for success.
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