Across different roles and organizations, I’ve seen how restructuring can disrupt the very capabilities that made a business successful.
In one organization, I watched a team create some of the strongest product collections in its division.
Their strength wasn’t one exceptional leader or one winning idea. It was the way customer research, data, design, and sourcing came together. They knew their customer, challenged assumptions, and understood how to turn insight into something commercially meaningful.
Then the organization flattened. Senior roles were eliminated, and much of that team disappeared.
The products already in development kept moving. The business continued delivering results. From the outside, the restructuring could look successful.
But the team that knew how to create that momentum was no longer there to build what came next.
That’s the part I don’t think we examine closely enough.
What an Org Chart Can’t Show
The pressure to reduce costs is real. Especially in public companies, leaders are asked to hit financial commitments, simplify structures, and make difficult decisions, often with limited time and imperfect information.
I understand why those decisions get made.
Headcount, reporting lines, spans of control, and financial savings can be modeled. They’re visible, measurable, and relatively easy to explain.
What is much harder to capture is how work actually gets done.
A team might know which data to trust, when to challenge a design decision, or whom to involve before something becomes a problem. Those relationships develop over time, through shared experience, successes, and mistakes.
After restructuring, responsibilities get reassigned. Systems and processes remain. The people who stay absorb broader roles, sometimes without the support or context they need.
But moving ownership on an organizational chart doesn’t transfer the judgment and relationships behind it.
Research by Boris Groysberg and colleagues found something similar when studying high-performing equity analysts who changed firms. Those who moved alone often experienced a decline in performance, while those who moved with teammates showed no significant decline.
It’s a different setting, but the underlying point matters. Performance depends on more than individual talent. The relationships and environment surrounding people play a role in what they’re able to accomplish.
When those connections disappear, retaining the work doesn’t mean retaining the capability.
The Illusion of Recovery
Here’s what makes this particularly difficult to recognize.
Businesses don’t stop operating when people leave.
Products developed months earlier still reach customers. Relationships built over years continue supporting decisions. Plans created by people who are no longer there keep delivering.
For a while, the numbers hold.
Then the pipeline runs its course.
The remaining teams have to build what comes next with less context, fewer experienced people, and broader responsibilities.
Decisions take longer. Mistakes happen. Teams spend time rediscovering things the organization once knew.
And eventually, they find their footing.
I’ve seen remarkable resilience in these situations. People step into larger roles, build new relationships, improve processes, and find ways to make things work.
They deserve credit for that recovery.
But there’s a question I wish leadership teams asked more often.
Did we recover what made the business successful, or did we simply get better at operating without it?
Those are two very different outcomes.
A business can regain stability without rebuilding what once made it exceptional.
And once things stabilize, the new level of performance often becomes the benchmark. The savings are recorded, the restructuring is considered complete, and the organization moves forward.
What it used to be capable of gradually disappears from the conversation.
When the Loss Compounds
Now consider what happens when that cycle repeats.
One restructuring removes a layer of leadership. Another consolidates functions. A new leadership team arrives and redesigns responsibilities again.
Each decision may make sense based on the financial and operational picture at that moment.
But that picture has already been shaped by the changes that came before it.
Experienced people have left. Relationships have been rebuilt around different responsibilities. Teams have adapted to managing the work with fewer resources.
After two or three significant changes, fewer people remember how the organization once worked at its best, let alone how to recreate it.
The business may be comparing its performance against a version of itself that has already lost much of what once differentiated it.
Companies can become increasingly efficient at operating a business that is gradually losing its ability to create future value.
That’s the cumulative cost of forgetting.
The loss doesn’t always appear as a dramatic decline. Sometimes it shows up in slower decisions, fewer new ideas reaching customers, or teams becoming increasingly focused on maintaining what they can manage.
Each restructuring may deliver its intended savings while making the next stage of growth harder to achieve.
The savings have an owner. The cumulative loss of capability often doesn’t.
What Are We Really Preserving?
I’m not arguing that every role should be protected or that organizations shouldn’t change.
Sometimes restructuring is necessary. The question is whether we understand enough about what makes a business successful before deciding how to change it.
We know how to evaluate financial savings, reporting structures, and organizational efficiency.
But how well do we understand the relationships and decisions that turn customer insight into commercial results?
Where does shared experience make the difference between following a process and knowing when to challenge it?
And how much of the performance we’re measuring today depends on capabilities that may no longer exist tomorrow?
These aren’t always easy questions to answer. Much of what makes an organization effective lives between functions, outside formal responsibilities, and in ways of working that have developed over years.
The people closest to that work often understand those connections better than anyone. Yet their perspective isn’t always part of the conversation before decisions are made.
I think there’s an important distinction between understanding what a business does and understanding what makes it good at doing it.
One is relatively easy to document.
The other requires looking more closely at the people, decisions, and relationships behind the results.
And after the structure changes, who’s evaluating whether those strengths survived?
A successful restructuring shouldn’t be judged only by whether the organization can continue operating with fewer resources.
It should also consider whether the business has retained the ability to create what comes next.
What Are We Actually Saving?
We spend considerable time understanding what a restructuring will save.
I think we should put the same discipline into understanding what it might cost us in the ability to create.
Because the financial savings will be visible almost immediately.
The capabilities we’ve lost may take years to recognize.
Before the next restructuring, two questions deserve equal consideration.
What will this change save us?
And what might it cost us the ability to create?
The first belongs in every financial model.
The second deserves a place there, too.
You can’t protect what you don’t know is creating value.
Research reference: Boris Groysberg, Linda-Eling Lee, and Ashish Nanda, “Can They Take It With Them? The Portability of Star Knowledge Workers’ Performance,” Management Science, July 2008.