Why most org structures suck (Part 1)
You’re working on a big project for your company and need to get people from other parts of the company involved. Maybe you’re a customer service leader and need some engineering help. Maybe you’re a product manager and need some ops help. This project is really important to the business, so you assume that these other teams will willingly support you. But when you speak with them, they say they have other priorities that are more important, and don’t have time to support you on this project. How many times have you run into this problem?
Now let’s say you’re a CEO and you have a really big problem or opportunity in the company that needs addressing. In fact, this is such a big opportunity that, in your mind, it makes sense for your teams to drop other things in order to focus on it. You ask one of your leaders to take this project on, and they do. They start having meetings that include not just their team, but also the other teams who are needed to work on this. You’ve given your backing to this leader to ask those other teams for their resources. But you check in after a couple weeks of those meetings and no progress has been made. The leader you assigned the project to tells you that all the teams agreed this is important to work on, but none of the teams who reported to other leaders were able to make time to work on it. How many times have you run into this problem?
In my experiences as an employee within a larger org, and as a leader of an org, these situations happened with exceptional regularity. I spent an inordinate amount of my time managing stakeholders to convince them that what I or my team was working on was worth prioritizing their own time for. An employee spending time doing this is inherently not spending time actually doing work. And a leader spending time doing this is not spending time actually helping their team get that work done or steer them in the right direction. But it’s not only a bad use of the organization’s time. If a bunch of teams are trying to get a bunch of other teams to allocate resources for projects, by definition there is inefficiency in prioritization. Every team seeking help from other teams thinks that what they’re doing is more important than whatever other teams are doing. This simply can’t be right. If every project is a top priority, then no project is.
What is causing this inefficient time allocation and prioritization to occur? There are certainly a number of contributing factors. But there is one that, in my opinion, is the principal culprit: bad org structure.
Most companies structure their orgs by function. This can work, at first.
A typical org structure of a company at pretty much any size looks something like this:
In this structure, people are divided into functions. There is an operations team, a sales team, a marketing team, etc. The reason companies are often organized like this is because, managerially speaking, it is very logical to group together employees with similar skill sets and backgrounds. A marketing leader is theoretically much better equipped to direct marketing employee efforts than an operations leader would be. They’re probably also better equipped to hire great marketing people and assess their performance than an operations leader would be. It’s also easier for managers to compare performance between people doing the same type of work.
When companies are early-stage, this structure makes a lot of sense. New companies, and new orgs, tend to have a lot of foundational work that needs to be done to set them up for scalable growth. I once joined a company as their first operations leader. The ops team was only about 10 people at the time, but there was significant growth planned in the coming quarters as we planned to onboard many new clients. Here were some of my key priorities at that point:
Hire and train great managers so the team had enough leaders to grow quickly without breaking
Identify the key operational and customer-facing processes that needed optimization, standardization, or centralization so that every team member was able to be more efficient and more impactful
Design a performance management program that set measurable standards for team performance and helped team members understand what was expected of them and track their progress
These are all pretty foundational pieces of work. It’s hard to grow a team without all of these things in place. This work was all really important and, even better, it also only required resources from my own team. Bringing in a marketing person to help think about how to select and train the managers in my team wasn’t necessary. Working with the product team to design a performance management program wasn’t necessary either. My operations team and I had all the tools we needed to execute this work. This has been true in every single early-stage organization I’ve worked with or joined as a leader. Almost everything that needed to be done within the team, we could do ourselves.
Structuring by function breaks down once the foundational work is done
Fast forward 6 months, and a lot of that foundational work was complete. As a team leader, it was my job to figure out what needed to be done next. Without as much foundational work left to complete within operations, I had two options: 1) come up with priorities that were more iterative in nature (i.e. improve the performance management program), or 2) come up with priorities that were more cross-functional in nature (i.e. improve the customer onboarding process). This is where an org’s structural problems tend to appear.
Let’s say that I focused my team on more iterative priorities. Certainly the initial set of operational processes we had centralized, standardized, or optimized was not a complete set. There were more processes to centralize, or we could better standardize or optimize the processes we had already worked on. Same with the managerial training and development. Whatever level of training my new managers had received in the first 6 months, there was undoubtedly more that they could learn. In all cases, there was more we could do. But would that work be as impactful as the initial buildout? Almost definitely not. Going from 0 to 1, where something goes from non-existent to existing, almost always has a greater impact than that same thing going from 1 to 2. Think about it in the context of my kickball team: when we only have 8 players, we benefit a lot more from having a 9th player (0 to 1) than from upgrading the skills of one of the existing 8 (1 to 2).
But what if I came up with priorities that were more cross-functional in nature? As something that had historically gotten very little resourcing, our customer onboarding program probably had a lot more room for improvement than my team’s management training. It was almost definitely the greater opportunity for impact on the business. But it wasn’t totally in my control. The process required careful coordination between a bunch of different teams. And only one of those teams reported to me. If I had been CEO of this company, I would have deemed this to be one of the biggest opportunities for the company to tackle. But as a leader of just one team, I had to keep in mind not just what was going to make the biggest impact, but what specifically was in my control. The less control I have over something, the less likely it is that I can actually have an impact on it. Suddenly, org structure went from something that helped the company succeed to something that was holding the company back from focusing on its most important problems.
This is where the examples I described in the first section, where managers and project leaders are having to jockey for resources, start to occur with greater frequency. Either that, or resources are starting to be used inefficiently towards projects that aren’t top company priorities. Neither is ideal for a startup that’s limited in resources and is fighting for survival. To be fair, it’s not ideal for a company of any size. Inefficient prioritization and resource usage lead to lower profits, employee dissatisfaction, and loss of competitive advantages over time. In part 2 of this post series, I’ll go over some effective solutions to these org structure problems.