Designing Efficient Teams — Part II
A metrics-based approach to organizational design creates clarity of accountability. You end up with a team that reflects what you need to do to make your business successful.
Chain of Command
In the first part of this series we covered some principles of how to organize your teams. Now, let’s talk about org charts. Org charts are not your organization’s design, but they are very useful in creating clarity around chain of command and individual accountability.
Chain of command is important. People need to understand who is keeping an eye on resources, bandwidth, workflow, prioritization, focus, etc. If the people in your company don’t know who has the final call over certain decisions, you will get bogged down. Chain of command should (if an organization is healthy) give you enormous speed.
When I describe ‘chain-of-command’, that is not the same as a strict, hierarchical organization. There can be very clear chain-of-command in flat organizations. It just means that everyone knows who reports to who and who makes what decisions. Creating this clarity (represented in an org chart) should be easy if you have already delineated ownership and dependencies.
Another benefit of chain-of-command is good management. I don’t think you can create a great work environment where individuals can grow and advance in their career if you don’t have dedicated managers that are held responsible for the growth and workflow of their direct-reports.
ORG CHART VS ORG WEB
The top diagram is a representation of a traditional org chart. Org charts describe chain-of-command accountability. Below that is a representation of communication and collaboration in a networked org. These two concepts ARE NOT mutually exclusive.
Networked orgs with a diffuse chain of command are a mess. On the other hand, orgs with a strong chain of command that have siloed, non-networked teams are not responsive to their environments.
Think of networked teams as a smart navigation system and chain of command as torque. If you are able to combine a networked org with strong chain of command, your organization can seamlessly move between execution and exploration, constantly moving fast in the right direction.
This is easier said than done; it always comes down to the people. No matter how well you design your organization, if you don’t hire the right leaders for each of your teams and ensure there is a high degree of trust and respect between those leaders, the company will fail.
Don’t Confuse Individuals with Departments
If you confuse your org chart with your organization’s design, you end up organizing your teams around people instead of the core responsibilities of the company.
In the early days of a company, people fill many different roles. Sometimes one person’s bandwidth is divided across two departments. Don’t design your departments and ownership based on the people you have. I am embarrassed at how many times I made this mistake. Design your departments based on your business and then fit people to those departments.
This is difficult. Startups don’t have the necessary people or time to fit resources neatly into an optimal organizational structure. Roles and reporting structures need to be fluid. Everyone needs to be prepared to get layered, promoted, and moved around once product hits market.
A massive benefit in taking a metrics-based approach to org design is that it gives you incredible maneuverability to move your internal resources based on what needs to get done while maintaining a continuity of competency in each team as you scale.
As an example, it is likely healthier to temporarily move “Emily the Engineer” from owning “energy output” to owning “grant writing completion” than to move the responsibility of grant writing from government relations to engineering. This is an obvious, hyperbolic example, but I have seen this symptom many times — there is a difference between the person and the role.
Organizational design does evolve. New products, new geographies, new technology, pivots in strategy, etc. mean that the team structures you have may no longer be the optimal way to organize your team for success. As your business evolves, always be vigilant to make sure your organization is a reflection of what you need to do to be successful. Don’t let it stagnate and become obsolete. Re-orgs in response to business evolution are necessary and inevitable.
Other Concepts
Let’s review a few organizational design concepts that may help define your teams. These are generally more applicable as you scale, but it’s good to understand these differences even at early stage teams.
LINE AND STAFF
In general staff teams support the org like HR and Finance. Line teams directly move the core business function forward, like sales or manufacturing. However, something like software engineering could be a line team at a software company or a staff team at a dairy conglomerate. It depends on how you define core business functions. Be specific around ownership and metrics or else this will get fuzzy. If metrics are internal-facing, it is generally a staff function. If metrics are external-dependent, they are likely line.
PRODUCT/GEO VS FUNCTION
The easiest way this has been explained to me is in the scenario of a large multi-product or multinational company. Imagine a large company like General Electric. They make jet engines and microwaves. Should you organize GE around functional departments like “marketing” and “manufacturing” or do you have product departments like “white goods” vs “jet propulsion” that have their own dedicated marketing and manufacturing teams. This example is pretty easy since the products are so different. However, the Jet division’s marketing team can’t unilaterally change the GE logo. They have to follow brand guidelines that come from a centralized, functional marketing department at HQ.
MATRIX ORGS
Sometimes you have simultaneously strong product/geographical teams and functional teams.
The General Manager of Ford in Brazil has all functions reporting directly to her. However each department, from HR to manufacturing to marketing, also has a functional competency center back in Detroit that determines general practices and policy. These types of organizations that seemingly have two bosses are referred to as Matrix Organizations. Matrix orgs can get hairy. The good news is that if your company is dealing with the growing pains of a complex matrix org… you probably made it!
As an Employee…
Finally, even if you are not a founder or leader at your start-up, you can still mold your organization. I assume most people know their department or team and can even go a step further and succinctly describe what their department owns and core metrics they track. What is your relationship to the other departments? Do you constantly hear people complaining about the sales department overpromising or the engineering department moving too slowly? What are the fault lines between departments? Can you form a relationship across the aisle? You don’t need permission to start a networked org.
A metrics-based approach to organizational design creates clarity of accountability. You end up with a team that reflects what you need to do to make your business successful.
Prime Movers Lab invests in breakthrough scientific startups founded by Prime Movers, the inventors who transform billions of lives. We invest in seed-stage companies reinventing energy, transportation, infrastructure, manufacturing, human augmentation and agriculture.
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