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Culture, Entrepreneurship, Relationships

The Org Chart of the Future

As I look all around me I can’t help but be amazed by the explosive rate of innovation we are living through. The breakthrough inventions in technology, explosive growth in startup communities and even the societal changes in how we socialize, date and parent are hard to keep up with. Even when we think we have a handle on it all we quickly discover brand new attitudes, devices and platforms that seem to change everything in cycles that now run much shorter than generations.

speed of innovation

If you’re as cool with change as I am, it’s a fascinating time to be alive. If you work for some big conglom that didn’t come into being in the tech boom – not so much. While the workplace has has been impacted by advancements in technology (yay, smartphones enable a new, 24/7 workday!!), there has been comparatively little innovation in how companies are run. Structure, processes and cultures have not adapted at a rate that’s even remotely similar to what we’re experiencing outside of work.

As a result, big corporations are becoming much less enticing places to work, especially for the long term, and particularly for younger professionals. I have written a number of posts characterizing the future workplace that further highlight the broadening disconnect between workplaces and general society in terms of how we operate. These gaps are causing tension between old regimes and the new. We criticize young professionals instead of embracing what they can teach us. We are in many ways stuck in the 20th century and don’t know it. I watched a TED talk from a European innovation expert who took a potshot at the United States, the only country that still pays him by check for his services….

Success in today’s business environment demands an inspired workforce, agility and market responsiveness. That means operating lean. That means the ‘system’ has to be your competitive advantage and not something you have to overcome to move forward. That means being conscious of how you operate as you scale up before you become too big to pivot. Otherwise it’s all you can do to avoid collapsing under your own bureaucracy.

Today I’m going to pick on org structure.  You know, finance, operations, sales, marketing, HR, IT…all with their respective department heads. OK well to be fair, there is something to be said about functional expertise; and besides, the education system has lined itself up directly with this common layout.

But I see some developing rationale to tear down the whole dated paradigm. And when I build it back up I feel the need to create departments around common objectives instead of disparate tasks, as is the current norm. Why? Because it’s inefficient and bogs companies down (I’ll explain later). I want to synergize what companies are trying to achieve for the sake of market responsiveness, productivity and employee satisfaction. The other reason is that we haven’t structured organizations to reflect some of the priorities that require attention. I’ll climb on that soap box when I get to #2 later.

A new order is in order (!!), and this post represents the DNA of my take on how to construct the high-performing company of the future.

Notwithstanding barriers and complications that I will address at the end, my vision is to organize a company into these three core divisions:

  1. GROWTH

New, but not new. We’re seeing evidence of companies inching toward this sort of set up but to me it so far merely reflects a relabeling of current processes and isolation and specialization of some marketing tasks. Time now to go all in.

The purpose of this department is to not only manage the entire growth process but also lead the company in establishing growth strategies and metrics for which all employees must be held accountable. This team owns alignment across the org and must function in a much more flexible manner.

First thing I would do as a result is merge the functions of sales, marketing and product under the same leadership. Each team member will be less specialized. This needs to happen to ensure both strategic and operational agility and to drive powerful alignment in growth-generating activity.

So let’s talk agility first. In today’s digital and hypercompetitive global landscape, I view the process of running a company as something like driving a Formula 1 car. The competition is whizzing all around you to gain the upper hand, forcing you to constantly maneuver, accelerate, brake and shift to catch up or stay ahead. It’s a relentless and exhausting pursuit in ways we have never experienced…and it’s only going to get more intense.

As a CEO or team leader, you have to audit your tools for growth – or advance your share. The toolbox is big and has many components; you have your product or service along with all the market-driving tools that live within sales and marketing.

To say we should apply equal weight and effort against each growth driving tool at all times would not be sensible. These tools are all levers to pull and should be able to be prioritized or deprioritized at any moment. Today, you might be deploying resources to develop new products but tomorrow you might just be in maintenance mode as you shift focus into marketing. Today your sales channels could be the drivers of a push strategy but tomorrow you may elect to pull consumers through the channels as you market to them directly. Today social media may be a thing and then tomorrow you are building traditional advertising.

No, you don’t necessarily change gears on a daily basis but in the current environment you’d need to much more often than in the past. The problem with the org charts of today is that each functional area has its own leadership team and I’m sorry they only play well together to a point. There are practical issues with pulling people and money from one department to redeploy into another. And that doesn’t even get into politics, because you are likely dealing with leaders who fancy empire building and who have their compensation and levels tied to budgets and the number of direct reports. While some might think a traditional structure fosters stability, I think it impedes market responsiveness.

Sadly, CEOs would become saddled with the responsibility of addressing ensuing conflicts or unlocking stalemates. Moving around resources, redrawing org charts and navigating politics becomes a daunting practice for someone who needs to be thinking about future business models and other bigger things. Small wonder we tend to default to leaving things the way they are.

Secondly, if we pool everyone into one big ol’ growth department, we can align team objectives much more readily. Some executives think that conflict is healthy – it makes everyone better. I agree to a point and have often said that conflict can open communication lines and breed progress, if used adeptly. What I don’t like is conflict that can easily be avoided and is the result of sheer lack of management attention to the basics.

Take sales and marketing. In traditional environments, sales prioritizes revenue while marketing tends to have broader focus on the P&L. Performance metrics typically support these disparate approaches right down to how bonuses are paid. And you know what? People like salary and bonus rewards (even if they are not the number one reason to work for a company).

So there you are. Relationships by design just meant to collide. I can’t even begin to count the number of labor hours I have burned nurturing interdepartmental relationships and cashing in chips to have ‘favors’ done to help me achieve my performance goals that conflict with others. Most across the org are in this position, which results in a massive political web of employees trying to make it through the day by pleasing for the sake of being pleased at some future time.

Growth happens more readily if strategies are aligned and departments are limber and versatile enough to promote shift in focus. The paradigm of ‘one employee / one function’ against this objective is no longer practical.

  1. INFRASTRUCTURE

Ohhhhh, how much I could type on this one.  Deep breaths.

As a productivity nerd, I agonize over this issue in business as much or more than any other. Not on the radar of many as far as I can tell. Whoever figures out that a lean and powerful scaled up corporate infrastructure would be a colossal advantage (OK other than WalMart) gets a platinum star. Let me explain why, and how we so easily end up off course:

When companies start up, the CEO/leaders are more broad in their focus; they are not only managing day to day functions (they have to, with few employees!) but also thinking about the future vision and growth models once the core business is uploaded.

As growth occurs, freaky things start to happen organically. It starts with adding people. When we add people we both consciously and subconsciously start building our infrastructure:  organizational structure, business process, systems, people. Some of the construction is deliberate and what’s not becomes organic. All of it together and how it all works collectively forms the company culture.

Culture has DNA, and DNA is deep rooted. When you see culture in the way I do – as something that runs across every aspect of how a company operates, you suddenly realize how daunting of a thing it is to manage.

And how do companies manage culture now? By committees, through bi-weekly meetings. Or it’s assigned to HR and routinely deprioritized. It’s thought of as veneer…branding…a coat of paint. I have had leaders tell me their company had an entrepreneurial culture. I ask them why they say that. I get something non-specific such as they encourage ‘out-of-the-box’ thinking. I naturally push for more concrete examples such how the company rewards risk-taking and failure….or…what’s the biggest decision a first-line manager can make without approval from higher up? (At that point sputtering and frustration ensues, so I have learned to stop).

So yeah, if you want to be a creative company, if you want to be lean and agile, if you want to be entrepreneurial, you have to re-engineer all parts of your infrastructure to line up to it.

And there are more failures. Large corporations often choose not to invest in updated data management systems while instead leaving it up to employees to compensate for their inferiority. If you’re a leader and you can’t internally ‘google’ anything you need to know, that’s your cue that your systems probably suck. That phenomenon alone can highlight the disconnects between access to information between work and life.

What’s worse, employees pay for it. They have to extract, compile and make sense of information that resides in legacy systems. Then turn it all into a story in PowerPoint…and then read it to an exec in a sweaty meeting with too many people in it. That’s now we manage information. Still. And it’s not only time consuming and highly inefficient but soul crushing. In one of my past jobs I have said that I spend at least 2/3rds of my week either prepping to present to someone our outright presenting (reading!) to someone about what’s going on. And with the rest of my week (and weekend), I try to move the business. This is how we work. It’s the culture we can’t get away from. And this is why those millennials we complain about agonize because they see the world moving faster than they are at the workplace…and they don’t find it meaningful.

One of the grand ironies of infrastructure is that as we get bigger, it should help us invest less energy to do more. We know we’re not managing it right because as we get bigger we just plain do more. We communicate more, we meet more, we send more emails – all with positive intent. But it’s supposed to work in the opposite. Instead of sharing more info in more and more meetings we have to instead make info more accessible, reduce the number of inefficient gatherings and hold people accountable for staying engaged via performance measurement systems. But few are doing that.

Our people could be the biggest source of ROI company wide. We complain about the dearth of talent and lack of innovation, collaboration and problem solving ability. I attribute about half of the perceived problem inefficient infrastructure designed to promote conflict and discourage collaboration. I blame the other half on how we manage people specifically from start to finish.

When I worked for J&J I had an org project to manage MBA recruiting. There was a ton of work involved from school selection, go-to-market strategies, interviewing process, offer calibration, converting new hires and onboarding. Had to repeat it twice throughout the year, once for full time hires and again for interns. I was a marketer yet this easily became over a quarter of my job. And that’s just me. There were a number of committee heads and team members making this thing go. I will say it was all worth it. Our offer to conversion metrics and retention got stronger as years passed.

Point is, the people engine like all infrastructure elements take time and effort to deliver returns. There are no short cuts. J&J redesigned a performance measurement and development system for marketing the year I arrived. Took a committee of outstanding leaders at all levels 18 months. This is what you’re faced with when don’t dedicate a team on an ongoing basis to review and maintain.

Interviewing is another area in which many of us participate. The next time you pull a resume off the printer before you run into an interview room instead of taking the time to learn about your next potential candidate, think about the disservice you’re doing to the company and the candidate. More importantly, think twice before you complain again that you don’t have the right people.

A company’s infrastructure is the engine (accelerator, even) of productivity, growth and employee satisfaction. It encompasses most things that are built over time and are difficult to manipulate without applying significant resources. It is not overhauled by committees who apply new coats of paint as a proxy for organizational change; it must be built and managed intently by teams. Daily. And thus, it must be decoupled from administrative domains and isolated into one critical and strategic division.

I encourage anyone reading to tap into the wisdom of founders and CEOs who reflect back on their management styles over the years and then share what they would have done differently. On a consistent basis, you will come across articles profiling leaders who admit they took too long to realize that once a company scaled up they needed to focus minimally on near term growth activities in favor of developing future business models and tending to infrastructure. That’s where most of the efforts need to go – those two things. Their management style never pivoted as the company grew; that’s a lesson for all of us in leadership positions.

  1. OPERATIONS AND ADMINISTRATION

OK after Infrastructure I’m kind of exhausted. So, no need to go deep on this one. You get it.

These are the score keepers and enablers. They keep everything organized, ensure the lights are on, give you a place to sit, manage supply and provide a general sense of how things are going. Traditional functions such as IT and Finance can broach multiple departments to the extent they are strategic or supportive. For example, some finance departments behave more like accounting than hard core finance. Experiences company to company may vary.

The Challenges.

While this structure is my utopian vision, I realize the process to get there is not an overnight thing, assuming it’s possible at all. The obstacles are many but the most significant ones are the following:

  • More employees at all levels will need a broader scope of skills instead of the more common practice of specialization; new and younger employees would require accelerated development
  • Scaled up companies would have to transition over time and probably with the help of consultants. The longer you’ve waited and the bigger you are, the harder it is!
  • A full infrastructure department would be tough to business case. As with many SaaS and PaaS products, the ability to metric productivity in a way that shows a clear impact on the P&L is a challenge. As a result, it’s difficult to generate momentum behind the initiative. To focus on infrastructure would require C-level leadership that understands that there are a mountain of benefits, even if many seem intangible

The most likely opportunity to reimagine the org structure rests in a new venture. Such companies start with a blank slate for everything, which means a passionate founder with an uncanny futuristic vision. Only then can we take our structure, systems, processes and culture development out of the 1900s and into a new century of organizational innovation. The result could be extraordinary — unprecedented levels of employee productivity, engagement and well-being that have never before seen.

Please visit my blog’s culture section, for more posts on culture development, and the future of work.

ADDITIONAL READING

Contemporary CEOs are ignoring these four realities

Great article from awhile back on successful startups, and the commonalities between them. Consider Lessons 1 and 3 and how they relate to the conversation in this post about growth. Growth must seamlessly integrate a number of things and is not just about a rebranded marketing team. If you truly want them marching together and/or you want to remain agile enough to shift deployment of resources you need to think of this collective as one unit.

This Forbes articles on top 10 digital trends of 2017 is my everything. Included in the discussion is the idea of blowing up org silos and tending to infrastructure. Right on!

The CMO of Hubspot in 2017 is recognizing how the marketplace and go to market strategies are causing a need for regular restructuring to accelerate growth. My comments on this medium post suggest taking the thinking one step further in the context of my post here.

 

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