When you're scaling up as fast as we are, and you double the amount of people in the company every year, that creates organisational challenges. We frequently need to rethink how to best organise people for success.
What is organisational design? "Organising people & skills into teams, that can work smoothly and effectively together on desired business outcomes."
How you organise in teams is crucial, because:
- It determines, to a large extent, the output your organisation can create.
- It has a big impact on how "enjoyable" work is
- It has a big impact on cost structure
We're 150 people now, spread across 7 offices. We're thinking very consciously on how we organise all that amazing talent 😉.
When we started thinking about the next iteration in our organisation's design, we again noticed how little resources are available on the topic. We happily share how we think about this challenge though.
5 principles for great organisational design
For each iteration of our design, we evaluate all design options on how they perform on the following 5 principles:
- Goals & Strategy first
- Strategic alignment, executional autonomy
- Distributed ownership, functional excellence
- Minimise layers, while keeping the "2 pizzas rule" intact
- Iterate, iterate, iterate
Let's dive deeper into each one!
Goals & strategy first
When you're organising people into teams, you're drawing lines, dividing people into distinct groups. Where you draw these lines matters, because it determines what your organisation will be able to execute fast, and what will be a hassle to get done. This means you need to be conscious about where you want to be fast, and where you want to allow for sub-optimal performance. That's where goals & strategy come in. Where you want to get to and how you plan to get there, determine which capabilities & activities will be key. You want to draw lines in your organisation, such that you maximise performance on these key activities.
For example: If it's your companies main strategy to grow through fast NPD launches, it makes sense to have strong cross-functional NPD launch teams. You'd want to include Ops, Product & Marketing talent, together in teams. If you don't do that, separate Ops, Product & marketing teams will have to work together through processes, briefings & feedback. This would result in much slower execution, hurting the companies ability to perform well on the strategy.
Strategic Alignment, Executional Autonomy
You have to get obsessed with this one sentence. If you get this right, It'll bring you soooo much value during scaling! 🚀
- Strategic alignment = making sure that everyone is working towards aligned goals.
- Executional autonomy = Teams can work independently on their key activities, without needing support from other teams.
Strategic alignment is important, because if we don't have that, teams could be working towards conflicting goals. Executional autonomy is important, because without it, the organisation's execution will drastically slow down as it tries to scale.
OKRs & Campfires
We work on strategic alignment using OKRs & Campfires. OKRs stand for "Objectives & Key results" and are a goal setting method, pioneered by Intel. We set goals every quarter, and make sure they are aligned between teams during "OKR sprints".
Weekly or bi-weekly campfire moments are then used to demo work done and align on roadmaps ahead. They are held at multiple levels in the organisation, to identify and alleviate bottlenecks to reaching our goals.
Where possible, we always try to work in cross-functional teams, minimising the need for briefings and processes on key activities. Cross-functional teams, working together in focussed sprints are key to delivering output fast!
Communication always flows easiest within teams, whereas you have to put in place structures to make it flow between teams. When organising in functional teams, you have to stack a lot of day-to-day processes on top of each other, making it very difficult to do deep & differentiating work as an organisation.
Distributed ownership, functional excellence
If you hire talented, ambitious people, you want to give them ownership over business outcomes. You want them to make their own decisions, mistakes & successes. This way of working is called, 'Distributed ownership'.
When you assign business outcomes, like customer LTV, net sales for a geography, # of quality customers acquired, ... to cross-functional teams, you allow them to be creative in reaching these outcomes.
This distribution of ownership sounds nice, but has risks as well. There's the risk that teams develop separate ways-of-working, not learning from each other. That's why you want to include a cross-teams push for functional excellence in your design as well. We solve this with "lead experts" in all functional domains (Growth, content, design, development, ...). These Experts are tasked with pushing the 'standard of excellence' of their domain across the company! 💪
Combining the distribution of ownership with a global push for functional excellence is a very strong mix.
Minimise layers, keeping the 2 pizzas rule intact
Small, agile teams that can work well together are the basis for everything. The 2 pizzas rule, coined by Jef Besos, says that a team can't be more than 8 people. If teams outgrow 2 pizzas, they become inefficient in working together, fast. Simple!
With the constraint that teams can't be more than 8 people, we want to minimise the number of 'layers' in the organisation. If a team reaches 8 members, the next hire has to go into a new team, if there are more than 8 teams like that, a new organisational layer has to be created.
The so called hierarchy this creates as we're scaling should be combated by keep decision making as close to the execution as possible.
Iterate, iterate, iterate
We all understand we need to iterate & learn on marketing & sales activities. But for some reason, we expect the way we organise teams to stay the same for years. This is because our team is our home within the company, and the prospect of changing that can be scary. When you're a scale-up however, you can't afford to look at organisational design as something you work on for half a year and then keep for 10 years. Within the 6 months you're working on it, your design could already become redundant. How you organise teams will be a living thing and you'll have to make changes on a yearly basis.