Org Design: People vs Roles

One of the most powerful things a company can do to be more effective is get its “communication architecture” right. This includes things like organizational design, meetings, processes, and one-on-ones: basically the things that help dictate how information flows and is shared across an organization.

Organizational design – the org chart – is one part of this. From Ben’s blog:

Think of the organizational design as the communications architecture for your company. If you want people to communicate, the best way to accomplish that is to make them report to the same manager. By contrast, the further away people are in the organizational chart, the less they will communicate. The organizational design is also the architecture for how the company communicates with the outside world. For example, you might want to organize your sales force by product to maximize communication with the relevant product groups and maximize the product competency of the sales force. If you do that, then you will do so at the expense of simplicity for customers who buy multiple products and will now have to deal with multiple sales people.

Work Backward

When designing an org, I like to begin with the end in the mind: what I think the org structure will look like in 24 months. I start by thinking about all of the activities that will need to be done. I then I lay out all of the roles that I think will exist and – importantly – define what responsibilities that role will have and what types of activities they are likely to do. My purpose here is start from what activities the ‘organizational machine’ needs to perform and then work backward to define the roles.

For example, here’s an org chart draft I had once created for my ISA company, Base (acquired by Stride):

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People vs Roles

Now even though I had all those roles defined, I was not planning to hire all those people immediately. Instead, the important thing to realize here is that, as an organization grows, the same person can play multiple roles. For example, in the earliest days, the founder and CEO (a person) may de facto be playing many roles: the Chief Strategist, the Head of Customer Service, the Head of Marketing, and the CFO. That’s normal. Now of course that person won’t be able to play that role as deeply as a dedicated individual. But that’s OK. By clearly defining the roles in advance, you make sure that it’s clear who is responsible for every set of activities that an organization needs to do and have laid the foundations for a hiring plan into the future.

Attention as the Constraint

Every system only has one to a few constraints that keep it from performing better. Sometimes this is due to an outdated or incorrect policy. Sometimes it’s due to a limited resource. Identifying and addressing the constraint in a system is the only way to meaningfully improve its performance.

Several years ago I had the (not unique, I’m sure) realization that human attention is often the constraint in many systems. Evidence for this being true is the fact that many of the most valuable businesses in the world today – Facebook, Google, Netflix, just to name a few – are valuable precisely because they’ve become highly effective in capturing, directing, and monetizing people’s attention.

Within an organization, often times the constraint is management attention: from the CEO, the executive team, the board, etc. How the CEO in particular manages her attention is one of the biggest – though far from the only – determinants of success.

I read somewhere recently that “the biggest barrier to scale at a startup isn’t capital, it’s the time & attention to design and run experiments testing the core tenets of the business.” I don’t know if I’d necessarily word it exactly like that, but I think it’s close.