Who’s Really Sitting at the Top of Every Organizational Chart

New Org Chart 1cFacebook moved into a new office complex earlier this year, which Mark Zuckerberg has described as “the largest open floor plan in the world.” With over 400,000 square feet, it is reported not to offer a single private office. There are conference rooms, shared spaces, and all kinds of creative gathering areas meant to protect the startup environment that is core to the company’s zeitgeist as it evolves into a corporate behemoth. It’s a wild, energetic, real-time experiment in organizational development that is already being praised and criticized from inside and outside the company. Whatever your assessment might be, it’s a test of human behavior worth watching.

For a moment, I’d like to think of the Facebook campus not as a model of space planning, but as a model of team planning. Long before the debate raged on whether private offices had run their course of usefulness—and just how truly dreadful the industrial cubicle could be—company leaders were debating the “optimal” way to arrange organizational charts in the Information Age. If you’ve spent any time with me in product development, you know I like to quote the sometimes overused phrase, “People in companies get stuff done in spite of org charts, not because of them.” It’s a bias I maintain for all kinds of reasons, not the least of which is seeing it in action almost every day. Another bias I hold applies to the “optimal” way to build these org charts. I’ll confess to that in a moment, but the title of this article has likely already given away my leaning.

Let’s start with the basics. The rise of the Industrial Revolution in the 18th Century, emerging from prior Agrarian Societies, led to thousands of individuals working for single companies, for the most part creating efficiencies in the manufacturing model. Most of us are familiar with the innovation of Henry Ford as something of the father of mass production with his 20th Century Assembly Line. The premise of the organizational charts for these early corporate conglomerates surmised that a few knowledge workers and a Big Boss would send instructions down the pyramid to a wide base of workers who hopefully wouldn’t ask too many questions. Executives were at the top, middle managers squeezed in the sandwich, and individuals contributors down below busy doing their hands-on functions repeatedly. If the model sounds blunt and easy to follow, there is a reason for that—it dates back to the earliest days of broad warfare, mostly perfected by the Romans. You have an Emperor, you have Generals, you have Captains, and you have Soldiers. It worked for thousands of years in capturing terrain, albeit at the cost of mostly Soldiers, and it worked for hundreds of years in mass producing products, too often without much consideration of job satisfaction.

As education and information became more available in later decades, and asking questions became the norm, the inflexible org chart became a lot more difficult to maintain. As workers collaborated more and followed instructions less, human resources departments (formerly known as personnel offices) looked to break out of the traditional top-down structures and unleash creativity. Standard org charts evolved along the lines of two basic models: Functional Departments and Cross-Functional Teams.

Functional Departments place similarly skilled workers into groups led by senior individuals with advanced experienced in a discipline. This creates a Legal department, an Art department, an Engineering department, a Finance department, a Sales and Marketing department, and the like. Over the course of your career you might aspire to become the VP of Finance or the VP of Marketing, and these VPs, now sometimes called C-Level executives (Chief Financial Officer, Chief Marketing Officer) point the functional expertise of their teams into a Chief Executive Officer. Your company may organize itself this way. It is a very common and familiar way to organize. It’s also still very close to the old military hierarchy.

Cross-Functional Teams break the model of Artist reporting to Art Director and Engineer reporting to Engineering Director. They place multi-disciplinary groups under a generalist manager who is often more “cat herder” than boss. In this model, a smaller group of people with engineering, finance, marketing, design, and manufacturing expertise might all report to someone called a Project Lead, Product Manager, or General Manager, who is in essence a mini-CEO. Unlike Functional Departments, Cross-Functional Teams are likely to be less “permanent” in structure. The team might be ad hoc, assigned to an initiative, ready to be broken up and redeployed following a product release. Functional experts on the team might have a dual reporting relationship to the team leader and a senior expert in their area of expertise offering professional mentorship, so that a team leader who doesn’t know the law doesn’t have to render legal oversight (always a good idea). Over time Cross-Functional teams can evolve into more permanent Business Units with profit and loss responsibility for a specific line of products and extensions. If you have ever been in a company comprised of Battling Business Units , you know it can be even less fun than being buried on a Functional Team.

It is at the intersection of these two models that we all learn the necessity of Matrix Management, which unfortunately in the Information Age is the only real way we have to collaborate in an ongoing manner. Sometimes we need a Functional Department to help us advance in our area of expertise, and sometimes we need a Cross-Functional team to get stuff done with people who are good at different things. Most companies go back and forth between Functional Departments and Cross-Functional Teams, and just when you think your company has settled into a comfortable structure, along comes the inevitable memo announcing the company re-org. Companies re-org over and over in search of optimizing their growth models, but the truth is, neither approach is perfect, and whichever one your company is currently utilizing, be prepared to have it change. Re-orgs are certain because change is certain. The opposite would be sameness, and as much as you might think you want that, running in place is the surest way possible to go out of business.

Oh, about that bias of mine—I believe anything in a company that leads to entrenched fiefdoms stalls creativity. Functional Departments are usually fiefdoms. Business Units are usually fiefdoms. Again, this is why Matrix Management is a reality, particularly in managing empowered, innovative individuals who join together in a mission that is unlikely to last a lifetime, but has a real chance to change the world now. If we take that back to the visual metaphor of the open floor plan, I tend to see greater strength in the output and engagement of Cross-Functional Teams than I do Functional Departments. That doesn’t mean I am against having an exemplary CFO, CTO, or CIO setting the bar for excellence in a discipline. It just means that whatever the org chart says at the moment, I don’t want any walls between artists talking to engineers, lawyers talked to sales people, accountants talking to marketers, or anyone so distant from customers that they forget who pays everyone’s salary.

You see, at the root of all this, there only is one Emperor, one General, one CEO, one Boss who matters most. That is the voice of the Customer, whom we almost never place on the org chart. Start by putting the Customer at the top of the hierarchy, and you’ll soon understand why who reports to whom doesn’t really matter when it’s time to tally the scorecard. That’s why the walls gotta go, figuratively or literally. Go out on the floor and try to bump into a few people. You may be surprised how much you learn and how good it feels.

_____

This article originally appeared on Inc.

Advertisements

How Fragile Is a Brand?

Philip W. Schiller, Senior Vice President of worldwide marketing at Apple Inc introduces the new iPads in San FranciscoApple unveiled a bunch of new products last week, including numerous options in shape, size, and price point for a fuller line of iPads.  Many of these products are desirable and will make great holiday gifts, but none comes close to pioneering a new category of experience.  These are known as brand extensions, variations on a theme for already desirable existing successes.  It’s good stuff, and good business, but not much to get excited about — nothing like the first Mac, the first iPod, the first iPhone, and the first iPad, all of which constituted innovations that created category-defining icons.

Steve Jobs used to talk a lot about brand deposits and brand withdrawals.  A brand deposit takes place when a company invests heavily in making an indelible mark with customers, akin to their very first experience with a point-and-click computer, or a sleek digital music player, or an easy-to-use smart phone, or an intuitive tablet.  Brand withdrawals are usually harvesting activities, like brand extensions, where a company takes some money off the table without over-investing to get it.  Extremely short upgrade cycles for modest improvements in a device or high margin accessories like a carrying case are notable examples of brand withdrawals.  Steve would say you have to maintain a balancing act to infuse a brand with life and a company with cash.  I don’t think I ever met anyone better at this balancing act than he was.

That’s why I am starting to feel some heartache for Apple.  I am seeing a lot of withdrawals and not a lot of deposits.  I am also starting to see sloppiness as an acceptable norm, rocky roads that get paved over later without heavily pushing the envelope to warrant the annoyance.

Recently I posed the following question on my Facebook page regarding Apple’s release of the highly touted iOS7:

Is it just me or is iOS7 woefully slow, bloated, and unstable on older devices, particularly on the iPad2? My hour-to-hour experience on my beloved tablet has gone from impossibly perfect to mediocre. Is this the same Apple?

The response was mind-blowing.  Here’s an extract from the thread, names removed to protect the honest:

  • I’m not having any problem with it except for user error with new features. I do see some slowness trying to connect to the internet but I assumed it was my wi-fi.
  • ME: I don’t think so because I am having the problem with wi-fi wherever I log in, it’s just sluggish, and apps that worked fine before crash at least once a day, and gasp, I have to reboot!
  • That’s not good. Wifi is definitely a problem. Apps don’t usually crash unless I stress them by doing things too fast. You have to reboot the device as opposed to relaunching the app?
  • ME: After a few apps crash it freezes, just like MSFT.
  • Ken, I am having the same problem on my iPhone 4S and MacBook. I regularly close apps on my phone, but that just saves battery life. It doesn’t help with speed.
  • Yep apple has confirmed with me that new software doesn’t perform well on old devices. Happen to me when I owned the iPhone 4.
  • It’s also bloated and annoying on newer devices as well.
  • 4S is now super unstable.
  • ME: Yep, no question that the loss of Steve Jobs is hardly being felt in Cupertino. Brand is in hunky-dory hands.
  • My wife hates it… I won’t upgrade….
  • try running it on an iPhone 4. I hate it.
  • Slow and crashes. I’m running it on an iPhone 4S and an IPad 2. Shame. Shame.
  • ME: Wow, I don’t think I’ve seen this much negative love toward Apple other than at a MSFT conference. I wonder if they know. Maybe I should extract these comments into a blog post to help them understand. But would they care? That’s the real question. If they did, they probably already would have done something about it.

Brands are not invincible.  They don’t fly with a safety net.  Customer loyalty has to be won anew at every touchpoint.  No company is safe from creative destruction, not even Apple.  That is why the average life of an enterprise company today is about half as long as a human life, around 40 years.

And you thought your own 40th birthday guiding you into middle age was scary, huh?

In my view, Apple remains a legendary company with three key competitive advantages at the moment:

  1. Brand: One of the most magnificent consumer brands of our time, expertly polished and full of lustre.
  2. People: An almost incomparable assembly of talent in its employment to create, innovate, Think Different, and change the world
  3. Cash: An unfathomable amount of reserves to invest as it deems wise and appropriate.

If they don’t protect the brand, the other two won’t matter in the long run.  While historic odds of longevity are no more on Apple’s side than any other modern corporation, the good news is that Apple has built up tremendous goodwill with customers and shareholders to ignite the future, and I would venture to guess they will protect their brand, but not without a lot of pain in the reinvention.  That’s perhaps the biggest problem of being at the top of the top, and why it is so easy to fall.  When customer expectations are at the level where Apple sets the bar, you have no choice but to outperform yourself time and again.  That’s an outrageous challenge.

Brands seldom shatter all at once.  It’s the little hairline fractures that get you.  Those are waved off as no big deal, normal ebb and flow in business.  Then a hairline fracture becomes a crack, and the crack ripples outward like a spider web, and then the ceramic whole flies apart.  Andy Grove calls it the Strategic Inflection Point, the change in market forces that happens and you miss it, and then it’s too late to course correct.  You can remainder, but you seldom get back to the top of the heap.

That’s because a brand is not a logo, it’s a promise.  And just like when a friend breaks a promise to you, you seldom fully forgive that person or fully trust them again.  Apple has always promised us humanity above technology, so when they even mildly violate that promise we feel it, because we have come to trust them so much. When a promise goes undelivered or long delayed, like a next-generation product leaked to the public zeitgeist, word of mouth can be savage.  Will we give them another chance on a bad release of iTunes or a map app?  On a rough system upgrade?  Of course we will.  Until the promise is broken one time too many, and then we won’t.

Business leadership is managing part for today, part for tomorrow.  It’s a plate spinning combination of the big picture and the small details.  Mostly it’s about listening to customers and loving your brand more than they do, protecting that promise with every resource at your command.  It’s very, very hard to do consistently, which is why the financial rewards are so immense when you get it right.

Curiously, the Facebook thread I extracted above went on a bit longer, and eventually someone pointed me to an online forum where I was directed to adjust a network setting and reboot.  From there things got a little better, but not entirely.  It was then suggested that I do a clean firmware install, which was way beyond my alloted time block for bettering the tool I needed to do my work — remember, these devices aren’t your work, they are the means to do your work.  We migrated to Apple devices precisely because competitors put us through the ropes with reinstalls, adjustments, and tip on settings that experts could swap.  Apple won the last few rounds because you didn’t have to be an expert at anything, you just opened the box and it worked.  That was a wow, and it was always worth the premium price to those who wished to pay it.  There were a lot of us!

Don’t break your promise.  Sweat the small stuff.  Love your brand.  Love your customers.