How To Organize Teams
Who Owns What?
I like to organize a team around this simple question…Who owns what?
It's not a task-oriented question. It's an ownership question.
Traditionally, there are two ways to organize a team. One is by function—sales, marketing, product, etc. The second is by areas of ownership.
Functional Organization
The first company I built was organized functionally. I had never run a company before, and the senior people around the table had never experienced anything other than the traditional structure.
A functional organization is based on one key ingredient…assumptions. Everyone's plan is based on a set of assumptions (whether expressed or not) and the plan they give you is more tied to those assumptions than you realize. If the company is winning, the assumptions are ignored. If teams start missing then you start hearing about how everyone had their own set of assumptions that were magically tied to their own results. How the downward spiral begins….
One team misses their date or numbers (we'll call it the sales team). They blame it on another team (we'll call it the product team) for not shipping a cool new product they had to have in order to hit their numbers. The product team says that's not our fault, you have enough great products to sell. The group starts to crack.
Next quarter, a different team misses, again repeating the cycle of other teams missing their numbers. Doubt starts to set in about the leaders you hired.
Next quarter, people start sandbagging their goals and preaching about underpromise-overdeliver. They assume the other groups will miss, so they build that into their plan. The team becomes less aggressive. And you don't know how to fix it. Doubt sets in about your leadership.
Soon, a board member asks a functional lead how it's going. If they are senior, they understand the politics at play. They give the "well, we'd be doing better if we could just do blah on time" answer. Concern begins to set in with the board member.
You change an executive or worse, one quits. Why did they leave? What do they know that I don't? More doubt sets in.
If the numbers don't improve, the pressure builds. You can't get each team to deliver their part on time, and you can't figure out why they're blaming each other. You don't have a deep bench of new executives you can call on. The clock keeps ticking.
You start spending more time with the functional leaders who can't deliver. This takes time away from winning the market. People see this. You know this. The pressure continues to build.
This cycle repeats as you end up firing, changing, and replacing the functional leads. If you don't sort it out, you get replaced too. I got replaced in my first company directly down this path.
I no longer structure companies functionally. That might change with a larger organization, but for now I've moved on to the Keith Rabois theory of barrels and ammunition.
The reason is that you can focus the entire organization around the biggest problems you need to solve. Those problems always affect the whole company and are not function-specific. You get a culture that wins and loses together versus functions that win and lose independently.
How Do You Win?
Before you can organize around ownership you have to ask yourself….How do we win the market?
Start by listing out the largest areas or problems you need to solve to make your business successful. Then put one person in charge of each area.
At Moment, it's pretty simple:
Make great products (hardware and software)
Reach customers (new and existing)
Deliver for customers (being in stock, helping customers, etc)
Make it easy to buy (fast, easy website)
In your company, it could be totally different. Often in a consumer-facing company, it's built around:
Build an incredible product
Create demand
Build (and fulfill) distribution
Service your customers
Who Owns What?
My preference is to then organize the team around each area we need to win.
The biggest benefit of creating an ownership structure is you can pivot the business easily (form new teams) or create a new area you want to invest in (put someone in charge of your new initiative/segment).
This isn't a functional exercise. It's an ownership and leadership exercise. Who on your team could own and deliver each of these areas? Who can galvanize a group of people to deliver better and better results?
The type of cross-functional leader you need depends on the type of core problem they have to solve.
Create Something New – If the problem requires breakthrough creativity, you want someone who can make sure the group makes the right creative decisions. This works best when shipping new products or initiatives. The downside is that this person will soon need a functionally minded person on their team to make sure their creative direction can be delivered.
Run Something Better – If the problem requires consistency, then you want a process-oriented leader—someone who is a strong system thinker that runs the trains on time. They have the opposite problem: any creativity needed can suffer without the right creatives on their team.
Finding someone who can both solve white piece of paper problems and is process-oriented (can make constant improvements) is very rare. Often, they are stronger at one half, and you'll be sacrificing their superpower by pushing them to be great at both creating new and improving existing.
Another way people think of these teams is as business units - essentially each unit is free to operate and deliver on its own. Each team's contributions add up to the bigger picture but individually they can deliver their own results.
Where Are the Hand-Off Points?
Once you have your problems identified and an owner for each, you can check the hand-off points between teams and within teams. We use a simple customer journey to figure out these points.
We do one version to figure out the hand-off points between teams, and a second version within teams so they know who owns what.
For example, to launch a new product across teams:
Define the campaign → Creative direction → Messaging → Create assets → Launch → Convert customer → Ship orders → Service customer
You figure out which team owns each part of the journey so the hand-offs are clear.
Then we use the same structure within teams to make sure people know who owns what. Using the same product example, a product team would do the following just to make that new product:
Define the problem → Define solutions → Concepts → Prototypes → Test → Refine → Manufacture → Beta test → Refine → Ship → Measure → Fix
This is a basic flow, but it lets the team know who owns what phase of the journey. They then have their own problems to solve that ladder up to the larger problem at hand.
Checking these overlaps only takes a few minutes. It gives you clarity on how to get from the large problems down to the subsets. It also makes it easier for anyone who joins the company to know what problems the team is solving and what they own in that journey.
How to Scale the Teams?
Once you have your organizational structure you will have to figure out how it scales up. Personally I prefer team sizes of 2–7 people. After 7, we split the group into multiple teams.
Why seven? Because after seven, a team lead can no longer hold weekly/monthly 1:1s with everyone on the team.
At Moment, we started with one team of four. Over time, we've organized and reorganized into what is now 4 main teams of 2-7 people. This has enabled us to teach new people how to run teams while giving us the flexibility to rally around new problems.
Where This Falls Down
Every team structure has weak points. Ultimately, the right structure depends on your preferences and how you like to run teams. The biggest warning I can give is to stop thinking about what functions you need and instead focus on what problems the company needs to solve.
Here are the biggest weak points with cross-functional teams:
Team Leads – It takes more time to develop barrels. They aren't being developed in traditional companies, so each one you put in place has to learn.
Senior Functions – Functions are used to working for the best functional person in the company. Designers want to work for the best designer, engineers for the most technical engineer, etc. You can lose senior technical people who only want to work under a senior functional leader.
Reviews – You have to create a review and leveling system based on the skills people need within cross-functional teams. In a functional org, the review system can focus on improvement within a function. In cross-functional teams, you need to review how they deliver across a mixed team.
More Conviction – Old-timers will tell you this is wrong and that you should do what everyone else does. You need more depth on why you're doing this and more conviction in how it can work.
If you have questions or need help, DM me @marcbarros. Thanks for reading.