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Wednesday, Jun, 18, 2014

Structuring the Nimble Organization - Google vs Facebook

Recently I received a call from an entrepreneur with a start-up company wondering if he needed a more formalized structure. My response: Nooooooooooo. In the start-up stage the focus is on experimentation and discovery of what the marketplace needs. The structure is best if it is simple, roles are flexible and everyone feels tremendous freedom to try things. This ability to have just enough structure but not too much is critical because the marketplace is so variable that unless a product continually evolves it will be outdated (Blackberry?).

How can companies stay flexible and innovative beyond the start-up stage, yet have the efficiency that comes from clear replaceable processes and roles that reduce overlaps and conflict? Organization structure is the way an organization divides the work (roles) and integrates how we communicate and collaborate when our work impacts on others.

Everyone has seen organization charts with the reporting lines. These lines formalize communication and decision-making paths. And when they are too rigid (you cannot talk to someone outside your team boundary without permission, you can?t work on something not in your role), employees can experience a deadening bureaucracy that either leads to creative work-arounds by the high performers or just plain stagnation.

Curious, I decided to look at the organization charts of Facebook and Google. Certainly these are two companies that have to stay nimble.

Structures examined with a detective mindset reveal what the founders and top team really care about. For example at Facebook the top team has 11 people (common size for a top team) and one of those top positions is Security. Clearly Facebook values and puts attention on Security. Human Resources is buried and lumped with Marketing. Both companies, as expected, have prominent Engineering roles at the top.

Google has fewer layers (flat as a pancake), with a top team of 19 people and one of those top spots is ?people operations.? People seem to be important at Google. According toFortune magazine, Google ranks number one in the top best places to work and has ranked in the top five for eight consecutive years. Last year they had two million applicants for 500 jobs. Seems like they are attracting top talent.

This flatter structure at Google reveals something else: trust, which is essentially the engine of innovation. Usually when companies grow, they tighten control with more formalized structures (decision making authority, performance plans, budgets, etc.). This made sense in the industrial age with illiterate workers seen as cogs in the machinery of production. Now, not so much.

Today?s world calls for a different way to think about organizations and structure. Our desire to be flexible and innovative can mean rethinking how we organize our work. Start ups understand that they have to constantly self-organize and reorganize all the time. Hierarchies limit information flow ? the lifeblood of how a company learns and changes. Trust facilitates transparency, where people share ideas, inspire each other, shift perspective and understand who they need to collaborate with better than the people at the top. I think Google is trying to support this through the formation of ?dog food teams? which work to make products better. New employees are also encouraged to have fun, think big, take risks, fix what is broken, invent solutions. ?Innovation from Everywhere? is expected at Google. Google trusts employees to use 20% of their time on anything ? to pledge their time to what they think is cool (creating an intersection of passion and organization need). The Engineers are the deciders on product innovation ideas. These cross-team collaborations are invisible on their formal organization chart.

The challenge of our time is that we want our firms to be agile, resilient and learn effectively and fast, but we treat them as systems of boxes (or network nodes), with a fixed number of lines between them. It is time to change the way we think about organizations. The issue is not about hierarchies vs. networks, but about a much deeper change.

Organizations are collections of people focused on a shared outcome ? living, breathing with new emerging patterns. A look at the world of plants and animals is instructive: all creative, responsive processes have the capacity to constantly self-organize and reorganize. Change is not a problem or anomaly. Change is the organizing input rather than the typical managerial redesign process. All solutions are by nature temporary.

What we have still not understood is that people need to have access to information that no one could predict they would want to know. When information is transparent to everyone, your people can organize effectively around changes and differences, around customers, new technologies and competitors.

Organizations can never be fully planned in advance. To stay alive, they need to breathe, live, grow, learn and find where they can thrive. Personally, I am betting on Google.

Connie Meyer is President of Performance Partners, a management consulting company focused on supporting clients in creating healthy, thriving organizations. 


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