Thread by @paraschopra

1/ At @wingify, we have changed our org structure several times.

A short thread on what I've learned about ORGANIZATION DESIGN in last 8 years.

2/ Startup founders have many biases. Some are classic cognitive biases that impact decision making invertedpassion.com/hacks-to-avoid… while others are specific biases that impact their product thinking invertedpassion.com/cognitive-bias…

3/ There’s yet another founder bias whose impact is not felt for a long time. It occurs when founders assume employees think and act like them.

The often repeated advice that “early startup employees wear multiple hats” is an implication of this bias.

4/ I remember I assumed that just because I was able to do multiple things (coding, design, marketing, etc.) I expected our sales folks to make their own presentations and engineers to think of new product features.

It was a bad idea.

5/ Now I know that asking people to wear multiple hats *hinders* growth because either they're mediocre at what they do, or they're simply doing too many things to do anything specifically well.

6/ People give an amazing performance when they’re given one well-defined thing to do.

7/ Generalists don’t give you growth (they’re great at experimentation though).

Real growth kickstarts when specialists are brought on to do killer execution on things that your company can benefit most from.

8/ A company IS its org chart, and so org chart should reflect what company WANTS to be.

In other words, org charts implements a company's stategy.

As @benthompson suggests, Apple is functional while Microsoft is divisional: stratechery.com/concept/incent…

9/ How I define org chart?

What roles should be there in the company and how those roles should be related to each other.

10/ From my experience, many entrepreneurs and CEOs (blindly) follow industry norms in hiring and so their organization chart takes a standard shape that’s indistinguishable from their competitors.

Observe how many startups hire VP Sales, COO, etc.

11/ But having same org chart as your competitor is inefficient because each company has an essentially unique strategy and hence deserves a unique organization design that implements that strategy effectively.

12/ In some cases, org design happens by accident because there’s no well-thought growth strategy.

A prerequisite for doing org design is clarity on strategy because if there’s no clarity, whatever org you have will automatically start determining what your strategy.

13/ To be a good organization designer, you have to be a good psychologist. You have to first learn what conditions bring out stellar performances in individuals and then design a structure where people can find themselves in such conditions.

14/ It's easy to make mistakes while designing org chart. I list several of them in this thread, but for a detailed discussion, see this EXCELLENT blog by @lexsisney organizationalphysics.com/2012/01/09/the…

15/ MISTAKE #1: Underinvesting in specialist roles

I heard someone say that you don’t realize how much better a job can be done until you’ve seen someone do it 10x better.

You don’t need a frontend eng, what you need is frontend performance eng who can speed up your app 10x

16/ MISTAKE #2: Having quality functions report into quantity functions.

Functions such as QA and development should always be parallel in org chart and not report to one another.

17/ MISTAKE #3: Having long-term initiatives report into people accountable for short term.

Doing this is the reason why big organizations usually cannot innovate when it comes to completely new initiatives. en.wikipedia.org/wiki/The_Innov…

18/ MISTAKE #4: Not eliminating outdated roles and functions fast enough.

The org chart should change as the strategy of the organization changes, which happens automatically as the company grows.

People don’t like their roles to be redefined, but has to be done.

19/ MISTAKE #5: Promoting high performers to be managers and leaders.

If you promote your best performers to managers, ultimately your org will be full of mediocre managers. en.wikipedia.org/wiki/Peter_pri…

20/ REMEMBER: you *will* lose your best performers as your company grows because their roles will become redundant as your strategy evolves.

@saastr says your company’s entire leadership team has to be changed 3-4 times before it becomes big (>$100mn) saastr.com/around-year-5-…

21/ Org design should be a deliberate exercise as it is what’ll determine if your strategy gets executed well or not. And it should be done from first principles thinking. Most roles in history didn’t exist until someone thought of it. So if you have to invent a role, you should.

22/ That's all on ORG DESIGN.

Detailed version of this thread is on my blog: invertedpassion.com/your-companys-… <- you can also subscribe my new essays via email

If you got new insights, share it with your founder friends!