'Winter hats go with winter coats', and 'supporters instead of jailers'.

In my journey through various workplaces, I’ve noticed recurring problems that seem to plague most companies. Two issues stand out prominently: the pervasive presence of office politics and the diminishing capability of companies over time.

But what if these issues were not just avoidable but had a remarkably simple solution that every company could implement?

The Unavoidable Politics Conundrum

Office politics, with its blame games and antagonistic dynamics, is often considered an inevitable part of corporate life. But is it truly unavoidable?

Imagine an ideal workplace where professionals collaborate seamlessly, work toward common goals, and collectively strive for improvement.

Does this sound like your workplace? Probably not. The reason for this disconnect lies in deeply ingrained beliefs that steer individuals toward a state of discord. As the saying goes, “most of the evil in this world is done by people with good intentions.” In the realm of corporations, good intentions manifest in the form of the separation of responsibility, and in the pursuit of control and resource efficiency.

The Pitfalls of Separation of Responsibility

Companies typically begin with the formation of an executive team, which then allocates global functions to various executives: Marketing, Revenue, Technology, Product, Operations, and so on. This separation cascades through the management hierarchy, creating sub-functions within each global function. For instance, within Technology, there are IT, engineering, Cloud infrastructure, security, and data sub-functions.

So what’s wrong with separating responsibility? It’s deeply anti-systemic, and it destroys alignment.

The Lawyer Example

If you’re a lawyer, you belong to the Legal function, as your manager and their manager, all the way up to a C-level in Legal or Operations.

You sit and hang out with your peers, but you can’t seem to catch a break: everybody comes to you with all sorts of crazy ideas. You joke with your pals over drinks, laughing at how unthinkable some of these requests are:

• A team wants to launch a new product in China.
• Somebody wants to fire a person from an ethnic minority background.
• A board member is proposing to buy a company that has a development centre in Russia.

The risks are insane! Why does the company even hire these immature people? No way you’re going to let them put your company in danger. No way. Nope. Over your dead body.

The Incentives are Skewed

Human psychology plays a pivotal role here, as individuals inherently act in their self-interest. People do what they feel is best for themselves, and are amazing at instinctively knowing what that is, by unconsciously processing signals and clues in the environment they operate in.

At work, employees want to believe they’re doing a great job, and they don’t want to be fired. To orient themselves, they identify who their leader is, and try to keep them happy. This is not always their manager, but it’s always someone who can make or break the employee’s career at the company.

And what do you think happens when what’s best for the company differs from what’s best for an employee? This misalignment between personal goals and the overall objectives of the team or company leads to suboptimal decision-making.

It’s important to stress that our lawyer from the example above wants to do a great job. Do you see the problem? The issue is that our lawyer’s definition of a good job is not be aligned with what their company wants to achieve.

Our lawyer has everything to lose from considering any of the ideas other groups come to them with, and nothing to gain. If anything goes wrong, they can say goodbye to their bonus, or even lose their job. And they’re not getting a promotion if a new product line successfully launches in China.

Every time a company puts incentives in place, implicitly or explicitly, it drives the behavior of its employees.

Control and Resource Efficiency Make Things Worse

By asking the global functions to enforce standard policies across the various business ventures, companies make things even worse. It’s as well-intentioned as it is naive. People that haven’t got a solid grasp of systems thinking inevitably fall into the trap of control and resource efficiency.

• “There’s not enough work for a DevOps engineer in each team”.
• “You don’t want each initiative to have a different Cloud provider”.
• “We’re a Java 8 house, and all our projects share a common Maven parent pom.xml to ensure we re-use what works”.
• “The global security and architecture teams need to review and approve all changes”.
• “Global IT ensures employees cannot just install whatever they want on their work laptops”.

Add dependencies between various siloed groups with misaligned incentives, and the result is chaos. Everything takes forever, people get frustrated and, over time, true inside wars develop. The first victim in this battlefield is the company itself, which becomes incapable of doing anything effectively.

After all, you can hire all the great people you want, but if they’re incapable and unwilling of working together towards the company’s objectives, nothing good will come out of it. A bad system beats a good person every time.

The Solution: A Paradigm Shift in Organizational Design

So how do we avoid all of this? What are the secret organizational principles that magically align everybody? The remedy to these challenges lies in three fundamental organizational principles:

1 - Initiative-Based Structure

Instead of organizing people by function, group them by initiative. Whether you’re a lawyer, a software developer, a designer, an HR person, or any other specialist, if you influence a business initiative, you report exclusively to the head of that business initiative, irrespective of their background. The initiative heads report directly into the founder or CEO.

2 - Cross-Functional Equivalent Teams

Establish teams with diverse skill sets that can address any task within the initiative. Each team member, regardless of their primary expertise, reports to the same person, who’s also within the initiative.

3 - Supporters instead of jailers

Contrary to concerns about standardization and control, embracing diversity within initiatives is crucial. Over time, companies deteriorate as new endeavors become stifled by rigid company-wide constraints. Allowing initiatives to operate differently fosters innovation and adaptability.

While it might seem counterintuitive, decentralizing support functions like IT, Legal, HR, and Finance for each initiative is essential. These functions should act as supporters, not enforcers. Shared resources are permissible, but their engagement and involvement should be at the discretion of the initiative, ensuring they remain aligned with the initiatives’ goals.

Within an initiative, if some people work outside a team, then those people are advisors and supporters, not policy-makers. If you want to have a security function within a business initiative, that’s fine, but they advise and help the teams, without ever reviewing, approving, or enforcing anything.

A Call to Action

In the realm of organizational design, adopting a systems thinking perspective is transformative. By restructuring reporting lines and fostering cross-functional collaboration within initiatives, companies can break free from the shackles of politics and stagnation. The key lies in creating a fleet of nimble, adaptable units rather than a colossal vessel weighed down by internal conflicts.

As you embark on the journey of building or reshaping your company, remember the two fundamental rules: “winter hats go with winter coats” (Jason Gorman said this while giving advice about component-level architecture, but it’s universal) and “supporters instead of jailers”. These principles will not only enhance collaboration and productivity but will also create a workplace where individuals thrive and organizations evolve seamlessly.