Speed and the challenges of scaling
The inevitable challenge that all successful start-ups face is the need to scale effectively. There are many elements to this, one of which is how to stay agile at scale. In a small company of 10, 20, 30 people, agility comes naturally. It gets much harder to maintain this speed as your company grows.
But, why does speed matter?
- Speed enables you to realise value sooner
- Speed reduces the time it takes to learn how to meet your customers’ needs; this reduces investment in products and services your customers don’t want. This means you can maximise the time and effort spent on delivering the products and services your customers do want, thereby increasing your ROI.
So how do you maintain speed as your business grows? There are 3 key elements to remaining agile at scale:
Stay nimble at scale
The key to remaining agile at scale is to stay small as you get bigger. Amazon famously described their initial approach to this as “two-pizza teams” — if it takes more than two pizzas to feed a team, the team is too big!
In practice, this means structuring your organisation into smaller units that can operate independently. At this point you might be thinking that businesses already do that because they’re organised into functions. But the key here is independence. Functions are indeed smaller business units, but most customer and business problems cannot be independently solved by a single function — they require a cross-functional effort.
Functional vs cross-functional teams
Historically businesses have organised by function. Essentially this means organising people into teams based on a common skill or discipline, so teams are organised by what they do.
The key difference with cross-functional structures is that they organise people into teams based on what they need to achieve. In other words, teams are defined based on a common purpose.
It is this common purpose which allows cross-functional teams to operate independently, and this independence is what liberates teams to move at speed. Reducing dependencies between teams reduces the need to align and coordinate, thereby dramatically reducing the process overhead which tends to slow down larger businesses.
Functional structures have been the default method of organising businesses for so long, that cross-functional structures can seem counterintuitive. In fact they are a far more logical way to organise. Consider this scenario…
You are the owner of three football teams. One team consists entirely of goalkeepers and defenders. The second consists entirely of midfielders and the third consists entirely of forwards and strikers. Organising your teams in this way is akin to organising by function — you have organised your teams based on their skills. The problem is, it takes a mix of skills to win football games, so your teams are unlikely to be successful.
If you re-organise your teams so that each has a mixture of defenders, midfielders and forwards, you have now created three cross-functional teams.
Each team now has the mix of skills to enable them to win games. Each team shares the common purpose of winning games, each individual brings different skills to help achieve this. The purpose of a goalkeeper is to win games; the skill he brings is saving goals. Likewise the purpose of the striker is to win games; he uses his goal scoring skills to achieve this.
As with football games, strategic goals require a mixture of skills. The rationale behind cross-functional teams is to optimise your organisation design to support the achievement of your strategic goals. You organise people based on what you want them to achieve rather than by their particular skill.
Defining mission-based teams
To define teams based on purpose, you need to be clear what you are trying to achieve. At this point it is helpful to have a coherent strategy. Based on your strategy you can identify outcomes, customer problems and key KPIs. These can all be used to help define your missions. Once the missions are defined you can identify the skills you need to accomplish each mission.
Small, independent teams enable agility at scale because they reduce dependencies and thus keep process overhead low. The process of defining cross-functional teams forces you to define your purpose which creates greater clarity and focus. Increased focus also accelerates speed by ensuring effort is concentrated where it can deliver most value.
Are you looking to scale your business? I am a Business Agility Coach & Consultant helping organisations to grow, scale and deliver value fast.
Find out more at betterfasterhappier.com.