There are two ways to organize a team. One is by function, with sales, marketing, product, etc. The second is cross-functional, with each team having a mixture of functional roles.

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 worked when we were small (sub 15 people) as it made the list of tasks easier to group. After fifteen it started to break down because in order for each team to deliver their goals they relied on other teams to deliver first. When a team missed their goals it created a downward spiral that looks something like this…

• One team misses, now the other teams miss their numbers and blame the original team. The non-miss teams assume they would have crushed their number if the original team hadn’t f’d up. 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 your ability to lead.

• Next quarter people start sand bagging their goals and preaching about underpromise over deliver. They start assuming the other groups will miss so they build that into their plan. The team is now less aggressive. And you don’t know how to fix it.

• 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. Concern begins to set in with board member.

• Any sales people on the team start to leave or bitch louder about how your revenue growth is everyone else’s fault. They built their forecasts assuming the other teams delivered amazing new products on time with the best marketing. They increase your anxiety.

• The pressure builds as you can’t get each team to deliver their parts on time and you can’t figure out why the teams are blaming each other. You don’t have a deep bench of new executives you can call on. The clock continues to tick.

• You start spending more time with the functional leaders who can’t deliver. This takes away from time spent on winning the market. People see this. You know this. the pressure continues to build.

This cycle repeats itself as you end up firing, changing, and replacing the functional leads. If you don’t sort it out you too get replaced.

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 because you can focus the entire organization around the largest 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 vs functions that win and lose independently.

What Are Your Biggest Problems?

Start by listing out thee largest problems you need to solve.

When you start the company the list is very. Such as, ship a product and find customers. And over time your list will become more complicated as you need to reach new people, service customers, deliver new products, scale an organization, etc.

To figure out your biggest problems, start by making lists. Once you have a bunch of lists try to group them into 2-5 major problems. These major problems are the ones you organize your company around. They are often connected to how you win the market.

Who Owns What Problems?

Once you have your largest problems you find one owner for each. These owners will be obsessed the larger problem, identify several sub problems to be solved, and then build a team that can solve all of them. Keith calls these team leads barrels.

When looking for barrels I have found two types; creative or functional.

If the problem requires break through 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.

If the problem requires consistency then you want a functional leader, someone who is a strong system thinker that runs the trains on time. They have the opposite problem in that any creativity needed can suffer without the right creatives on their team.

It’s ok to start a team with a creative to solve a new problem then change that person for someone functionally minded who can scale the solution. You will need both creative team leads and functional ones.

Being able to move teams around is one of the biggest benefits to a cross-functional organization. The end result is more opportunities for new people to step up and lead.

Where Are The Hand-Off Points?

Once you have your problems identified and an owner for each, you can then check the hand off points between teams and within teams. We use a simple customer journey to figure out these points.

We do one set to figure out the hand off points between the teams and a second set within the teams so they know who owns what.

For example, to launch a new product across the teams…

Define the campaign -> creative direction -> messaging -> create assets -> launch -> convert customer -> ship orders -> service customer.

You would figure out what team owns what part of this journey so the hand-offs are clear.

We then do the same structure within teams to make sure people know who owns what. Taking the same product example a product team would have done 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 also provides you clarity on how to get from the large problems down to delivering on the subset of problems. It also makes it much easier for anyone who joins the company to know what problems the team is going after and what they own in that journey.

How To Scale The Teams?

We use a team sizes of 2-7 people. After 7 people we split the group into multiple teams. Why seven? Because after seven a team lead can no longer hold weekly 1:1’s with everyone on their team.

Looking at Moment we started with one team of 4. Over time we’ve organized and re-organized into what is now 3 main teams and 8 secondary teams. Some of those secondary teams will start as one person who launches a new discipline we then build around.

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 will be based on your own preferences and how you like to run teams. The biggest warning I can provide is to forget about what functions you need and instead focus on what problems you need the company to solve.

But 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. So designers are used to working for the best designer, engineers the most technical engineer, etc. Therefore you can lose senior technical people who only want to work for a more senior functional leader.

• Reviews. You have to create a review and leveling up system based on the skills you need people develop within cross functional teams. When organized functionally your review and reward system can be built around how much they are improving at their function. When cross functional you need them to improve at how they deliver work across a mixed team.

• More Conviction. Old timers will tell you this is wrong and you should just do what everyone else does. Therefore you need more depth to why you are doing this and more conviction about how it can work.

If you have questions or need help dm me @marcbarros. Thanks for reading.