Optimize Communication, Throw the Boss Out

It is well-known that difficult goals are best achieved when people work in small teams of under ten people. Various agile methods were created based on this principle. Communication in teams is optimal when the lines are short. But that doesn't tell you how to structure an organization with hundreds or thousands of people. The solution of simply dividing them into many small teams is clearly insufficient. How do all these teams fit into a bigger picture?

How do you align many teams to work towards a common goal?

Management hierarchies seem to be a necessary evil. In this blog post I will not waste time on bashing such hierarchies. Everybody already knows that management hierarchies have a bad influence on information flow. (You can read Malcolm Gladwell's book Outliers, and see that there is a strong correlation between plane crashes and hierarchical cultures.) Of course, that doesn't mean that we should not have managers. As I discussed in earlier posts, some people are needed to point dozens of teams in a proper direction. (And I need to have something to do, besides blogging, and sipping tea.)

Let's see what my requirements for an ideal organizational structure would be:

  1. Every person in the organization is part of a team. Nobody is responsible for doing something on their own;
  2. All teams are cross-functional, meaning that they are formed around (sub)goals, not around expertise;
  3. Every person is managed by a functional manager who has full understanding of the type of work being done;
  4. Finally, any emerging hierarchy should be as flat as possible. The fewer steps from top to bottom, the better.

What would such an organization look like?

Well, that depends on how you solve the subordinate-manager relationship. Basically, there are two main options (with some small variations that I'm going to ignore for now):

  1. One boss is assigned to the team, and manages all members of the team. The boss is part of the team, though he could be managing the team from a distance. This is the traditional department-with-a-boss solution.
  2. Several bosses are assigned to the same team, and each manages only some of the team members. The bosses are not part of the team themselves, they are all managing from a distance. This is the modern matrix management solution.

Some people claim that option 1 is the optimal solution, because it keeps communication lines between team members and their functional manager short. When the functional manager is part of the team, he knows all that's going on, which is clearly not the case with option 2, where it takes a manager more effort to understand what's going on inside the teams. It is also said that the matrix management solution of option 2 can lead to conflicts between the functional managers who are managing people in the same team. And it can also lead to conflicts between functional managers and informal team leaders, or project managers within the team.

Still, I believe option 2 is better than option 1. Here's why…

This is a picture of option 1:


The picture shows you a situation where every team has a functional manager inside the team (level 5+6). But who is managing the managers? Well, that will be other managers operating from within their own teams. And those teams have their own manager as well, inside the team (level 3+4). The top level is the company's management team, which also has a boss inside the team (level 1+2).

In the example above, where people are organized in teams, and each team has its own boss inside the team, you end up with a 6-level hierarchy.

Now let's see a picture of option 2:


This picture shows you that there is no boss inside the teams. Instead, each team member is managed by someone in another team, one level higher. No functional manager is part of the teams of his subordinates. In fact, each manager can manage people in several teams, while each team itself can have a project manager or informal team leader. But the project managers and/or team leaders are just "first among equals". They are not functional managers. They are nobody's boss. The team at level 1 is giving direction to the teams at level 2, and they in turn are giving direction to the teams at level 3.

In this example, when the boss is not inside the team, you end up with a 3-level hierarchy!

As Chief Information Officer of our company I have just two concerns: optimal communication, and nice tea. A 3-level hierarchy is much better than a 6-level hierarchy. Therefore, option 2 is my preferred solution. Of course, I understand that matrix management can bring some (small) risks, but I think these can easily be managed. And I'm only painting an ideal picture here. Compromises may be necessary, depending on the situation.

I also know that several other options for organizational structure are available, but I'm sure they all break one or more of the four requirements I listed earlier. So I will happily ignore them, while pouring myself another cup of sweet Darjeeling.

(picture by Orange Beard)

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  • http://blog.looplabel.net/ Anders Sandvig

    There is also a third option, which is somewhat of a combination of the first two. Say you have an organization with five teams, five mid-level managers and one top-level manager. Each team includes a manager, but the manager is also a member of a different team, consisting of the four other mid-level managers and the top-level manager. This way you eliminate the extra levels added by managers who are not team members and you get the benefit of having managers on the teams. This can be scaled recursively, in the same manner as scrum of scrums:

  • MTan

    Agree with Anders. The way Option 1 is drawn here is the worst possible straw man for a simple hierarchy.
    Having worked for both styles of companies, my experience is that the matrix management risks are not necessarily small nor easily managed. The main failure that I have seen is that matrix tends to decrease the sense of ownership (diffusion of responsibility). So while communication is increased the “getting things done” part decreases.

  • http://profile.typepad.com/jurgenappelo Jurgen Appelo

    Thanks for the feedback, guys. In fact, the third option Anders is talking about is implemented in some parts of our company. I was considering it as a compromise, which is why I didn’t list it seperately. But you may be right that it should be described as a third option.

  • http://profile.typepad.com/6p01156ea93dec970c blog.softwareontheside.com

    In all of this, I think one idea emphasized in the book 5 Dysfunctions of a Team (http://www.amazon.com/gp/product/0787960756?tag=clemhome-20) is that each individual should have a “first team” meaning that they are first loyal to one team while they may be managing or involved with other teams. This concept seems to gel better with the matrix model. Moving to a matrix model can be tough though as different types of people that wouldn’t normally communicate directly need to have lots of face to face time (this is from personal experience). BUT that’s the point and at some point there is a break through when all parties involved “get it” and work starts to happen in a more efficient manner.

  • http://www.elilopian.com Eli Lopian

    Effective Communication could probrably be reached by optimizing the information that is being relayed.
    Once the correct information reaches the correct people, being part of a team and “getting things done” will still be in place, and the effective communication increases.
    Conveying ‘dilemmas’ works wonders, http://www.elilopian.com/2009/03/31/throwing-the-boss-out/

  • Troy Cobb

    I’ve been in a situation where Option #2 was in effect. I was the manager of the several teams, but in that case the informal team lead (Scrum Master) was managed by a peer of mine. It was awful — it was very difficult to keep the teams and the local leaders on the same page because they were managed from a different point.

  • http://blog.mendeltsiebenga.com Mendelt Siebenga

    You also showed these pictures in the agileholland presentation but of course they went by so fast there wasn’t really time to think about things.
    But your math is flawed…
    It doesn’t really matter how you draw circles around teams and who’s on or off the team. If one person can manage n other persons then you have a set number of levels for an organization of a certain size. Your diagrams don’t show complete organizations so this is hidden. Option 2 can’t grow as big as option 1. Not because the bosses are on or off the team but because the hierarchy is less deep. Your diagrams seem to suggest n is 3 for option 1 and n = 4 for option two (otherwise you can’t have 4 teams on level 2).
    Also option 2 has 4 levels, not 3. The team at level 1 needs a boss somewhere outside of that team.
    In practice I’ve noticed the optimal situation seems to be teams that have a dev-lead/architect person on the team and a manager outside the team. The person on the team manages work and the person outside the team manages the team.
    I see a pattern forming here of me agreeing with your conclusions but not with how you got there 🙂

  • http://www.dennisstevens.com Dennis Stevens

    Option two is better if you can reconcile the metrics and compensation conflicts that will inevitably arise among the matrixed managers. You also have to manage against the sense of “plausible deniablity” among the team members. The hurdles are alignment of purpose, effective metrics, and a culture of putting the big goals ahead of the little ones. These are not small hurdles and require a great deal of effort and management will to implement.
    Option one is just easier, and while potentially much less effective, requires less effort from management and allows managers to successfully hit their objectives without having to play well with others within the organization.

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