Yesterday James, my co-founder at Percolate, sent me over a really interesting nugget about how Apple structures its company about 35 minutes into this Critical Path podcast. Essentially Horace (from Asymco) argues that Apple’s non-cross-functional structure actually allows it to innovate and execute far better than a company structured in a more traditional, non-functional, way. As opposed to most other companies where managers are encourages to pick up experience across the enterprise, Apple encourages (or forces), people to stay in their role for the entirety of their career. On top of that, roles are not horizontal by product (head of iPhone) and instead are vertical by discipline (design, operations, technologies) and also quite siloed. He goes on to say that the only parallel he could think of is the military, who basically operates that way. (I know I haven’t done the best job articulating it, that’s because as I listen again I don’t necessarily think the thesis is articulated all that well.)
Below is my response back to James:
While I totally agree with what he says about the structure (that they’re organized functionally and it works for them), I’m not sure you can just conclude that’s ideal or drives innovation. The requirement of an org structure like that is that all vision/innovation comes from the top and moves down through the organization. That’s fine when you have someone like Jobs in charge, but it’s questionable what happens when he leaves (or when this first generation he brought up leaves maybe). Look at what happened when Jobs left the first time as evidence for how they lost their way. Apple is a fairly unique org in that it has a very limited number of SKUs and, from everything we’ve heard, Jobs was the person driving most/all.
My question back to Horace would be what will Apple look like in 20 years. IBM and GE are 3x older than Apple is and part of how they’ve survived, I’d say, is that they’ve built the responsibility of innovation into a bit more of a cross-functional discipline + centralized R&D. I don’t know if it matters, but if I was making a 50 year bet on a company I’d pick GE over Apple and part of it is that org structure and its ability to retain knowledge.
Military is actually a perfect example: Look at the struggles they’ve had over the last 20 years as the enemy stopped being similarly structured organizations and moved to being loosely connected networks. History has shown us over and over centralized organizations struggle with decentralized enemies. Now the good news for Apple is that everyone else is pretty much playing the same highly organized and very predictable game (with the exception of Google, who is in a functionally different business and Samsung, who because of their manufacturing resources and Asian heritage exist in a little bit of a different world).
Again, in a 10 year race Apple wins with a structure like this. But in a 50 year race, in which your visionary leader is unlikely to still be manning the helm, I think it brings up a whole lot of questions.
Bill Simmons has a good article about Bill Russell, Kobe Bryant and leadership. I found the first paragraph especially interesting:
I spent five hours with Bill Russell last week and thought of Kobe Bryant twice and only twice. One time, we were discussing a revelation from Russell’s extraordinary biography, Second Wind, that Russell scouted the Celtics after joining them in 1956. Why would you scout your own teammates? What does that even mean? Russell wanted to play to their strengths and cover their weaknesses, which you can’t do without figuring out exactly what those strengths and weaknesses were. So he studied them. He studied them during practices, shooting drills, scrimmages, even those rare moments when Red Auerbach rested him during games. He built a mental filing cabinet that stored everything they could and couldn’t do, then determined how to boost them accordingly. It was HIS job to make THEM better. That’s what he believed.
The idea of scouting your own teammates is really interesting and clearly has business implications. We tend to spend a lot of time looking at the landscape and understanding our customers, but there’s always an opportunity to better understand the people around us. We sort of do it with reviews and goals inside organizations, but this seems like a different lens on the idea of management and leadership. Instead of just trying to look at people and understand how to help them grow, you look at how competition would exploit your team and use that to try to identity your blind spots.
Jeff Weiner, CEO of LinkedIn, seems like a really smart guy. The NYTimes has a nice little interview with him that includes a couple really great nuggets about leadership. I especially liked his take on email, though:
Like any other tool, e-mail is what you make it . It’s an incredible tool of productivity, collaboration and knowledge-sharing for me. That’s not to say I haven’t struggled with it like everybody else. But one thing I realized is that if you want to reduce the amount of e-mail in your in-box, it’s actually very simple: you need to send fewer e-mails. I know it’s kind of a self-evident truth. Because every time you send an e-mail, what’s going to happen? It’s going to trigger a response, and then you’re going to have to respond to that response, and then they’re going to add some people on the “cc” line, and then those people are going to respond. You have to respond to those people, and someone’s going to misinterpret something. That’s going to start a telephone game, and then you’re going to have to clarify that stuff. Then you have someone in a time zone who didn’t get the clarification, so you’re going to have to clarify that clarification.
I was recently rereading Ben Horowitz’s advice for managing your own psychology as a CEO and I especially liked this nugget:
When they train racecar drivers, one of the first lessons is when you are going around a curve at 200 MPH, do not focus on the wall; focus on the road. If you focus on the wall, you will drive right into it. If you focus on the road, you will follow the road. Running a company is like that. There are always a thousand things that can go wrong and sink the ship. If you focus too much on them, you will drive yourself nuts and likely capsize your company. Focus on where you are going rather than on what you hope to avoid.
I haven’t written a ton about starting Percolate, partly because I don’t want this to become a place where I just promote what I’m up to and partly because I’ve been so busy I haven’t had a lot of time to write (as I’m guessing you’ve noticed).
Well, now I’m on a train and I forgot my Verizon card at my last meeting and I decided it would be a good chance to get some things down. These are a bunch of random thoughts, as much for my own safekeeping as sharing.
Before I start, a bit of an update on Percolate: We have 15 people, our own office and a healthy roster of Fortune 500 clients. James (my co-founder) and I started the company last January (2011). Alright, onto the thoughts …
One of the funny things about starting a company (and growing it) is the milestones you set for yourself (or discover as you go). There’s the obvious ones (first employee, first client, first check in the bank), but then there’s the less obvious ones like first office (alright, maybe that’s an obvious one) and first employee who relocated to come work for you (we passed that one recently). Every time we hit one of these it’s a moment to reflect and think about how crazy the whole process of starting a company really is.
I’ve written this before, but it bears repeating. I can’t imagine EVER starting a company without a co-founder. I can’t recommend it highly enough to anyone thinking about being an entrepreneur. As far as choosing your co-founder I think there are a bunch of factors that has led to a really strong relationship between James and myself, including: A lot of respect for each other, clear roles (but also enough respect that when we move outside those roles it’s accepted) and an ability to disagree and be stronger for it (I wrote a short post about this but I think it’s hugely important, if you can’t argue productively with your co-founder, you shouldn’t start a company with them). There are lots of others, but those top my list.
There is a fundamental difference between being a person running a company and being an employee. As the one in charge your singular goal is to keep the company evolving (at least it’s true of a technology startup). Stasis equals death. You want your company to look totally different tomorrow than it does today. If you’re an emplooyee, you often want the opposite: You like where you came to work and you want that company to stay the same. I’m not sure how to resolve this disconnect and I never recognized it until starting Percolate.
Recruiting, Marketing & Press
All three of these happen all the time. They don’t ever stop and we’re going to make sure they remain that way even when the team performing these roles moves past just James and myself.
A Little Disagree Is a Good Thing
Teams shouldn’t always agree about everything. Having different perspectives is ultimately what’s going to force things to be stronger. Understanding the roles different folks on the team play (and helping them understand those roles) is really important.
I never did a whole lot of managing before I got to Percolate. I thought it was pretty fine to let people do their job and support them when they needed it. James introduced a bunch of ideas to me around being more active and it’s a strategy we’ve been trying to live as much as possible at Percolate. We set quarterly goals with each employee and meet at the end of the three months to grade them together. We have weekly meetings and do monthly surveys of employee satisfaction. None of this stuff is perfect and hopefully it will all evolve (especially as we continue to grow), but it has really helped me understand the value of a more active management approach.
I’m sure there’s lots more, but that’s what’s coming to mind right now. Hope this is somewhat helpful/interesting.
I love this answer from Poke founder Nik Roope on what designers can bring to organizations:
Businesses are built on concepts. Ideas structured to extract or create value in some way. These ideas, famously penned on napkins (although more likely Evernote theses days) are by their nature abstract and intellectual. “Design” takes a central role in the step from the intellectual to the manifest and when the process is working this isn’t a verbatim translation, it’s an active process that structures, orders, tunes the components into a compelling working system. Broad-minded designers with solid structural sensibilities are thus critical for success.
Interesting story from Fog Creek about getting rid of sales commissions:
Our salespeople all estimated that they were spending about 20% of their time just keeping track of what money was due them. There was constant horse trading. And, most worrying, we created a heavy disincentive to do all the service stuff that makes customer service shine. Why would you want a system that sets up after-sales service as competition against new sales, especially if you have a small sales team? Reputation and retention, after all, are both paths to revenue.
I’ve been spending a lot of time lately thinking about how you build a structure for teams to succeed. Part of that structure is salary (there are lots of other parts as well). We’re trying to figure out a system that makes the most sense for the sort of company we’re trying to build and, in turn, trying to look at accepted practices with a skeptical eye. (As an aside, I’ve also been reading the Management Myth, which explains how management consulting came to be). Anyhow, no real conclusions, but glad to see others thinking about this as well.
Football manager is an interesting position. In Europe the job wraps up what is two positions in the United States: Coach and GM. The big difference between a manager of a european football club and the coach of a US football team is final say over personnel decisions. In the US a coach has a say, sure, but it’s the GM who is really making the decision. Obviously that makes the European job much different, more strategic and, probably, harder.
Which makes it all the more impressive that Sir Alex Ferguson, the Manchester United manager, has been at the helm of one of the world’s most successful sports franchises for 25 years. In the US, the average tenure of a coach in one of the four major sports is right around 3 seasons and althought I’m having trouble tracking down good numbers for European football at the moment I have no reason to believe it’s any longer (especially with the addition of relegation, which is one of the more brilliant things in sports).
Anyway, here’s how the article explains Ferguson’s success:
Shuffling his backroom pack has given Ferguson a fresh pair of eyes to see United through and also prevented players, in particular the longer-serving ones, from going stale on the training ground. New ideas, combined with players willing to adapt to them, are essential for the top clubs. Manchester United have not played in the same style for these 25 years; they have bought new players to adapt to new systems, sometimes to pull further away from their counterparts and sometimes to narrow a gap. This season’s style is different again and, in terms of their pressing game, has parallels with the way Barcelona try to win the ball back.
One of the things that always strikes me about NFL coaches (I know the NFL better than any of the other sports leagues) is that they always bring a system with them. In the case of the Chicago Bears and Lovie Smith it’s the cover-2 defense. There are those coaches that bring offensive systems as well, but seldom do you hear about a coach who is adapting their system to the talent on the roster. It sounds like this is exactly what Ferguson has done and, as a result, has helped him keep his gig (I’m sure lots of football fans would argue extraordinary amounts of money to spend on players had something to do with it as well … but Joe Torre still got fired).