A VC in Vacationland

I have been having some animated discussions lately with some of my portfolio companies about their organizational structure, or lack thereof. The net result was Dave formalizing some overall suggestions on how to think about structuring an organization in a small, technology focused company:

1. Customer-focused–An organization needs to be, first and foremost, customer focused.  That means it needs to be designed to serve customer needs.  Generally, consulting or software companies should have two major organizational structures—one that develops solutions for specific market segments, like consumer goods companies and some cross-cut functions that support all market segments, like R&D, product service & support, finance, HR, etc.
2. Leadership Responsibilities–Senior leadership in these companies needs to have a go-to market segment as their responsibility, as well as one of the cross-cut areas.  Think about your cross cut areas as possibly administration (HR, finance, facilities, etc.), operations and marketing/sales. A senior executive needs to be responsible for one of these areas as well as a go-to-market segment.  Small companies just do not have the resources to have separate executives for all internal and external leadership needs.  Multi-tasking is a key way to provide the leadership as well as to keep expenses under control.
3. Team Responsibilities–For the next level of organization structure, having team members with both market-specific and operational responsibilities also makes a lot of sense.  In the operational generalist world, having them work part of their time with the go-to-market people, for example, keeps the operational people well aware of changing customer needs. Similarly, the go-to-market team members should have roles in the operational side of the business, contributing to customer support, product design and related functions.

There are a lot more factors that should be considered in designing and/or refining your organization structure.  My advice is to start simple:  follow the three principles outlined above, see how it works and then make changes to adapt to emerging needs and challenges as they happen.  Don’t try an design the perfect organization up front, but also do not do it once and think that your organization will last a long time.

At Accenture, now a $20 billion global IT consultancy, we changed organization structures every twelve to eighteen months. Often, this was not fast enough, given the ever changing nature of our marketplace.  But when we went to do it, we always started with the three simple principles outlined above.  It worked very well for us.