Monday, March 20, 2017

Functional and Unit organizations

A colleague pointed me to a great article about Functional vs Unit Organizations. It's a long article, so it's difficult to summarize in a brief post.

Author Steven Sinofsky describes "going functional" at Microsoft, and says "No organization is purely functional or entirely unit-based, nevertheless in any given company of size (more than one product or more than about 100 engineers) there is almost certainly a dominant shape."

Sinofsky adds that while there's no obvious answer to "functional vs unit" for every organization, he does provide a few pros and cons. I'll attempt to summarize some of the core ideas here:

Pros

One product, one org. Sinofsky says "if you’re building one product then you just don’t really need “units”."

Better develops skills for each functional area. The "functional" org chart allows you to develop staff in the direction in which they are aligned. This is critical to an organization to grow its core strengths, especially as Sinofsky highlights that "the future of a technology company is never the current product, but the ability to lead technology change over many years and that only happens with depth of technology skills."

Easier to resource load balance. If you operate in a field that faces constant change, Sinofsky advises "A functional org is perfect for this because all the discipline resources are under one “roof.”"

Cons

Potentially diffuses accountability. When I worked in higher ed, we had a saying when referring to "academic IT" and "administrative IT": "One IT." It didn't matter what group you were in, but we were all in this together. But organizing your groups by function may spread out accountability.

Challenging to manage physically separate people. I've experienced this issue first-hand. It can be very difficult to manage people who are not sharing the same office space as you. Sinofsky agrees, and comments "a [geographically dispersed] functional org can be challenging because it pushes each of your functional leaders to become skilled in managing people from a distance."

People tend to feel less opportunity because there is “one” leader of a functional area. We all need to grow, and it's important for our star performers and future leaders to feel there is a place for them within the organization. Sinofsky agrees, and adds "there can be a feeling of limited opportunity “managing within a discipline” compared to “managing across disciplines”."
Sinofsky continues to compare and contrast Functional and Unit organizations. It's a long read, but worth your time if you are involved in defining your organizational structure.

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