Organizational design for growing companies

lattice design

Why is it that small, feisty startups consistently move so much more quickly than large incumbents? One of the key reasons is the ability to make decisions quickly. Large companies have layers and layers of management: CEO, COO, CTO, VP of Engineering, Director of Product Management, Product Manager, and way down in the hierarchy, the engineers. Having worked at a $7 billion company, Thomson Reuters, for three years I saw closeup and personal how large incumbents operate. I had to spend more time on corporate meetings which basically had no relevance to our company than I would have liked. And while we did have the attention of CEO Michael Brown, he was several layers above me. But I while Thomson was in many ways a traditional huge, slow moving conglomerate of dozens of acquisitions I do give them credit for leaving us – their 423rd acquisition! – pretty much alone. It was only when we wanted to do acquisitions of our own, and we did three of them, that we got enmeshed in the corporate hierarchy.

So is bureaucracy the inevitable result of size? Does getting big fast mean hiring dozens of MBA-wielding middle managers and stifling creativity of engineers and others directly involved in product development? Not necessarily.

Bill Gore, inventor of Goretex, and founder of W. L. Gore, had a better way that the typical top down hierarchical model in most businesses. He dubbed this organizational design The Lattice. This design stemmed from “Bill Gore’s experience with “task force teams” while he was employed at the DuPont Company. Such groups were formed at DuPont on an ad hoc basis to attack problem situations. They were usually multidisciplinary and typically operated for short periods of time outside of the company’s formal management hierarchy.”

Here’s Gore’s definition in his own words from a presentation entitled The Lattice Organization:

A lattice organization is one that involves direct transactions, self-commitment, natural leadership, and lacks assigned or assumed authority. . . Every successful organization has a lattice organization that underlies the façade of authoritarian hierarchy. It is through these lattice organizations that things get done, and most of us delight in going around the formal procedures and doing things the straightforward and easy way.

I was delighted to find that slide 3 outlining the attributes of the lattice has the bullet point: Sponsors (mentors) not bosses! And here are the attributes of what Gore calls sponsors, who are very much like mentors:

Sponsors

• Engage in a one-on-one relationship

• Focus on the development and growth of the associate

Sponsors offer associates:

• Encouragement

• Guidance on principles and practices

• Feedback on performance

• Help in securing resources

• Advocacy for the associate in compensation discussions

Guidance in personal development planning

Role model behavior

Sponsoring is defined as a two-person relationship, much like mentorship, that focuses on a person and helps the associate grow their contribution to the enterprise. The only differences are in the three of the last four bullets which all apply to mentorship inside a corporation as opposed to the type of outside mentoring provided by MIT’s Venture Mentoring Service and similar mentoring provided by Y-Combinator, TechStars and other incubators, accelerators and academic programs.

Bill Gore ends the presentation with these words of wisdom:

The simplicity and order of an authoritarian organization make it an almost irresistible temptation. Yet it is counter to the principles of individual freedom and smothers the creative growth of man. Freedom requires orderly restraint. The restraints imposed by the need for cooperation are minimized with a lattice organization.

So what does this mean for a startup? First of all strive for a flat organization, avoid bringing in layers of managers. Keep groups small – Jeff Bezos rule about meetings that two pizzas should be enough to feed everyone at a meeting can be applied equally to work groups. Keep in mind the two jobs in a startup: building a product and selling it. While eventually as you grow you will need operations and administrative staff, the first being accounting, outsource these functions or use contractors as long as possible to maintain flexibility.

I do recall what was called back in the last century, “the matrix organization,” which attempted to avoid typical hierarchies but ended up confusing lines of authority by having staff reporting to two different groups, the functional organization and the team organization. It didn’t work. Whether the lattice organization will work for you is another question. But as your grow your company don’t just emulate the large corporations with their hierarchical designs you may have worked for, give thought to the lattice organization. You can start by studying Bill Gore’s presentation.

Lattice organization

I recommend studying the web site of W.L. Gore, starting with the About page, entitled: A commitment to innovation shapes everything we do. And the Culture page entitled: Innovation, integrity and teamwork drive our business every day. In fact, how many companies even have a page on their web site dedicated to their culture?

 

Author: Mentorphile

Mentor, coach, and advisor to entrepreneurs, small businesses, and non-profit organizations. General manager with significant experience in both for-profit and non-profit organizations. Focus on media and information. On founding team of four venture-backed companies. Currently Chairman of Popsleuth, Inc., maker of the Endorfyn app for keeping fans updated on new stuff from their favorite artists.

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