Structure Design

Structure Design:
How to Design Your Company to Scale

A key element of the Designed to Scale Coaching Program is actually designing the right new structure to support your evolving business strategy. In this part of the program, your coach designs your new structure, and then you refine and implement it together.

“Structure” is a loaded term, and my approach to designing and changing structures is unique. Watch these videos to see if this approach resonates with you. If it does, continue reading to find out more.

What is Structure?

Structure is how your business is organized. If you want to get your business to do something new, then at key points in its development, you’ll need to look at and change its structure.

The 3 Building Blocks of Structure

The three design elements of organizational structure are: Functions, Location, and Authority. Use these three building blocks to avoid some common pitfalls and design the right new structure for your business stage and strategy.

The 6 Rules of Structure

There are 6 Rules of Structure to follow when designing a scalable business structure. They are:

1. If the strategy or lifecycle stage changes, change the structure.
2. Don’t allow short-range functions to control long-range ones.
3. Don’t allow efficiency functions to control effectiveness ones.
4. Don’t allow centralized control to overpower decentralized autonomy.
5. Put people into roles where they can focus and thrive.
6. Process brings structure alive.

Design Controls Behavior

Design controls behavior. If you want new business behaviors, change the the organizational structure The 6 Rules of Structure provide visibility into key underlying polarities at work within every business. A key idea is to not treat polarities as problems to be solved. Polarities (e.g., short-range vs. long-range, efficiency vs. effectiveness, control vs. autonomy) must be harnessed to create the right amount of tension in the business for sustained strategic execution.

The Right Structure for the Business Stage

What is the right organizational structure for the current and emerging lifecycle stage of your core business and any business units? Using the Organizational Physics Strategy Map as a guide, this video shows that:

A Pilot It stage initiative requires very limited structure.
A Nail It stage initiative benefits from a functional structure.
A Scale It stage initiative requires an evolving structure (based on the functions defined in the Nail It stage).
A Milk It stage structure requires making a break or escape from the legacy structure.

Introduction to the 4-Quadrant Structure Map

The Structure Map is a powerful thinking tool to identify any current structural breakdowns occurring in your business, […]

By Lex Sisney|2024-06-24T01:51:41-07:00May 24th, 2023|Comments Off

The Second Business Unit: How to Pilot It, Nail It, and Scale It

The purpose of this article is to talk about the launch and growth of your second business unit, which could be a new product line or a new geographic market that complements the core or original product line or market.

The main point I want you to take away from this article is this: If your company is having trouble launching and growing its second business unit, then you likely need to address a design flaw in the original or core business unit first.

My own experience as a CEO was that I struggled to lead the launch of the second business unit against the incessant demands of the core business because I didn’t understand this concept well enough.

A majority of my coaching clients are looking for help with launching their second unit, whether it’s a new product or new market, while thinking that things are going pretty well in their core unit. They just need some guidance on launching the second. But after diving into the situation, the client CEO quickly realizes that for the second unit to thrive, the core unit must first evolve.

Since this issue is not well understood, I hope to shed some light on it in this article and share my approach to solving it.

The Health of the Mother Determines the Growth of the Child

Fundamentally, what you’re trying to achieve with the launch of a second business unit is to have the “mass” of the core business executing swiftly and profitably against changing external and internal conditions and with enough capacity and wherewithal to simultaneously pilot, nail, and scale the second unit.

What I didn’t appreciate fully until I had been through it as a CEO myself is that despite all our attempts to free up the second unit to be autonomous from the mothership, it is the health and capacity of the mothership that still controls the destiny of the child.

The irony is that most of us don’t realize that we actually have a design flaw in the mothership until we attempt to launch the child.

Let me give you an analogy. If there’s a crack in the foundation of a building, is it a problem? If it’s a small one or two story building, it’s probably not a big deal. Patch it up. But if it’s a large multi-story building, a crack in the foundation can be a very big problem indeed. The whole thing risks collapsing.

Similarly, the design flaw in the main business has probably been present for years. But until the second unit was added to its foundation, it wasn’t known or if it was, it wasn’t seen as a big problem. However, this hidden design flaw is now causing problems for both units and the whole thing is at risk of collapsing, or at […]

By Lex Sisney|2024-07-30T11:44:51-07:00February 28th, 2023|Articles|Comments Off

Designed to Scale CEO Coaching Program

CEO Coaching with Lex: Apply to My Designed to Scale CEO Coaching Program and Drive Guaranteed Results

Being the CEO of an expansion-stage company is a rollercoaster—exhilarating one moment, frustrating the next. I know because I’ve been there. That’s why I created this CEO coaching program.

If you apply and qualify, we’ll work closely together as I guide you through a proven framework designed to quickly transform your company. The result? You’ll turn a good business with high potential into a great one that’s kicking-butt on its most important strategic priorities.

Here’s what you need to know…

Your Qualifications

If you’re the CEO of an expansion-stage businesses (typically $30M+ in annual sales with a leadership team of 7+) with a significant market opportunity to capture, you may qualify for this program.

My guarantee is that by coaching with me in this program, your organization will not only scale — it will also have improved coordination, execution speed, and a more aligned culture. What’s more, you’ll experience greater time freedom, clarity, and confidence in your role as CEO.

2-Minute Intro to the Designed to Scale CEO Coaching Program

How to Quickly Get From Nail it into True Scale It

In a picture, this coaching program guides you, step by step, to play to your strengths and passions while simultaneously leading your company from the mid to late Nail It stage of business development into the early to full Scale It stage of business development, as shown in the picture below.

The Designed to Scale CEO Coaching Program guides you, step by step, to play to your strengths and passions while simultaneously leading your company from the Nail It stage of business development to the Scale It stage of business development and beyond.

Here’s another picture and an alternative way to look at it. Our job is to help you to drive your business up the lifecycle stages into a zone of growing revenues and profits (the dotted oval below). Then, from this position of strength, structure and prioritize the launch and development of new business units that will in turn go through their own lifecycle stages for sustained, profitable performance over time, like this:

How to create sustained profitable performance.

Is the Designed to Scale CEO Coaching Program Right for You?

You’re an ideal client for this coaching program if you’re the CEO of an expansion-stage company that […]

By Lex Sisney|2025-01-10T23:15:46-08:00December 14th, 2022|Comments Off

Designed to Scale Audio Book Images

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By Lex Sisney|2022-03-05T09:07:49-08:00December 31st, 2021|Comments Off

About Top-Level OKRs Strategy Survey

The Top-Level OKRs Strategy Survey:
Set the Right Strategy for Your Stage

Watch: A New and Better Way to Do SWOT Analysis (part 2 or 2).

How Clear is Your Strategy?

Let’s talk strategy.

How would you rate your company’s current level of clarity and alignment towards the right set of three-year strategic objectives for its lifecycle stage, on a scale of 0 (low) to 5 (high)?

Think for a moment. What score would you give?

If it’s 4 or above — indicating that your strategic priorities are the right ones for your company’s lifecycle stage, everybody in the company “gets it,” and they can see how their individual work supports the strategy — then you can stop reading now. Congrats and keep doing what you’ve been doing!

If it’s 3 or below — indicating that there’s either a lack of clarity on the right strategic priorities, or misalignments in the team’s understanding and buy-in about the right priorities at this time, then please keep reading. What I’m going to share with you will measurably improve company-wide strategic clarity and alignment on the right strategy by 30 to 50% this quarter.

The Challenges of Aligning on Top-Level Strategic Objectives

If you’ve been in the trenches of an expansion-stage company, I don’t have to tell you that it can be surprisingly challenging to truly align a diverse leadership team around a core set of strategic priorities. Sales has its views. Finance has its own. Operations and Customer Success demand to see internal improvements in the customer experience while Product Strategy and Business Development want to push the envelope on what’s possible, and so on.

It’s not as easy as just saying, “Yes, and…” and adding a bunch of unrealistic strategic themes. Real strategy requires real sacrifice. What you are not going to do is just as important as what you are committed to doing to drive your company to its next stage of development.

The risk of getting the top-level strategy wrong can mean the rapid failure of the entire business. In this scenario, the team is busy climbing the wrong mountain for its current stage of development.

Align on What Matters

In the book Measure What Matters, famed venture capitalist John Doerr profiles many companies and leaders successfully running an objectives and key results (OKR) program. What’s most interesting to me about the book is that it reinforces how challenging it can be to align a cross-functional leadership team around the most important top-level corporate objectives.

For instance, Mike Lee, co-founder and CEO of MyFitnessPal, says, “We didn’t appreciate how much thought it took to create the right (top-level) company objectives.” […]

By Lex Sisney|2023-09-25T06:57:20-07:00December 20th, 2021|Comments Off

Who Should Own the Customer?

Who Should Own the Customer?

Photo by Mike from Pexels

When I’m building a new organizational structure with a leadership team, someone usually makes this observation: “In this new structure, who actually owns the customer?” Before responding, I first try to get a shared definition so I’ll ask them to clarify: “Great question. What do you mean specifically by ‘own the customer’?”

They tend to hem and haw before replying something like, “You know, own the customer… a single point in the organization that knows everything about the customer, that is accountable for the overall customer experience, makes product decisions, and that champions the customers needs.” They might then share with me that in their old structure, this role was held by the VP of Product or Marketing or Customer Success. “In this new structure,” they’ll add, “it’s unclear who owns the customer.”

OK, now we’re getting somewhere. Here’s the answer:

In a well-designed organization, no single role should “own” the customer. Instead, the entire structure must be designed to acquire and serve the right customers now and over time. Every role in the structure has a part to play in accomplishing that mission.

Put another way, there are some key steps in the customer journey: from acquisition to on-boarding, to engagement, to support, to the design and maintenance of the products and services customers use, and so on. Each of these distinct steps in the customer journey actually requires a different mindset, skill set, and focus. If the structure were designed so that one role is accountable for all aspects of the customer journey, some very predictable problems will emerge because the organization is attempting to consolidate too many conflicting and competing needs under one role.

What kinds of problems? They exist on a spectrum in relation to the competing demands of short-range vs. long-range, efficiency vs. effectiveness, and autonomy vs. control. You can read more about these competing demands in Top 10 Signs Its Time To Change Your Org Structure. How those problems show up in your particular business will depend a lot on the skills, style and interests of the individual leader as well as the lifecycle stage of your business.

For example, if the leader who is supposed to “own” the customer is more sales-oriented, then you can expect to see a lot more focus on customer acquisitions and a lot less on customer engagement and retention. If the leader is more process- and quality-oriented, you should expect to see a lot of great product plans but very little throughput. In other words, some segments of the cycle will thrive and others will suffer.

Or, if your business is growing rapidly in the early Nail It stage, for example, you will see a lot of firefighting by the team to meet customer needs, with no one really […]

By Lex Sisney|2023-02-21T10:22:01-08:00December 5th, 2019|Articles|Comments Off

The Top 10 Signs It’s Time To Change Your Organizational Structure

The Top 10 Signs It’s Time To Change Your Organizational Structure

Lex conducting an Organizational Structure & Design Workshop in Capetown, South Africa. Photo Credit: Gregor Röhrig

Changing your organizational structure sucks.

There. I said it.

Helping companies change their structure is the work I do every day. If I didn’t know what I know now, I’d wonder, “Why would anyone want to do it?”

Changing your company’s structure can be a massive initiative. If you don’t do it correctly, it’s a recipe for disruption and disaster. People’s careers are on the line. Job titles can change. Existing reporting lines can get disrupted. One leader’s turf can expand and another’s shrink. The political fallout can be a huge cost in itself.

Even worse, if the new structure is done wrong, you’ll have the classic case of the cure killing the patient. You can set your company back even further in its development.

The corollary is also true. Structure done right can be the breakthrough you’ve been looking for. It’s like activating the booster stage of a rocket. It’s the catalyst to the next level of performance. I know because I’ve seen it happen over and over. It’s the reason why I do the work I do. It’s also one of the most misunderstood aspects of organizational design.

Let me explain all this by starting with a recent example at Microsoft.

In the early 2000s, a few years after taking over as CEO from co-founder Bill Gates, Steve Ballmer decided to double down on the existing divisional structure at Microsoft. A divisional structure typically has strong divisional heads but poor or limited cross-functional coordination across the divisions. Ballmer’s approach led to this infamous visual about working at Microsoft in the 2000s (I’m not sure who the source is but I still find it funny):

If your business has the wrong structure for its business model, strategy, or lifecycle stage, it’s not going to scale up. It’s going to trip up.

What was the problem with this approach? It was the wrong structure for a changed reality. The existing divisional structure worked well for Microsoft in the 80s and 90s during the desktop/data-center era. But the structure itself also made Microsoft incapable of adjusting to a radically changing, Internet-first era. Ballmer tried to rectify this problem by changing strategies several times but he never changed structures until 2013 (and then only haphazardly or half-heartedly). It was too little, too late. Under his tenure, Microsoft lost half of its enterprise value. Not a good […]

By Lex Sisney|2021-05-18T08:58:13-07:00February 26th, 2019|Articles|Comments Off

The 3 Agreements for Type-1 vs Type-2 Decisions

The 3 Agreements for Type-1 vs Type-2 Decisions

If I were to ask you — “How are you instilling a culture of speed, accountability, and teamwork as your organization scales up?” — how would you respond?

This is a critical question. On the one hand, you want to keep what works well from your early start-up culture — fast decision making, risk-taking, camaraderie, and innovation. On the other, you have to manage the growing complexity — more people, new product lines, multiple business units, increasing regulatory requirements, and more. How can you achieve both?

Most entrepreneurs and CEOs struggle with this. They know that as their business scales up, they must evolve how the business operates, makes decisions, and cascades its culture. They also rightly fear that more policies, centralization, and procedures could cause the company to bog down and lose its entrepreneurial edge. The status quo is no longer tenable. You need a cure but the cure shouldn’t also kill the patient. What to do?

If we were to ask Jeff Bezos the same question — How do you instill a culture of speed, accountability, and teamwork at Amazon?” — he’d say something like this:

“Amazon’s management philosophy is to be customer obsessed, treat every day as if it were Day 1, manage the two major types of decisions (Type 1 and Type 2) differently, reinforce that it’s better to disagree and commit than get stuck in information paralysis, and elevate true misalignment issues quickly.”

What Bezos has figured out, and what he’s consistently trying to communicate and reinforce, is that to be effective at scale means to build on principles, not on policies. Policies, procedures, and rules may be necessary to some extent (especially if you are in a highly regulated industry) but they do not create high performance. As you know, they often prevent high performance.

Principles, on the other hand, are designed to be few in number but strong in impact. Meaning, a principle points you in the right direction but calls on the common sense and creativity of the individuals executing it. Also, if a principle is violated, this must carry big consequences. It has to, or it has no weight; it’s just a platitude.

If you’re like me and you tend to resonate with the principles-over-policies approach to scaling a business, but you’ve also been wondering how to bring this home for your leadership team and staff, I want to share with you a one-page document I use with success in my coaching […]

By Lex Sisney|2021-09-17T08:32:06-07:00January 27th, 2018|Articles|Comments Off

It’s Not a Problem to Solve. It’s a Polarity to Manage.

It’s Not a Problem to Solve. It’s a Polarity to Manage.

I saw this image circulating around social media last week and I had to roll my eyes:

It’s not because I don’t believe in the values of “new management” thinking. Quite the contrary. It’s that making the shift from “old management” thinking to “new management” thinking is not a problem to solve. It’s a polarity to manage.

A problem is something to be dealt with or overcome. A polarity, on the other hand, is something to be managed on a continuum. Basically, anytime you are dealing with things that seem at odds with each other or paradoxical, you’re dealing with a polarity and not a problem.

Take the first line in the viral image above as an example. Are employees your biggest risk or your biggest asset? The answer is both! Hire the wrong employee or lose control of your HR compliance function and it won’t be too long before you’re served a very expensive and frivolous lawsuit. On the other hand, if you treat your employees like they’re not your greatest asset — like they can’t be trusted to use their common sense or act in the best interest of the company — then you’re going to engender a lot of resentment and apathy.

This meme, which is generating thousands of likes and shares, portrays New Management Thinking as the solution to the problem of Old Management Thinking. It’s actually not the solution. There is no problem to solve – just a polarity to manage.

Don’t treat polarities as problems to be solved or pay the price. Why? Because when a team treats a polarity to manage as a problem to snuff out — chanting all the while “Down with hierarchy!” “Down with meetings!” “Out with the old and in with the new!” — one polarity will be emphasized too much and the organization will experience even bigger problems.

A team like this wastes an inordinate amount of time and energy on the wrong things, leading to a lot of activity and little effectiveness. Their misguided efforts also make it harder for the good and necessary aspects of the opposite polarity to exist within the organization. The end result is an organization that is less resilient and adaptable to change.

As a leader, being able to discern the difference between a problem and a polarity will help you to build a culture that makes the right decisions about the right things. This is true even if, from an uneducated eye, those efforts can sometimes appear to be in support of “old” ways of thinking. But they are not old ways of thinking! You are just boosting up an aspect of a polarity that is needed in your organization at this period in time. Later on, you may boost up “new” ways of thinking, depending again […]

By Lex Sisney|2021-05-18T01:44:44-07:00May 17th, 2017|Articles|Comments Off

Results

Real World Results: It’s Hard and It Works

Organizational Physics is a proven framework for designing and scaling your business. Founder Lex Sisney is one of the world’s foremost experts in organizational structure and design. He has personally helped to transform several hundreds of companies, in 16 countries, and in industries as diverse as software-as-a-service (SAAS), machine learning, manufacturing, energy, consumer goods, health care, biotech, payments, hospitality, import/export, distribution, field services, mobile, publishing, and more.

The results speak for themselves: within 7 to 9 months after implementing Organizational Physics, most clients show a sustained 65 to 75% improvement in internal operating performance (as measured by them) and simultaneously realize a 2X to 3X increase in sales over the next 1 to 3 years. In fact, a handful of well-positioned clients have grown 10X in that time-frame, achieving multi-billion-dollar valuations.

Jump to:

Testimonials
Case Studies

Here is a sampling of some real-world results:

A $40M biotech start-up was struggling with management execution and coordinating across multiple geographies and product lines. The founder was a thought leader with a research background who definitely understood the technical side of his business. He was also a first-time CEO, however, and he was naturally overwhelmed with internal operational issues at scale, despite having a COO to support him. By better defining the next stage strategy and implementing a new organizational structure and design, this same CEO took the business to more than $100M in sales in under three years, with very lucrative margins. As of this writing, he has received two competing multi-billion ($B) buyout offers.

A $150M publicly traded consumer goods company was attempting to seize a new market opportunity but found itself going up against much larger, well-funded competitors. It had to innovate new product offerings while bringing together a complicated supply chain and distribution model. Of course, it also had to maintain and improve GMP quality standards. Using Organizational Physics, the company redesigned its structure, accelerated its execution speed on the new opportunities, won several best-in-category awards, and grew to become the number 1 or 2 competitor in its categories. The company is now valued at more than $1B and they are expanding into new international markets from a very strong foundation.

A five-year-old venture-backed start-up was growing fast and had reached 300 employees. But as it grew, its internal execution got more complex and things started to bog down. Inside the company, one part of the business was fighting against the other. There was also a lot of conflict between members of the founding team and new senior-level hires brought in to help the company scale. As a result, sales were flattening. By implementing Organizational Physics, this company created a new structure with clarified roles and responsibilities to support the expansion strategy. They also implemented an improved management execution process to bring the structure […]

By Lex Sisney|2025-01-10T10:36:08-08:00December 26th, 2016|Comments Off