Org Structure: You Get What You Wish For

Alfred Chandler of the Harvard Business School famously wrote in 1977 that “structure follows strategy”. In the types of companies around for the first three quarters of the 20th century – big players in “bricks & mortar” such as oil companies and industrial manufacturers – this was sound advice. Organisation structure was put in place to enable execution of the organisation’s strategy.

Typical of the time were “command and control” models, steered from the top down, and continually homing in on being a well-oiled machine with perfect repetition as the end goal:

Org 1

In large forward-thinking organisations, this also led to divisional structures, where each division owned a product or brand or market sector, and had autonomy over functions such as marketing, sales and service:

Org 2.png

This naturally led to the development of the product management function – product management being the management of a product (or brand) and everything related to getting the product (or brand) out into the market and successfully used.

Software products are different. Separating product management from product development is not feasible, for several reasons.

  1. Software products are typically innovations that have never been seen before, so the proper product or solution is only arrived at incrementally and in response to customer feedback and continuous change
  2. Product development never ends
  3. The marginal cost of “manufacturing” (or duplicating additional software) approaches zero, so therefore product management need not spend time on manufacturing because it simply does not exist

As a result, a more feasible organisation structure is to embed product creation into the product management function, an equal partner alongside marketing, sales and services:

Org 3.png

Is Chandler’s famous assertion that “structure follows strategy” really true, in the new world of software products? Given the new paradigm that combines continuous product development and change with the other product management disciplines, perhaps a better way is to flip this assertion on its head. Perhaps strategy follows structure. Another way to say this is “you get what you wish for”, at least when it comes to optimal organisation structures for product management.

How is your organisation structured? Does product creation (development) live in a separate vertical, perhaps called “Engineering” or “Technology”? Does this lead to disconnects between marketing, sales, services and product development?

It is time to rethink traditional organisation structure, because in many cases they are ensuring structure is not following strategy!