- Changing organizational models

Welcome again to the Product Bakery. Lovely day today. It's approximately 30 degrees Celsius in my apartment and I'm having the pleasure to sit here with Christian in person. Hi Christian. Christian who is melting away on your couch. Yes, and for everyone who is thinking of how do you record a podcast episode. Whenever you record a podcast episode, make sure that there is no background noises. So turn off your AC, turn off everything that could actually make your stay a little bit more comfortable. And with that, Christian, how are you doing? Well apart from the heat, I'm doing very well. How about you Alex? Well I can't complain. As always, I'm quite happy to see you here. Any highlights from the past week? Apart from the fact that we finally can leave the house and visit some restaurants and bars, I would say overall that was my main highlight. That sounds good. And as usual, you're not working too much so you can actually enjoy the life of going outside, right? And getting tanned. Yeah, he almost looks like... Coming from the Dominican Republic. Three skin tones darker than me. But I will get to my vacation soon. And you deserve it. However, for today, some work left for us. Alex, there's a topic we haven't talked much about, which is organizations in hyper growth or in growing phases in general. How do you think about that? Beautiful topic. We both have worked for a company in hyper growth, but we also these days working and seeing many companies that are faced with the in quotes challenge by gaining the customer growth and also being challenged with hiring people and structuring an organization around the product and the people you are working with. So Christian, what do you say is the most important thing to actually think of structuring your organization? Well, I would say make sure you keep up with the people and make sure they're on board. But yeah, I thought we can talk about the pitfalls that usually happen that you trap into while you are growing massively. And the first thing I think to take a look at and that is very important is asking yourself, how should this organization look like at a certain point or by reaching a certain milestone, right? Let's say you're planning to grow 10x over, I don't know how many years. So some companies like let's take Gorillaz here in Europe, in Germany, which is growing massively at the moment. So I think there you very likely have by the end of this year doubled or even tripled your amount of employees. So what are you going to do? Looking just like at the crazy amount of money that they keep raising over and over again. Yeah, they will definitely also have this massive growth and they already had in the last couple of months. But yeah, where should we start, right? Because I think there is so many topics that we could look at for organizations from where you're coming from, like how is it structured even when you're a small startup, down to alignment, how do you keep the organization aligned, the hiring aspect. We talked about hiring a bit. We will definitely talk more about hiring because it's also something that is like top of my mind at the moment as I am structuring the team and the organization around it. But yeah, anything you would like to start with. We can take a look at companies who have passed that phase already. Let's take a look at Spotify and I think that's somehow the trend everyone is talking about and the Spotify organizational model. Isn't the trend already over? Isn't even Spotify not using their model anymore? And I think that's a very good point we should talk about because you still hear and see people adapting the Spotify model in terms of splitting up the organization in tribes and value streams. Squats. Squats, exactly, which is this very fancy word that replaces the word teams. So is it a good thing to do or generally the topic I would like to discuss, does it make sense to copy something that a company has either succeeded with or not? We probably need to look at why do you copy in the first place because I think while obviously there are some benefits of learning from others, learning from other mistakes, even things like people listening to our podcast. Ideally, some people would learn things that they can apply in their business. So especially when speed is an issue, you might look at best practices that are there and apply them for yourself. But I can also see that or I can imagine we're trying to get to in terms of the negative sides of it. But maybe we can talk about that one. I agree fully with you that you should always try to keep your eyes open and see what other people are doing and what's working and what's not working in the industry and also on a subject matter level. But I think the worst thing you can do is when you're trying to form an organization is to just being a copycat and trying to adapt something one by one. Because the fact that it has worked for Spotify or the fact that it has worked for Netflix, for example, doesn't necessarily mean that it works for you. And I think the very first thing to take a look at as a founder, as a leadership team is to take a look at the culture. So with whom are we working? With whom are we interacting? And does it make sense to eventually press people into a model that not necessarily will work? And even what are we building? I think that's a super important question. And there is never one size fits all. And if we look at what that specific phrase means, you probably cannot use my wardrobe just because it looks good at me, right? The Italian wardrobe is definitely very tailored to your needs, Alex. Tailored is the right word. No, but I think it's very important to start with the people. And as crazy as it sounds, we have these days gazillions of options to get information. You can talk to people, you have books, you have blog articles, whatever. But I think it's very crucial to take a look at what do we have at the moment? Where do we stand? And what do our people think about it? Because there are many decisions that are getting made by leadership teams without involving the people early in the process, which leads to the fact that once you're trying to apply a certain structure, and let's take this Spotify model because we have seen it also at SumUp where it was there from, in quotes, one day to another. There was obviously catch-up with the leadership team and also with the people. But we also faced certain challenges due to the fact that you had tribes, for example, and each tribe lead had the ability to hire whatever they wanted. But at the same time, you have also departments like HR or finance and what are you going to do with them? Do you try to tribalize them as well or do you would like to see them rather working across tribes? And I think just talking about that particular topic, you will already see that there are a lot of questions and dependency popping up, which can definitely hinder you in growing faster. And I think the cultural aspects that you brought up is like the most important and something that worked for me also in the past or that I keep trying to apply is also to generally always start with an analysis of how things are working at the moment. Where are the problems that people have? What are our bottlenecks? Where do we see the biggest opportunities and what are the needs of the people? And then start with that as a basis to see what organizational model could work. How do I need to change it? And it's similar to agile, right? It's like people over process us. Try to work with that. Once you have done your research and once you have analyzed what's important, I think the next step is then to set your goals. So what is important for you in the future? Is it just being able to grow fast? Do you want to speed up the development? Do you want to speed up the research? Do you want to make the system more robust? All these points are very important in how you want to structure an organization. And something that we talk about a lot is the whole world around product management, product design, and also engineering. In product management and engineering, let's say research and development, it's a little bit different maybe than in other functions like HR and finance, because you have this agile processes. You have a lot of communication that is needed and a lot of going back and forth and re-evaluating to make sure you stay on track and you match the customer problems and the customer needs. Therefore, I think one of the key messages for people in leadership positions is to take a look on where you want to be in the future and how it should look like instead of trying to find a model that has like thousands of solutions, but not necessarily all of them will suit your needs. Yeah. And from looking at past experiences, what are the biggest mistakes that you've seen? Yeah, I think the biggest mistakes that can happen is if you give too much autonomy. So autonomy is generally something that is very helpful in product and engineering, but when it comes to hiring, when it comes to budget management, it's good to have a centralization within the company that makes sure that you're not breaking the rules. Everyone tries to be a mini CEO as a product manager, as a tribe lead, and you sometimes start losing the big picture because you are so much focused on your tribe and on your individual needs, which is also the basic idea of a tribe. But you need to be realistic here. It's not working like that. You have always dependencies. And I think that's a very good point because I've also seen this a lot and I've seen it also like when we work together, I believe in autonomy as one of the most important ingredients for success. But at the same time, you need to have the right guardrails or the right rules around it. And just because you mentioned hiring, I still remember that we had people who felt so empowered that they hired their own designers in the team. And what happened then was that, first of all, those designers felt left out because they were not part of the designer organization. They were not benefiting from the team of designers. At the same time, they suddenly had different roles, which also brought up a lot of questions in the team. Okay, why is he a UX, UI designer instead of a product designer? What made him a specialist instead of a senior and so on and so forth? And I think, as you say, these are also the rules that I was mentioning. Aydan came up with a guideline and a hiring guideline of okay, these are the roles that we're looking for based on the needs that we uncovered in the whole organization. This is what someone needs to have. These are the salary bands, the salaries that we pay everywhere. And this is how we promote people. And I was just about to say, in the worst case, someone comes to you and asks, hey, why is this person making 20% more money than I? And then you have a problem. And to the points that you just raised, you should not mix up structure with chaos or autonomy with anarchy. Anarchy, exactly. You're speaking out of my heart right now. That's definitely something where the line is very thin. So you need to be very careful. But I believe, especially at the beginning, when you start establishing a new structure in your company, to keep the ropes tight, to make sure that you rather have clear alignment within the leadership team that everyone has to take care of and everyone has to follow until you reach the point where you feel stable enough to let things go and let things naturally grow. And I think like even one step further, right? Like, for example, as me being in a leadership position, it's also my responsibility to make sure the quality is consistent. And I can only do this if I have some sort of control. I'm a big fan of empowerment. But as long as I'm also the one who then in the end needs to justify why certain things land in the wild. And when I have the CEO pointing the finger at me and asking me, why did we do it like this? It is important that I have also the autonomy and the empowerment to set the rules around it, to make sure that we are working with one set of principles across the whole organization. And that those principles allow people to act autonomously and to make their own decisions without me having to double check. But it's like this groundwork that needs to happen somewhere. And it needs to be someone who owns this. And I love the fact that you're taking your role so serious, because at the end of the day, you are responsible. And what is most important or what is best for my team is a very valid question. But you should not forget the question what's best for the company. Absolutely. Yeah. And this is it starts like on a very high leadership level of setting the foundations, the ground rules, and then it all trickling down while you need to balance it like also with all the team needs coming up. And this is where you need to apply the principles that you would apply to your product, to the team and to the people. Understand what they need, understand what their pain points are, like literally design thinking or research applied to the people in the organization. You do it also in software development when you want to establish a new technical architecture or infrastructure. The first thing you do is you do your research, as we mentioned at the beginning. And as leadership team, it shouldn't be different. And before you make a decision too quick, because you want to be in quotes, agile and fast, it's very important to make sure you have all relevant information at that time and place. And also to make sure that you have an alignment within the leadership team. It requires a lot of conversations and it requires also fighting and tough conversations and maybe getting emotional at some point. But before you make a decision for other people without involving them, I highly recommend take your time because that's an impact that will last for years. Beautiful words. And with taking your time, I think we can also slowly go into the closing of this episode. So Christian, is there anything speaking about best practices or some tools that you could use for setting up your own organization that you would want to share? There is no silver bullet, but do your research, understand what's most important for your company as well as your people. What are the expected goals and milestones you want to achieve? And I think it was like a year ago, I wrote an article about my learnings as a product manager that I'm happy to link in this episode where you can also take a look on the upsides and downsides of restructuring your organization and trying to make it, for example, more organic. And speaking about notes in the description, every episode also has a page on product-bakery.com slash episodes where you can find episode minutes as well as the possibility to interact with the people. And as usual, as we're doing this like in our free time and because we love to share our thoughts with all of you, we would highly appreciate if you can share it with your friends and co-workers if you like the episodes and just drop us an email if you have some thoughts or if you would like us to discuss a specific topic. No more to say. With that, have a beautiful, sunny day. You too. Happy sunbathing, Alex. I will turn on the ventilator now. With that, bye-bye.