I have been thinking a lot about company-building lately.
Before starting Justworks, most of my experience was centered around building things on my own as an engineer, or as part of a single cohesive product team with 2-10 people.
Often, people build organizations as a “big team”. Much of the decision-making is centralized at the top. During my internship at Yahoo in 2006, I was part of a cross-functional team where the only person that we all reported to in common was the CEO! That’s crazy, because it means that any contentious decision can only be resolved at senior levels, and in practice it means that contentious decisions are not made. Only safe and obvious decisions are made and everything else ends in gridlock. That is a lost opportunity.
During my career, I have worked in two organizations that really focused on decentralizing decision-making. Both are exceptional organizations.
One is Amazon. It is a hybrid model, and Jeff still has his hand in a lot of things, but there are many small teams that operate with relative autonomy. Because of their architecture, teams spend a lot of time negotiating with other teams (establishing APIs and SLAs, for example) but many decisions can be made within a single team. It’s not perfect but Amazon has enjoyed outsized returns over the past few decades and this is an important part of it.
The other is the army. While it evokes images of drill sergeants and generals and “command and control”, the reality is that the army is a highly decentralized organization. Small units operate within an established framework but have latitude in how they accomplish their missions. This is necessary for survival because the battlefield is too big and changes too quickly for any one person to make all the decisions. (McNamara choosing bombing targets himself in Vietnam is a classic example of military dysfunction.)
Amazon and the army have many things in common. Here are a few:
- They have strong values and cultures. In both of these organizations you can ask anyone about values and they will respond with some specific answers. They invest heavily in developing and maintaining culture.
- They select leaders carefully and ensure that these leaders are aligned with the organization’s culture and values. In the case of the military, they grow these leaders from scratch, often starting with recent high school graduates (West Point or ROTC.)
- They have robust communication systems that allow small units to operate autonomously without losing visibility into what each unit is doing. Information can move quickly up and down the organization.
- They have strong support systems that allow each unit to focus on its mission. This means certain systems are highly centralized (personnel and logistics systems, for example) in order to support decentralization around organizational objectives.
There are lots of other things and these organizations are far from perfect. But I believe these are the key components of how they have been able to achieve massive scale while continuing to be highly effective.
So, if team-building is orchestrating a small group of people to accomplish a single mission, then company-building is creating an environment where many teams can thrive together and move towards a common goal with relative autonomy and latitude.
Here is an excerpt of a recent all-hands meeting that includes more (though some of the diagrams are a bit esoteric without a voice-over, but you’ll get the gist)