Skip to contentSkip to navigation

Organize Like a Startup

Legacy companies looking to increase agility and collaboration can take a few lessons from new firms.

(originally published by Booz & Company)

Organizational dysfunction. Failure to align strategy and execution. Resistance to change. Distorted communications. These are common maladies that leaders wrestle with every day. I’ve written before about complexity—and the importance of understanding its impact on organizational design and function. Recently, I read a new book on the subject: Startup Leadership by Derek Lidow, the founder of iSuppli, which provides data and analysis to the electronics industry. Lidow led the company to a successful sale, and he has insights from his entrepreneurial endeavors that are equally applicable to startups and legacy firms.

In his book, Lidow writes about structuring a new company the right way, from the ground up. Although established companies can’t afford to tear themselves down and start all over again, they can use the principles in the book to analyze vulnerabilities, guide reorganization, collaborate, innovate, and become more nimble in the face of fast-changing conditions. How? Here are a few tips:

Never assign anyone to a job at which they are unlikely to succeed. This may seem obvious, but I’ve seen many organizations where people are moved into positions because of a predetermined career plan or because the firm is plugging who they have into a spot they need to fill. It’s fine to expect people to grow into new roles, but you need to provide them with the resources and support they need. Sometimes, just knowing support is there helps foster a psychological safety zone in which change is less threatening, creating a greater probability that the employee will thrive.

The U.S. military is a leader in training individuals to perform well in high-stress, high-stakes situations. To accomplish this feat, officers spend about 25 percent of their careers in education and development. I’ve found no private sector organization that comes remotely close to providing a similar level of support. The attitude is generally, “Get it done or we’ll find someone who will.” Things get done, but with a fair amount of collateral damage to the organization.

The success of a reporting relationship is the responsibility of the supervisor. It’s time to stop blaming underlings for their bosses’ failures. Hiring the right people; setting clear expectations and objectives; serving as a role model; and providing regular feedback, resources, structure, and support are the basics of leading a team or a global corporation. Organizations would do well to invest time in teaching people how to design organizational relationships—both as managers and subordinates. One of my best bosses defined his role as removing obstacles to my success. He framed the relationship as supportive, one where it was alright to talk about problems and tell the truth. If your relationship with a subordinate is awkward and unsupportive, move him or her to a role where they are more aligned, or hand them a fair severance package to help them move on.

One of the more common phenomena that I have seen is people who do not want to manage people being given supervisory roles. Being a boss is hard work. If you don’t want to do it, you won’t do it well. (See the first point.)

Being a boss is hard work. If you don’t want to do it, you won’t do it well.

People who do not trust each other should not work for each other. This is a difficult, though essential, issue to address. Low trust environments are often politically toxic. People are afraid to offer new ideas or extend themselves to collaborate because it puts them at risk. They become internally focused rather than paying attention to customers and external market conditions. Holding people as accountable for their trustworthiness as for their financial metrics is simply good business.

The idea can seem like a stretch, however, because many companies are not good at fostering honest conversations, and overly formulaic HR management systems make the process even more awkward. So, how can you accomplish it? Fred Reichheld’s work on the Net Promoter Score comes to mind. By asking a simple question (for instance, “Would you recommend your boss to a friend or co-worker?”), you might discover information that could become as important for talent management as it is for customer satisfaction.

How responsibility and accountability are delegated shapes both culture and performance. Are responsibility and accountability shared, or do they rest solely with individuals? Conventional wisdom says that unless one person owns an outcome, it won’t be achieved. But in environments where value is generated through teamwork and collaboration, responsibility and accountability shared with mutual respect and trust among the team members can be a better option. It creates an atmosphere where it’s easier to be adaptable and responsive. Amy Edmondson’s work on teaming holds many insights into how this can be done.

Do not design your organization around certain individuals or personalities. This is one idea that Lidow implies through several stories in the book, and I’ve witnessed similar scenarios myself. Often, a reorganization process is based on short-term, self-serving assumptions and decisions rather than long-term objectives. Just as many of the boundaries of convenience drawn long ago have contributed to the conflicts in Southeast Asia, the Middle East, and Africa, designing an organization to ensure that Bob gets as many direct reports as Sally will have unintended consequences down the road.

To remedy this, give all stakeholders in the organization a seat at the table and a voice in the process. Craft principles for organizational structure that are agreed to in advance, rather than waiting until the bartering over territory begins. Empower everyone involved in the process to speak up in order to hold the group accountable to the organizational principles or give someone the job of representing the system rather than a particular component.

Work has changed, and organizations must change too. Entrenched interests often make that change difficult, particularly in established companies. More important than a new org chart is a fresh mind-set—one that values agility, tempers ego, and respects the organization and the stakeholders it serves.

Eric McNulty

Eric J. McNulty is the associate director of the National Preparedness Leadership Initiative. He is the coauthor of You're It: Crisis, Change, and How to Lead When It Matters Most (PublicAffairs, 2019). He writes frequently about leadership, change, and organizational culture.

Get s+b's award-winning newsletter delivered to your inbox. Sign up No, thanks
Illustration of flying birds delivering information
Get the newsletter

Sign up now to get our top insights on business strategy and management trends, delivered straight to your inbox twice a week.