An ideal tech company structure?

You have to have checks and balances, responsibilities and focus…

I’ve worked in a number of tech companies in the last 32 years and I’ve noticed similarities and differences. Some of the differences are just that, differences but others actually positively or negatively effect the day to day operations. It would not be appropriate to name companies, but all of the information below was extracted from my experience at real organizations.

In a tech company there is always a development team but there is not always a research team. Development organizations are referred to as R&D but in most cases it’s a very little “r” and a big “D”. In order to have a Big “R” and a big “D” the company has to have a budget to fund research. Research often results in development, but not always so the company has to have an appetite for “R”.

Depending on the type of tech company R&D may be further broken down into hardware and software design. These are two fundamentally different disciplines that require  different approaches and solutions to problems. I can’t speak for other places in the world but hardware design is much less common in “silicon valley north” than say 20 years ago. If you take away the hardware component, you end up with a software team that is most commonly little “r” and big “D”.

Software generally has a target hardware platform and if that platform is a commercial product like a personal computer, there should  be a few people in the organization that understand the target hardware. Software developers need to know the limitations of the target platform, its operating system and advancements in support hardware like video cards. This team would ideally be the hardware part of R&D, but I have seen organizations where it is placed in a separate group responsible for hardware qualification and customer specific system integration. If this group is placed in the R&D organization of a software company it is import that the head of that team understand the difference between hardware and software development. Ideally that person should have experience with both.

R&D may be further split into design verification, documentation and various other support groups but eventually the product is complete and passed on to an external testing organization. If this organization is too close to R&D its performance can be compromised. It is too easy to be convinced by a designer that a problem is design intent. QA is the last step before the product is released to Operations and the customer, so it is important that they have a non-biased look at what has been produced. If something is awkward or doesn’t work as they expect, they have to send a clear message back to Product management and R&D. This can cause friction between the teams especially if what R&D was asked to design was not clearly defined.

QA or Verification can be a problem for organizations as the people that work there have to be protected enough to deliver controversial reports. I’ve worked in a company where QA was so well protected that the group became a product prevention department. If QA is populated with the wrong type of people, no product will ever be good enough and chaos will result.

Product or project management sits between R&D and Sales/Marketing and is the mediator between both sides. See my previous blog post for a more in depth description of the importance of product management. If QA and R&D have a problem that they can not resolve, the buck stops at Product/Project management. This is one area where organizations can be different. The most successful organization that I’ve worked at filled the product management roll with two very different people. The outward facing job was filled with sales like people who met with customers, listened to their concerns and requirements. They collected data and handed off to the inward facing people where the data was analyzed and applied to the requirements for the next R&D cycle. I’ve seen this job done with a single resource but not as well. The single resource has to meet with customers as well as handle the day-to-day questions from R&D and QA. It’s hard to be in two places at the same time.

Before the product is placed in the hands of the sales and marketing organizations it has to be assembled, packaged, produced and eventually shipped to distribution points. The group that does the commercialization is usually called Operations or Manufacturing. This group interfaces with R&D, Product Management, and Sales to make sure that the right thing is built in the appropriate quantities and distributed to appropriate places so that when orders are placed they can be fulfilled in a timely fashion. Manufacturing the product can include another level of testing to catch production problems. Operations can be involved with cost reduction and may recommend changes to R&D that do not effect functionality. This is more common when there is a hardware component to the product but software distribution and licensing can raise similar issues.

Next we get to the Sales and Marketing organizations. There is more than enough work here for two completely separate groups which is usually how tech companies are organized. When companies are first starting out and there is not much of a product to market so I have seen the two jobs collapsed into one. Once the company is rolling however, it is difficult for someone to run both groups and have a personal life. Marketing relies heavily on creativity (which requires time to think) and sales is for the most part tactical (Generate leads, Don’t think just do, Sell what you have now, Meet your quota, etc).

Marketing generally works closely with product management to understand what is being produced and when it will be released. Marketing does the research necessary to understand the competition and positions the companies products in a way that differentiates them from the rest of the pack. During this process Marketing may feed information to sales so they can build competitive selling strategies. Marketing is the face of the company, responsible for all outward communications. It is very important that marketing and sales say the same things.

Sales is where the customers and company meet. Sales people generally work for their customers and represent them to the company. Sales people move from company to company bringing their customers with them. It is not uncommon for sales people to be loyal to their customers first and the company second. There are as many models for selling as their are sales people so in the interest of time, I will leave that topic for another BLOG post.

The heads of each of the previous groups mentioned join with the CEO and sometimes COO to form the senior management team. I have worked in small organizations where group boundaries and responsibilities are blurred but I can’t say that this worked well for extended periods. I have also worked in companies where communication between groups was on a need-to-know basis and that definitely does not end well.

The best approach to growth lies in clear communication between teams and that starts with their leaders. It is critically important that each team understands its contribution to the whole and that teams don’t waist time and resources doing work assigned to other teams. The most successful companies that I have worked for have held regular all-staff updates (at least once a month). This insures that everyone from the lift truck driver in the warehouse to the VP of sales are all telling the same stories.

When all the stars align and everyone is pulling in the same direction the employees and customers feel it. Success breeds success and that is what happens when it all comes together. The one company where i worked that was highly successful went from humble beginnings to billions of dollars in global sales in fifteen years. It felt like every other start-up that I have been in since except for communication. The CEO was in front of the entire company once every two weeks at the start and every employee was a share holder. I never had to ask myself what to work on next, I just knew. Work was always fun, people always had time for each other and if there were politics I never saw them.