The Beer API: Org Design for Dummies
Org design is the hidden black art that affects every interaction in your company.
It's also incredibly hard to learn because the impact of decisions on structures and roles play out over months.
That’s not to mention the fact that these decisions are usually made by a small group of people in most companies.
Black art or not - it’s critical to get org design right. And even if you aren’t a decision-maker, it’s still super helpful to understand it.
There are of course lots of frameworks out there, but I found most of them to be too theoretical. I’m a simple man that likes simple things.
So I thought I’d share a simple org design framework that my co-founder and I developed. We call it the Beer API.
(If you don’t know what an API is - ask ChatGPT to explain it to you)
Ok so how does the Beer API work?
Imagine members of two functions go for beers - what do you think they’ll talk about?
The main insight behind the Beer API is that they’ll inevitably be moaning about something, most likely each other’s functions. A good org design does not prevent this moaning. Instead, it sets up a structure where teams moan about the *right* thing.
There’s a lot in that paragraph, so let me unpack it a little.
In an early-stage startup, it’s easy for everyone to understand the nuances of each function. This mutual understanding means that there's minimal moaning.
But as you scale, it becomes exponentially more expensive to have nuance and, eventually, the complexity becomes crippling.
To continue operating at a high velocity, you need to embrace simplicity. Teams should have clear accountability, even when it’s a little unfair. For example, sales needs to be held accountable for their quotas regardless of marketing’s performance.
It doesn’t take a rocket scientist to realise this setup will lead to teams moaning about each other. Despite that, most leaders don't initially want to accept this.
So here's the trap leaders fall into: we tend to get sad when someone complains about another team. Our first response is to consider this as a problem to be solved. If we do go ahead and “solve” this “problem”, we actually make things worse by adding complexity.
Instead of jumping in to “solve” anything, our first response should be to ask what the team is moaning about.
A good Beer API between teams has the following characteristics:
- Teams consistently moan about the same things
- The thing being moaned about is the inevitable result of the behaviours you want
For example: If you get sales to hustle and rapidly grow revenue, then customer success will moan that sales is over-promising to close deals.
Once you have teams moaning about the right things, then you need to tweak the dials to get the right level of moaning.
In the example above, it might be that sales really is promising too much and you need to reel them back a bit.
In summary: Solving moaning is not the goal, harmonizing the moaning is.