People, Process, Product, Customer, and how people fit in organizations
As I hit 6 months with my current employer, I’ve been doing a lot of thinking about how organizations make decisions and even more so, whether your own motivations and preferred work approaches will fit in.
One of the most effective models I’ve heard described is the one to the right. It refers to different decision-making styles used in a variety of companies. Every company uses all of these at some point, but typically one or two dominate. Certain combinations (diagonals on this diagram) are not compatible in one organization, but may exist in different orgs within the same company. They are:
- People: the key decision makers are individuals, who may or may not follow any sort of a process, and in any case are not bounded by one. Best examples I can think of: Apple under Steve Jobs or Tesla under Elon Musk. Apple was famous for not even having an org chart, because what really mattered was how many degrees of separation existed between you and Steve, and what Steve thought of you at that moment (which was subject to change at any moment). Steve and the people closest to him got to make decisions. Everybody else followed along or left.
- Process: The exact opposite. There is a process for making decisions. They are generally followed regardless of anybody’s personal views. You will often hear ideas like “disagree and commit,” elevated as key management concepts, because it’s understood that decisions are not solitary, that everybody can and should have a voice in the process. Amazon’s version is even stronger it’s “have backbone, disagree and commit,” the implication being that you’re expected to stand your ground and argue the case if you think a decision is wrong. But also by implication, if you can’t follow the process, or see yourself bounded by one, you need to leave. I’ve seen very senior management from “people” companies arrive at “process” companies and fall flat because they have limited personal tools for managing through process. AWS — despite Bezos early reputation for mercurial decision making — is very much a process company. Eventually Bezos came around to the notion that “good intentions don’t work, you need mechanisms.” Mechanisms are process, they ensure consistency regardless of the individuals involved.
The best way I’ve found to tell which one you’re in, is paying attention to staff or other large meetings: “The meeting is cancelled because [important person] is out that day?” You’re in a “people” company. “The meeting goes on whether I’m here or not, one of you can lead it in my absence?” You’re in a “process” place. If you’re regularly told you have a new bit of work today because somebody higher up had an idea in a meeting that you weren’t invited to attend, you’re almost certainly in a “people” place.
In my experience, process places are far more likely to do bottom-up planning than people organizations and are more likely to function as distributed/decentralized organizations.
And important to note that being a “process” organization does not in any way mean that the organization doesn’t care about it’s people. In fact, I have found the opposite to be true. “People” orgs tend to make clear that some people are important and get to make decisions, while others are expected to respond to their immediate demands. If anything, process orgs tend to level the playing field and open up far more options for everybody to have input.
All organizations have some aspects of both, but one always dominates.
Continuing:
- Product: The organization prioritizes internal product decisions. You may hear that “we know what the customer wants before they do.” Apple under Steve Jobs is a great example. Steve had outright disdain for his customer’s opinions. “I’ll build what I know is right, and my customers will learn to love it” is his extreme form of product-focus. Design over function is product focus. Most companies should not follow that extreme. You’re not Steve Jobs. Even Apple today can’t really do that anymore, but many companies do extremely good work by figuring out how to remain a step ahead of their customers and how to drive customer wants rather than respond to them.
- Customer: Organizations that listen carefully to what customers want and build products that solve their problems. They aren’t blindly following every customer request, rather, if they’re smart anyway, they’re listening and trying to figure out pain points, then designing products to address those pain points. As a former manager said to me about a product we were building “no customer asked for this product, but they told us everything wrong with every other product, and this is the thing that addresses all those concerns.” The most customer-focused companies I know tend to be in the professional and personal services space.
Even in the same business, companies can be very different. GM is famous for detailed and painstaking following of customers. They practically invented modern marketing. They have armies of people and external service companies doing surveys, focus groups, and other measurement of what the market wants in their next car. Mercedes focuses on product leadership. It’s not that they don’t listen to customers, but they’re very focused on designing things to satisfy requirements that customers don’t even know they have yet.
Again, all organizations have some of both, but one always dominates.
That leaves four combinations.
People-Product: Apple/Steve Jobs again, but the pattern is mimicked at many tech companies. Combine a mercurial founder with a passion for solving problems that people don’t know they have, and you end up with a People-Product company. There used to be a lot more process companies in tech, but as tech has become more and more about software, with all hardware issues outsourced, the need for the kind of process thinking that typified tech manufacturers like Intel, HP and many others in Silicon Valley’s early days has waned.
Process-Customer: Listening to customers at any scale is almost necessarily going to require robust process. Most consumer packaged goods companies have to fall into this category, along with the vast bulk of other mass-market companies. But from what I’ve observed, it’s common in tech as well. Amazon certainly endeavors to be in that group, but there’s enough of a product focus in some spaces that it’s not as clear cut as they claim. Microsoft is also process and customer focused, but again somewhat less clear-cut.
People-Customer: The most obvious organizations who do this are professional services firms with a small number of “rainmakers” who serve as the gateway to the customer and thus the ultimate (people) decision makers. Any business that is focused on delivering individualized products or services to specific customers (as opposed to dealing with customers at scale) is likely to fit into this category, whether it’s personal services, custom home construction, etc. Many smaller businesses operate very successfully this way.
Process-Product: Mercedes is a good example. They are intensely engineering and product focused. But when is the last time you heard about the mercurial rants of the Mercedes CEO or one of their product designers? You haven’t, because for all the product focus, there are defined processes by which ideas go from “that’s funny” to “new high-end product feature.” And any company with a large manufacturing or logistics operation must have a strong process focus. I’ve seen some interesting examples of companies that split the “manufacturing” arm from the “design” arm, with different cultures at each, but those are less and less common. Design for manufacurability works best if there is a connection between the two pieces. And if you truly don’t care, then it makes most sense to go the Apple way and outsource all manufacturing.
Once again, all organizations capture all of these in some places and at times. But when push comes to shove, most organizations will default to one consistent pattern. Thus, I’ve seen some very process-oriented teams in people-oriented organizations, but that only works to the extent that no “important person” outside the team demands something out-of-process. The process is at best localized and subject to revision when the people in charge change. I also have seen some very dynamic and charismatic leadership in process orgs, but the risk there is that when the leader moves on, whatever progress they were making tends to fall apart. Bezos and many other long-time leaders departing Amazon will surely test this.
This matters because different people tend to do well in different organization types. My best work has been in places that are process-customer, but I’ve done well in process-product as well. I will admit though that this works best for me if it’s “process light” or at the very least “process, but don’t let it slow you down too much.” Clear guidelines for how decisions get made is always best for me, but if the process is so time-consuming that decisions can’t be made quickly, I tend to lose my mind. To my mind process works best when coupled with strong direct ownership that keeps it in check. I have not done well in people-dominated organizations. Dramatic and mercurial leadership, and having my your daily work shifted by the whims of some leader somewhere with no discussion of alternatives and reasons may be really inspiring for some, but to me it falls flat at work, as it does in politics.
But I know lots of people who loved Apple and loved Jobs and really wanted to have that kind of leadership around. Many of them moved on when he was no longer there.
Understanding what kind of management you work well with is important. Over the past six months I’ve significantly refined what I’m looking for in good work. It’s decentralized, service-oriented, and puts a strong emphasis on consistent process.