There is no one perfect way to structure a product organization within a company. Like most things in a company, organization structures only make sense for given moments in time, and as changes happen with the business, so does the organizational structure to match. Product teams are no different, but they tend to vacillate between four different types of structures over time, which I’ll explain along with their pros and cons. These structures tend to work best when aligned with how engineering, design, and other partner functions are structured, so there are 1:1 relationships between leadership roles in those functions.
Alignment of Structure
By far the most important rules of product organizational structures is that they should closely mirror the partner functions. So engineering, product management, and design should tend to have structures that match each other whenever possible. This can’t always be 1:1 as engineering teams tend to be much larger, but if engineering is organized in a very different way from, say, design or product management, it can cause many problems. It can create misaligned incentives as well extra coordination between managers as one director may have to interface with four different peers to align their work instead of one. Assuming the company tries to align all of the development functions, let’s talk about a few ways they can be aligned.
Organization by Type of Product Work
In the Reforge Product Strategy program, we talk about the different types of product work. A common organization structure is to separate teams based on the type of work they are doing. One pillar is the innovation pillar working on new products. One pillar is the core pillar trying to strengthen the core product with additional features and maintaining the core. One pillar is the growth pillar trying to grow overall usage of the current product. One pillar is the platform pillar working on internal features that support other product and engineering teams to allow them to scale.
The organizational structures can be quite stable, but the level of investment in them can change quite dramatically over time. Product leaders need to consistently be thinking about the right allocation between these different types of work and changing resourcing among them based on the needs of the business. This reshuffling can create change fatigue of individuals that have to move around teams.
Organization by Customer
If a product has different types of customers, a common structure is to separate product teams by the customers they build for. This is very common in marketplaces that have supply and demand teams, or in subscription companies that have self-serve and enterprise, or free customers and paid customers. This allows product people to become experts in understanding their customer well to deliver them value.
These organizational structures tend to be very stable in marketplaces, but less so in subscription companies if the contracts between those teams are not written correctly. For example, I’ve seen companies that have split into free and paid where the free team is penalized when a person upgrades, which should be the very goal of a free plan. But, since the free plan was goaled on usage, whenever someone upgraded, their usage was removed from the free pillar’s metrics. Even in marketplaces, there can be issues with this model as great products are things that benefit both supply and demand, and it’s hard to build a great product if you only know one side well.
Organization by Value Proposition
If a product has different value propositions, a common structure is to separate product teams by those different value props. For example, at Pinterest, we thought about our value props as Discover, Save, and Do, and had different product pillars for each of those value props. This makes it easy to align OKRs or goals to the value you’re trying to provide your users.
This organizational structure can last for quite a while as value propositions do not change dramatically over time in most companies, but some necessary product functions don’t easily fit into this structure. Great product goals tend to be focused around value created for the customer that, in the long run, create value for the business. Value prop structures are more likely to ignore or de-prioritize that second part of long run value for the business. These structures can also overly focus on the product engineering part of the engineering stack as their goal is to deliver more value. If not handled correctly, this structure can lead to an under-investment in important maintenance, scaling, or growth work as the desire is always for new features that aid in delivering this value prop.
Organization by Initiative
Companies tend to have strategic initiatives that emerge from annual planning, so a common organizational structure is to align product and engineering around those initiatives. This process can work well when initiatives are new, and the organization isn’t sure what types of product work will be most important to succeed in an initiative yet. The initiative structure allows PM’s and engineers to flex between innovation, growth, scaling, etc. as needed to support the ultimate outcome for the business. This requires product folks to be more agile in their planning and in the skill sets they are leveraging. We organized this way at Eventbrite when I started as Chief Product Officer.
This organizational structure tends to be the least stable because initiatives change frequently or at least on an annual basis. Once the type of work that is required to be successful for an initiative becomes clear, many times teams like to specialize by switching into one of the other structures above.
Mixing and Matching
What a lot of companies end up doing is mixing and matching a couple of these approaches to fit their needs. For example, while Pinterest used the value prop structure for the core product team, it also had growth and monetization teams to balance the business needs of the company. That combination proved fairly stable for a while. No organizational structure is perfect, and emerging trends in product, like having product managers work deeper into the technical stack on platform, infrastructure, and DevOps, will continue to shape changes in how product leaders structure their teams to drive effectiveness. Nevertheless, it’s important to think through the tradeoffs of different organizational structures to make sure they match best to the needs of the company at the specific point in time. What is most important is aligning this structure between engineering, product, and design as much as possible to the teams work in unison.
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