This is a post in a series about the 80% Rule for Designing Teams. As a recap, the rule is that “each team should be equipped with the resources and authority to deliver 80% of their mission without outside dependency”.

Reading the first posts in this series, it may sound like there is no place for functional teams. But let’s be clear. Sometimes it makes sense. Here are situations where it does:

1. Demand for the function is spikey
2. The function is very expensive to provide
3. The function is non-core
4. The organization is complex

Let’s look at some examples, again using EdCo, our fictional online education company, and the Primary School Team. Keep in mind that the Primary School Team is just one of several business units (others might be Secondary School, University, etc).

Demand for the function is spikey

Suppose the Primary School Team makes a big brand push every summer. They need intensive brand help for only 3 months. Rather than pay for their own brand team, it makes sense to work with a centralized EdCo brand team.

The function is very expensive to provide

Payments is a good example. It is expensive to develop a payments system that offers a wide range of payment methods, is integrated into customer service operations, and manages fraud risk. Consequently, the Primary School Team is better off if EdCo has a centralized Payments Team providing these services internally.

The function is non-core

Office facilities is a good example. If the Primary School Team has the best office facilities in the world, do their customers care? Probably not, so EdCo should probably have an Office Management Team to handle it.

The organization is complex

Imagine that EdCo is a big, sprawling company with 8 different business units. Each one has its own marketing head. Maybe there’s one or two central marketing services team for brand and analytics. And with all of this organizational complexity, marketing things slip between the marketing cracks. There might be conflict. One business unit yells about how low their prices are. Another is promoting their premium packages. Or there might be lack of knowledge sharing. One business unit may have discovered the secret to low cost customer acquisition, while others are completely unaware. When things slip between the cracks, there is probably a role for a person who looks at the Big Picture. For example, it might be a Chief Marketing Officer who sets a vision and strategy for the function (“we stand for premium quality!”), lays down the law (“no discounting!”), resolves conflict (“which team owns these customers?”), spreads best practice, troubleshoots top issues (“CompetitorX’s brand awareness is beating ours!”), and ensures continued excellence in people.

Just be careful

Functional org is needed at times. But it is a not a risk-free road. It’s easy to centralize decision making too much and impose too much process (“I am the CMO! Everything remotely marketing related is mine! All mine!”). This is terrible behaviour because it takes away from the business unit head, the one person meant to counterbalance all the competing pressures of different functions to serve a particular customer set. If the functional leader has enough control to effectively break the 80% Rule, then they’ve gone too far. So when figuring out roles, just be careful.

GS Dun builds new ventures and products, including international expansion ventures. Our name is short for “get sh** done”, so while we can talk the talk, we prefer to keep our meetings short and just get on with it.