Flip your org chart upside down
Your org. chart - you know, the one shaped like a pyramid - is upside down.
Yes, it’s the classic way to visualize it. The image above is essentially how every company draws their org. chart, and eventually it also represents how they act. Instead of focusing on serving customers, employees eventually focus on how to serve their boss.
There’s a better way to conceptualize this; all you have to do is flip your org. chart upside down. You put the customers at the top, and you put the CEO down at the bottom.
Today I’ll share why this model is so important, what happens when you start serving your boss, and what it can look like when you put your customers at the top.
Why is this important?
If you don’t have customers, you don’t have a business. And you probably want to have a business.
Your company got started and grew because it solved a customer problem. You need to continue solving your customer’s problems, and solving them well, or your customers will find a competitor who will.
Where you place your customers as part of your organization matters. They’re typically not drawn on an org. chart. Unless you’re like Amazon, who leave an empty chair in meetings to represent the customer, at most it’s probably just implied that you’re in business to serve customers - most employees spend most of their day with other employees.
Frank Blake, former CEO of Home Depot, says the inverted pyramid “…is one of the most powerful business concepts.”
L. David Marquet, captain of the Santa Fe submarine, leveraged this concept in taking his ship from worst to first: When he took over the ship it ranked dead last in operating standards, and he took it to the top of those rankings by employing these ideas. I’ll reference his book on the subject, “Turn the Ship Around!” a few times today.
If you want to improve your business performance and customer retention, this is an important model to understand and use.
How does the traditional org. model develop?
When a company first starts out, the founder is very focused on customers. They have to be. No customers, no business.
As the company scales, eventually help is hired. Likely the founder is still doing most of the customer-facing work.
As the company continues to scale, the founder moves further and further away from the customer. Yes, they probably still talk to key accounts every quarter, but by and large they’ve got other things to focus on. Their org., now measuring in hundreds or thousands of employees, are the ones talking to the customers.
It’s here, when a company has decent scale, that the classic org. chart starts impacting the work. Any single customer-facing role has very little impact on the company’s overall performance.
That means that the person who matters most for your day and your livelihood is your boss. As more and more of the org. starts serving their boss instead of the customer, bad things start to happen.
Serving your boss instead of serving the customer
Once you start serving your boss instead of your customer, there’s a misalignment in incentives for the company.
Your boss has a greater effect on your future than serving customers, but serving customers has a greater effect on the future of the company.
People serving their bosses happens naturally because bosses are human, and the company has blessed them with certain authority. The boss doles out compensation and can fire you. In a large company, customers don’t have that same authority - at least not directly.
As an employee, operating rationally, you will make sure your boss is happy. What makes bosses happy? Sometimes it’s because you made the customer happy, but often it’s because you made the boss’ life easier - and that’s not the same thing.
What are some of the downsides that develop when it’s more important to keep the boss happy?
Low Agility
Customers are trying to tell you what they need, but in the top-down boss-serving model, it’s hard to get information up to where the authority to change something lies.
When your customers’ needs change, the business operating in this model can’t quickly change to meet that new need. Often, business don’t even realize the customer needs have changed! The information about customers is stuck inside the heads of employees, and it doesn’t flow naturally up the org. chart.
The company may not notice that customers are unhappy until they start to churn, and by then it’s very late!
This happened at Starbucks when they expanded to China. The authority for the breakfast menu resided in Seattle where the boss was, far from where the customers were. Chinese customers didn’t want a blueberry muffin for breakfast. Starbucks’ Chinese employees knew this, but they didn’t have the authority to change it. So the blueberry muffin stayed on the menu until eventually someone with authority realized it wasn’t selling.
When information has to move up to authority, that’s going to be a slower process.
“Don’t move information to authority, move authority to the information.”
— L. David Marquet in “Turn the Ship Around!”
Learned Helplessness
When bosses hold all the authority, their employees develop learned helplessness; they learn they are unable to control or influence outcomes, which leads to passive and resigned behavior.
They lose agency, and are often sitting around waiting for decisions to be communicated so they can act.
This is hugely wasteful!
Your company has all these brilliant and capable people sitting around waiting for a blessing to do the right thing. They’re full of energy and ideas that aren’t put to use because the boss has to approve all the projects, writing, etc. before it can be acted upon.
Bosses are typically uncomfortable with mistakes, so they try to control the outcome. After all, bosses have their own bosses to please! Unfortunately, control is the wrong reaction.
You lose motivation, productivity, and morale among the staff. Customers wonder why your company isn’t helping them solve their problems.
Politics
Politics often shows up when customers are absent. When everyone is busy making sure the boss is happy, you get a “performance” culture (as in, performing a play).
It becomes less about the quality of the work - and how well you solve customer outcomes - and more about whether the boss feels good about your work. What do other people say about you? Do you keep quiet, not escalating issues? If so, good job. You made the boss’ life easier and will be rewarded. The customer outcome is less important.
Obviously I’m painting a caricature of the extreme examples of the top-down boss-pleasing org. model. Everything exists on a spectrum. I’m sure you recognize examples of these bad outcomes in your own experience!
What does it look like when you put your customers at the top of the org. structure and remember that you serve them?
What it looks like to serve your customers
A company operating in an inverted pyramid model would have properties that are the inverse of the classic model; they would be more agile, they would have people operating with high ownership, and they’d have lower amounts of politics.
There are a few more features I’d like to point out, and I’ll start this section with an anecdote from a company operating this way: Home Depot.
An anecdote from Home Depot
On a recent podcast, Frank Blake, former CEO of Home Depot, tells the story of a cashier while he was running the company. Home Depot was operating under this inverted pyramid model. Customers are the top of the pyramid, and the Home Depot associates were empowered to do the right thing by them.
In the story, a customer comes to the register, and as trained, the cashier asks if the customer got everything they needed. The customer said yes. Then the cashier asks what sort of project the customer was working on.
The customer said they were making a casket for their son.
The cashier said they were so sorry for his loss, and gave the customer their entire order for free.
A very human moment, and the cashier chose to do a kind thing for a customer going through a tough time.
The cashier felt empowered to help a customer. They didn’t need to bring over the store manager. They didn’t need to call the head office. They just did what they felt was right. And they were rewarded, not punished.
That’s not the kind of thing that would ever happen in a classic top down model. In the classic top-down model you’d be so worried about getting in trouble from your boss that you wouldn’t feel comfortable making an exception.
Leaders serve the employees
In the classic model, a boss can come to view their organization as serving their needs. The leaders wants something done, so they tell their team to get it done.
In the inverted model, the leaders serve the staff. They help break down roadblocks. They help with alignment. They focus on training, development, and learning for their staff - because they know that a more capable employee will be better equipped to serve the customer, who are the lifeblood of the company.
Leaders in this model look at the systems and processes their team operates within, and find ways to optimize them. They reduce internal friction so that more and more energy can be spent on solving customer problems, as opposed to that energy being used to navigate internal inefficiencies.
A peek into the inner life of employees
What does it feel like to be an employee working in this model?
An employee feels like:
- I make decisions
- I learn
- I matter
Much is expected of employees in this model, and they rise to the occasion. To serve customers well, an employee will have to make decisions and improve themselves when they fall short. They’ll need good judgment, drive, curiosity, and humility.
When employees see that they matter and have impact, it unlocks greater outcomes. In fact, as Daniel Pink argues in his book, “Drive,” the three bullet points above are the three things that define inner drive: Autonomy, Mastery, and Purpose.
This self-directed inner drive fuels greater performance in companies like this. It unlocks the current potential in employees, and simultaneously develops their future potential.
Employees see the impact their work has on customers, and it feels great! Customers are happy. Dopamine get released. They strive to do it again.
Can you imagine what’s possible if everyone in your team or company operated at such high levels of agency?
It sounds magical. So why doesn’t everyone do this?
Why doesn’t everyone do this?
It’s hard.
One of the reasons it’s hard is because you need competent and trained people. This takes energy. You’ve got to find people with the right characteristics. You’ve got to develop their skills.
Have you tried to divest control without first making sure your organization is competent to handle more decision-making authority? I learned the hard way that control without competence is chaos.
— L. David Marquet in “Turn the Ship Around!”
If your talent density is low, you start to implement policies and procedures to prevent errors. These policies and procedures begin to create the learned helplessness and lack of agency in your staff. They become barriers to working and doing the right thing. They become so hard to change that everyone just lives with sub-par operating systems.
When bosses are in charge of compensation, their staff worry about their performance reviews and naturally do things focused on keeping the boss happy.
Humans also have ego and don’t want to let go of control. It’s not easy for everyone to give up decision-making authority to their staff.
We have so many companies operating in the classic top-down pyramid because it’s the natural outcome. Inertia takes us there, which is why this other model is so rare.
But that’s why I’m sharing it with you 🙂 It’s important to get started. To push back on inertia. To remember that we’re in business to serve customers.
Bringing it all together
The inverted pyramid model of an organization has the customers at the top and the CEO at the bottom.
This is important because companies are in business to serve their customers. No customers, no business!
Over time, as companies get larger, the person who matters most for your day and your livelihood is your boss. As more and more of your org. starts serving their boss instead of the customer, bad things start to happen.
When employees serve their boss, eventually you get low agility, learned helplessness, and politics. Your business grows misaligned to your customers and unable to serve them best. Competitors come in and steal them.
If you flip the model to where employees serve customers, you get the opposite; the business is agile, people operate with high ownership, and politics are low.
In this model leaders serve employees. They break down barriers and focus on developing their staff.
Employees feel high internal drive and are self-directed. They have autonomy, mastery, and purpose.
The inverted pyramid sounds magical, but it is difficult to put into place.
Even though it’s hard, it’s important to get started. To push back on inertia. To remember that we’re in business to serve customers.
Take action
What could you do this week to push closer to a model where customers are at the top?
Are there processes or policies that were put in place to reduce risk, and are now taking energy away from your people?
Identify a decision you make that you could push closer to the customer. Who will you delegate to? Start training them to do it well.
If those changes are too big, start by drawing your org. chart as an upside down pyramid. Put yourself at the bottom and think about what it means to serve your staff. How could you improve their autonomy, mastery, and purpose?
As always, have fun with this - and let me know how it goes! I’d love to hear your thoughts and what you’re working on related to this. Email me at kevin@catalyst.group18.co.
Kevin 🤗