When companies are out of sync
Internal mismatches can hurt execution
Most professionals understand the unique timelines of their own functional areas, but unless you have oversight over several — which typically doesn’t happen until you become a C-level operations executive — the cadence of adjacent functional areas may be unclear and misaligned, which can be a detriment to the organization.
For example, most marketing departments will have an annual cadence. When CMOs submit their budgets for approval, they’ll have mapped out all pertinent activities of the entire year in advance. They know exactly when experiential activations will go live, the dates of every large road show, when to hit the gas on specific advertising channels, and how macro events will be used to drive the rest of the year’s marketing plan. As a result, many marketing teams work on a two- to four-quarter time horizon. Meanwhile, your colleagues on the product management team should be operating on a much longer 12- to 18-month cycle. On the other end of the spectrum, the sales department is likely hyper-focused on this quarter and the numbers they must hit in the span of the next several weeks.
Most challenges to execution emerge when different functional units are out of sync with each others’ timelines, incentives, and goals. In the corporate equivalent of nirvana, the marketing team would deliver exactly the type of collateral and competitive information that the sales team wants right when it needs it most. Not coincidentally, this would also be right around the time when the product team is releasing its latest major product update and getting customers excited about features that are sought after in the market. Companies that execute well can exist in this state of nirvana for some time. Companies that don't often suffer in one or more functional areas because they are organizationally off-kilter.
It can be very challenging to get these moving parts to line up. But if you suspect a disbalance is happening at your company, there are a few things you can do. One is to explicitly task someone — ideally, someone neutral who is external to the organization — who can come in and evaluate your overall strategy across business teams and look for opportunities to better align them in the short to medium term.
Second, organizations can try to reduce friction in communications between team leads or senior executives in each function so they can better synchronize. For example, it’s likely not the right cadence if the head of sales, head of marketing, and head of product only meet once a quarter. At a minimum, a monthly sync is recommended to augment any 1:1 conversations, and if the company is facing a milestone – for example, it needs to kickstart growth, has a new product rolling out, or is changing its market-facing messaging – it should probably shift to a weekly standing meeting instead to ensure that everyone is in alignment.
A third option is to examine organizational design and structure — again, ideally with someone who is neutral and has expertise with the same company size, scale, stage, and industry you're working in. In a perfect world, this team could dispassionately assess the organization and provide insights along the lines of, “If you want to grow revenue by X percent next year, you need to begin doubling the size of your sales team now, since it takes two quarters to fully onboard new salespeople before they are fully productive.” This is a significant cross-functional challenge, so these types of exercises can be applied throughout the organization, but this is the kind of work that must be done to keep organizations internally marching to the same tune.
It's important to note that functional leaders of different capabilities can also present a mismatch. For example, perhaps a company has some rockstar leaders who are invariably weighed down by a few milquetoast organizational peers at their same level who are underperforming (requiring action to get them to improve or be replaced). This can be both a cause and a visible symptom of organizational misalignment.
What does an out-of-sync company look like from the outside? It’s not always easy to tell but you can pick up on a few dead giveaways. For example, a company with 45 sellers may appear to be focused on net new revenue as its major growth driver; however, in this particular case, the company’s goals are to grow existing revenue by 60% YoY, which falls on the shoulders of three people in customer service whose bonus structure is fixed and not tied to revenue or individual, non-team performance. While success isn’t impossible, it’s highly unlikely in this scenario.
The companies that historically do media sales but want to shift to a Software-as-a-Service (SaaS) model with predictable annual recurring revenue also readily come to mind as a good example of an out-of-sync organization. They usually try to do this by bolting on various SaaS selling techniques to an existing, very well-versed media sales team without adequately preparing everyone for the reality that these are two extremely different disciplines and ways of selling, with different buyers, deal structures, and success metrics. By the time they realize that it’s usually way too late.
One fairly recent real-life example is Turn, the ad tech pioneer that went from being a media IO-driven company and the DSP in the market with lofty valuations and IPO ambitions, to a SaaS company that was acquired for barely 2x what it raised only a few years earlier. Peloton recently faced a similar challenge. The home exercise equipment manufacturer went through a hypergrowth event during the pandemic, when locked-down consumers couldn’t go to gyms and purchased home exercise equipment and subscriptions online in droves. Hypergrowth is never easy in a normal business climate, but in a very unusual year — like in the beginning of a pandemic — it's exceedingly challenging, especially when the company has a clear identity crisis. Peloton was positioning itself as a tech company, but with its fitness bike, app, and content, it also resembled — and perhaps needed to behave more like — a media company. When it announced staffing cuts a few months ago, impacting roughly 20% of its workforce or some 2,800 people, that pegged its overall employee footprint at 14,000 — that’s the general neighborhood that is occupied by the likes of eBay, Intuit, and Workday — which is truly an astonishing number given Peloton’s product lineup, market, and revenue numbers. Peloton went from flywheel … to splat, right into a wall (but thankfully all signs point to a likely recovery).
These problems can be difficult to spot and diagnose from the inside of a company, but like underlying health conditions such as high blood pressure, they can exacerbate day-to-day activities, slow them down, and seemingly inexplicably make execution harder. Being aware of how these issues manifest and knowing how to address them once identified can mean the difference between a successful exit and an infamous fire sale, stagnating stock, and various takeover attempts.
One question
How do you ensure that you have the budget and organizational awareness to investigate possible out-of-sync cases? Can folks like executive coaches who work with more than one functional leader be the missing link here to quickly diagnose and alleviate any egregious lack of sync in the course of their own day-to-day remits?
Dig deeper
Thanks for reading,
Ana, Maja, and the Sparrow team
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