In this episode we discuss: How do you scale from 100 employees to IPO? We are joined by Mark Logan, ex-COO of Skyscanner and currently Chief Entrepreneurial Advisor to the Scottish Government

We chat about the following with Mark: 

• What are the foundations of scale? 
• How do you prevent command and control from creeping in? 
• What goes wrong with organisational alignment over time? 
• Why doesn’t OKR cascading work? 
• What are the three golden processes of an organisation?
• Why do things break when you scale? What do you need to look out for? 
• What are the three golden processes of an organisation?
• How do you get the innovation process to work? 
• When does it make sense to go cross-functional across the organisation? 
• What is expected from a C-level role?

Biography: 

I have over 25 years' experience in highly successful startups and 1st-tier internet tech companies. I have been instrumental in the success of multiple award-winning start-ups, including Skyscanner, one of Europe's most successful tech companies, where I joined in 2012 to take on the general management of the business, culminating in a £1.5billion acquisition in 2016. 

My experience spans consumer internet economy startups, executive management, organisational development, change management, strategy development, contract negotiation and delivery, software development, growth science, sales and marketing , HR, large scale programme delivery and operations management, including lean agile techniques. 

Currently mainly focused on helping to nurture the start-up community in Scotland and the UK as an investor, non-executive director and advisor.

Summary: 

• Scaling a business from 100 employees to IPO with ex-Skyscanner CEO Mark Logan. 0:06
• Bethany: Investing in individual competence is essential for setting up employees for success within their roles.
• Brandon M: Mark Logan prioritized this by focusing on developing the skills of each employee at Skyscanner.
• Bethany highlights the importance of career development and line management effectiveness in retaining staff, rather than allocating budget to wellness programmes.
• Bethany suggests that companies need to carve out time and give permission for employees to think and learn at work, and celebrate their efforts to create a learning environment.
• Brandon M. shared his experience with OKRs, highlighting the importance of practical application and alignment with business strategy.
• Bethany agreed, emphasizing the need to balance structure with flexibility and contextual understanding, citing Nike as an example of a company that executes OKRs effectively.
• Resource allocation and technology adoption in business. 8:17
• Bethany highlights the challenge of resource allocation in product development, particularly when it comes to balancing the need for new technologies with the reality of limited resources.
• Bethany emphasizes the importance of having a clear understanding of how new technology will improve processes and outcomes before investing in it.
• Scaling organizations and maintaining agency. 11:03
• Bethany: Friend's security company has accidentally implemented decentralized decision-making, leading to no bottlenecks as they scale.
• Mark Logan: Foundation of scale is agency, as company grows, founders' urgency decreases, and staff takes over.
• Mark Logan: As company scales, agency of frontline staff drops rapidly, leading to productivity crisis.
• Bethany: How to keep agency alive as company grows? Contrast agency with autonomy, and define agency as consisting of basic competence and other factors.
• Restoring agency in organizations. 16:03
• Mark Logan emphasizes the importance of competency and ownership in a growing company, citing examples of incompetent leaders and lack of clear ownership boundaries.
• He uses the analogy of a book club to illustrate how founders should not assume that everyone is on the same page and should actively push ownership to the frontline.
• Mark Logan: Alignment issues can lead to loss of agency, where employees feel disconnected from the company's strategy and lack access to necessary resources.
• Mark Logan: Best practices for maintaining agency include regular check-ins, clear communication, and providing employees with the necessary tools and resources to do their jobs effectively.
• The challenges of implementing OKRs in a rapidly scaling organization. 21:00
• Mark Logan describes the evolution of his company's goal-setting process, from initial alignment to cascading objectives across teams, to eventually hiring a project manager for alignment.
• The company realized that the goal-setting process had become cumbersome and was hindering progress, leading to the creation of a new role to manage alignment.
• Mark Logan and Bethany discuss the challenges of scaling OKRs (Objectives and Key Results) in businesses, particularly in terms of losing alignment and control as companies grow.
• They believe that the solution lies in enabling and influencing employees, rather than controlling them, and that this approach should be reflected in the contract between managers and employees.
• Organizational structure and innovation. 26:20
• Mark Logan argues that neglecting certain aspects of agency can lead to poor management and creation of barriers within an organization.
• He suggests that over-reliance on functional hierarchies can hinder the implementation of key business processes such as customer acquisition and maintenance.
• Mark Logan: Functional hierarchy can hinder innovation, as it creates walls and silos that slow down scaling.
• Brandon M: Innovation needs wiggle room and clashing of different skill sets, which can be encouraged through informal relationships.
• T-shaped skills, hybrid working, and team collaboration. 31:12
• Mark Logan emphasizes the importance of T-shaped skills in a fast-growing startup, where individuals should have a deep specialism and adjacent knowledge to innovate holistically.
• Bethany and Brandon discuss how to enable individuals to gather and make an innovation difference, with Bethany highlighting the need for informal collaboration and Brandon focusing on the importance of encouraging T-shaped skills.
• Brandon M suggests creating hybrid teams with diverse skills to foster innovation and collaboration.
• Mark Logan advocates for embracing the squads and tribes model in organizations to promote ownership and productivity.
• Implementing cross-functional teams and tribes in a business. 36:37
• Mark Logan emphasizes the importance of cross-functional collaboration in product development, citing Skyscanner's success with squads and tribes.
• Mark Logan explains how Skyscanner's product engineering efforts evolved to better serve diverse international markets by creating growth tribes with local engineers, commercial people, and marketing teams.
• This approach led to improved performance in markets like South Korea, with a 300% increase in performance, as the team was able to adapt the product to the local business case and handle code bases more effectively.
• Transforming organizations for success. 40:59
• Mark Logan emphasizes the importance of taking a thoughtful and structured approach to organizational change, rather than simply implementing new processes or structures without proper enablement and support.
• Bethany agrees, highlighting the need for CEOs to be transformational and think about how to make things dramatically better, rather than just focusing on incremental improvement.
• Mark Logan emphasizes the importance of optimizing for agency in organizational change.

Brandon M 0:06

Hello everyone and welcome to another episode of the operations room a podcast for CEOs I am Brandon Mensa, joined by my amazing co host Bethany airs, how are things going?

Bethany 0:17

They are going really well random because this weekend I booked our summer holiday.

Brandon M 0:23

So in the depths of February, not that it's particularly cold here, but you have booked the sunshine and sunlight of a summer vacation. But even

Bethany 0:31

more than that is we are splitting our time between the French Alps and Alicante again. So I booked flights for three of us, London, to Geneva, Geneva to Alicante, and then all four of us Alicante back to London, and spent in total 367 pounds. Wow. Yeah, and includes like actual checked in luggage. So ba miles and the flight between Geneva and Alicante is on Easyjet and EasyJet has a sale right now. And so it was like 200, and something for the three of us. We're going to the same plant that we stayed in in Alicante last time. So no, everything has sorted out the hyrecar already. So all I have to do now is decide where we stay in the French Alps. And we're done.

Brandon M 1:26

Well, congratulations. I went back to Canada last week for two nights, if you can imagine. So it felt like a whirlwind trip a little bit. In actually equally my got a round trip to get to Toronto for 420 pounds, no check baggage, because I didn't need checked baggage for the two nights. But that's a fabulous price.

Bethany 1:46

I can't imagine that for two nights. That's a huge flight.

Brandon M 1:49

I know it's eight hours. So I lucked out just in terms of the seating scenario was rather punishing, I would say on the the the timezone differences. So we've got a phenomenal topic today, which is how do you scale from 100 employees to IPO. And we've got the man that's done it. It's Mark Logan, he is the ex CEO of Skyscanner. He, in fact came in at roughly 100 employees and took them all the way through IPO. And I'm sure that's why he's now received his OB fr s e designations, part of the Queen's counsel, whatever those things are, and we will talk to him in a little while. But before we get to that, Bethany, just a bit of a back and forth between ourselves. So the first one that he talked about was investing in individual competence, and just making sure that every single employee in the business is set up for success within their roles. What's your view on number one here, which is investing in individual competence?

Bethany 2:43

It's essential for two reasons. One is people need to be able to do their jobs well, and everything is changing so quickly nowadays that you can't just rely on hiring somebody that has a degree in it, because chances are their degree is already obsolete. And so you actually have to help people stay up with the skills that they need. This year is a perfect example. How are you going to learn about Gen AI, and you need those skills in your business. And then the second one is just around retention and motivated employees. Everybody wants to develop and learn. Or nearly every one eye, you have to want to generalise to 100% want to develop and learn and feel like they're relevant. And therefore investing in their ability to learn is paramount to retaining staff and having a happy employee base. I

Brandon M 3:38

was reading some article the other day around wellness programmes. And it occurred to me that this is a bit of a controversial view here. But if we're going to allocate budget for things, I would prefer to allocate money into line management effectiveness and career development as opposed to wellness programmes, because at the end of the day, you need to build the basics and get the basics in place before you start optimising and optimising is things like wellness, in my view, I

Bethany 4:02

don't really understand what a wellness budget is. So I think it would depend on what's in that budget. I think the reason why companies don't get career development, right, is because they think it's outside training or training programmes. And that's only a small piece of the puzzle. And sometimes like the where we are right now, there aren't outside training programmes that are actually good or structured or created yet because it's also new. And some of it is actually either giving people the time at work to develop themselves, or like the permission because people feel like and I certainly used to do this have like, I can only read on my time. I can only watch videos on my time I can only think on my time business time has to do and then by the time it's thinking time I was exhausted. So actually giving myself permission to think in work time. And therefore giving the people who report to me and cascading down the permission to think at work it because actually you're doing isn't valuable you're thinking and learning is. So part of it is carving out the time and the permission. But the other part is recognising and encouraging people who do make the effort to learn and celebrating that learning. I think people feel it's like the responsibility to create a workshop and everybody attends that workshop, or we hire and a trainer and everybody attends that training. But then people's forget about it. It's not part of the business. And everybody does. So how do you create a learning environment, and that's where the career progression comes in. And then you can still spend on wellness, whatever wellness programmes are.

Brandon M 5:49

So I completely agree with that. Because even very simple things where behaviorally you're wanting to do and try different behaviours within the organisation to flex yourself to start grow yourself in certain direction. So purely as an example, I was challenged with giving more recognition to individuals into teams on a weekly basis. And I was being held to account to that in terms of like, Brandon, have you done it? Right? So if you think back on the past week, how many times did you give proper recognition or reward, either to an individual or to a team? And the answer sometimes was zero. Like, yes, I am clearly not doing it. So that behavioural push, I consider this to be hands on practical in the business things that matter, week to week, that, from a career standpoint are tremendously important to my craft, and things that I you know, that I was learning how to do in this case. Second point. So he talked a lot about alignment, and this kind of situation where you need to have some level of structure and process to create alignment, but you don't want to overdo it.

Bethany 6:50

That's 100%, where the art versus the science comes in. It's like the letter of the law versus the spirit of the law. And I feel like oftentimes, with OKRs, everybody gets really into the letter of the law. And it becomes like a Bible and rules and challenges and failures, even if you've succeeded because you haven't done it in exactly the way that you were supposed to have done it. And really, what we need to be focusing on is like, the spirit of why we're doing things, what are actually the most important things, what is the context behind that, and then just constantly reminding and keeping that drumbeat of remembering that these are the three most important things for the business this year, everything needs to fall within those three, but you don't need to, like, tight handedly grasp onto it all. We worked with Nike, and Nike does this really well. They'd have like three OKRs, they were major strategic initiatives, every single person at Nike could tell you what the three were, and how their bit of what they were doing fit into one of those three, but not in like my three KPIs link perfectly to somebody else has three KPIs at the top, but more trusting that everybody understood the context were good at their jobs, and understood the strategy and therefore could advance the strategy wherever they were in the business. And that's what Marc's talking about.

Mark Logan 8:16

Yeah, I

Brandon M 8:17

love that. Point number three that Mark spoke about was access to resources, making sure primarily the the right folks in play to be able to accomplish whatever you're trying to accomplish. What's your view on number three.

Bethany 8:29

So this is where product teams and agile get it right? They sell forming multidisciplinary teams that can get everything done that needs doing. I think that works well. If you know what needs doing What's hard is when something pops up, and you need to like sell form a new team, which means you need to be able to somehow unform a previous team. And so like the theory of it sounds great. The reality of what happens when you need to change and get people moving and restructured quickly is difficult. The other thing that he wasn't talking about, but I do find as a challenge, particularly I found this as a CRO is people thinking they need resource when they don't. So when the resource is another person or a skill, the way that Mark is talking, I totally get it. When somebody feels like they need a new piece of technology, otherwise they can't do their job. I am much more cynical. And sometimes it's true. But we need to figure it out and know how we're going to use that technology. And other times it has just not been thought through at all. And it's just like a panacea. And so again, it's comes into the expertise of leadership to understand and filter through and question and figure out what are actual constraints and what are imaginary constraints. Just

Brandon M 9:54

out of curiosity, what's the criteria by which you would accept Have a technology request. I was thinking about this the other day based on one of our previous podcasts. And you said something interesting to me, which kind of stuck in my head. And it's really this idea that that person that's requested that piece of technology, they already need to have very clear process in place that they've refined over time where they have absolute clarity as to how it actually works right now. And when they go into that new tooling, they know exactly how it's going to be different and better. You should

use technology, when you understand how it's going to make your life better, how it's going to make it faster, or how you can't do something because you don't have it. But it needs to be really defined and clear. And I don't think it needs to be a perfect business case. So it's like, I'm going to spend 10,000 pounds, and therefore I'm going to have 10,000 pounds worth of like freed up space or generate 10,000 pounds more leads, because very rarely does it fit in so perfectly, particularly in startups and scale ups where we're not dealing with magnitudes, where like 10 minutes saved on everybody turns into millions. We're not in that like world yet. Point

number four last one that Mark brought up was ownership, or who wants the decision and having boundaries as well. What's your take on this one,

I was talking to a friend recently, who is not in a tech scale up, he is in a security, real business with people not just technology, and has not come from a business background, he is the CEO. And the structure of the company is fascinating. And he's basically done what Mark is advocating, accidentally. And so they have these pods with a manager leader, set of analysts who can work independently who make all of the decisions around the projects that they're delivering. But he feels like his job as CEO. And the two things he should spend all of his time in is winning new business, and making sure that everybody remembers why they're doing, why the business exists. And that was just such a freeing concept. He's like, I really thought it was gonna be a command and control leader, I thought I was gonna want to know everything, but like, I just can't, I don't want to and it bores me. And so he's like, because of the way he's interested, he's pushed all of that decision making power very low in the organisation. And what that meant is they don't have any bottlenecks as they scale.

With that, let's go on a quick break. And when we come back, we have our conversation with Mr. Mark Logan. What are the foundations of scale? And you can imagine that, you know, for both you and I being in series A companies in series B companies, we think a tremendous amount about this question of how you scale organisations effectively. So when you think about this broad based question of what are the foundations of scale? What's your take on my

firm view is the foundation for scale is is agency. And what I mean by that is, as a company grows, in the early days, the company's staff has very high urgency, you know, the founders, and they joined shortly after, they know what they're trying to build, they know how the customer feels, they know what the on the lot the responsible for, and the kids just get on with it. And many founders look bite and Westfalia, lusail years and lamento. It's just not the same anymore. The trick is, as the company scales, that that same sense of the agency to do things, it needs to move to the front line of the organisation, as the front line moves away from the founders, you know, the frontline being where the actual work is done. where customers are made, bugs are fixed products are released, markets are marketed to. So the key concept for me is always what's the level of agency of the frontline staff of the business. And what you find is that in almost every startup, all things being equal, as the company grows, as headcount gets increased, the level of agency that individuals have left us on devices drops, and actually drops quite rapidly until it provokes productivity crisis. So I think if we focus our organisational design efforts, as you know, operations people are CEOs and founders, etc. On the notion of, if you could measure it, what's your agency index? And the one would say it's 100. And then why isn't it still 100 On the day 365, or afterwards? That's a Northstar that I tried to steer the ship nine. It's definitely

the Nirvana of businesses that I've always wanted to work in, regardless of seniority or level, you know, because obviously, if you're at the front line, and you have loads of agency, that's a great place to work. As we get bigger, it never seems to stay. And we try lots of different things and lots of giving context and policies that are around guidelines and principles rather than rules and contracts. And yet with rapid growth and feel like command and control sneaks in no matter how much you don't want it to, how do you manage to actually keep that agency going? Let's

first of all, try to define agency that they should because it's in my definition, the answer and seeds of the answer to that question that exists. And it's probably useful to contrast agency with autonomy, they're not the same thing. You can be autonomous and incompetent for example. And it's that fear of autonomous incompetency, that often makes executives and founders reluctant to really explore this concept. So I think of agency as consisting of a number of things. The first is that you've got to have the basic competence to do the job that's in front of you know, that seems like an obvious statement. But think about the fact that as an organisation grows, the competency of everybody drops in all things being equal. So for example, and then you can at managing two people. But suddenly, I've got 10 People actually incompetent with that, and the organisation hasn't invested in that competence. So competency goes off over time, unless it's very actively invested. And so one reason the agency Falls is because companies don't invest sufficiently actively in competency assume it's a sort of given, I should say, as an aside, the person or people that most effects are founders, and your founders tend to give themselves a free pass. Because you know, I'm a product visionary, it leaves small things like management technique to others, because I'm a visionary. For most staff and a business, the company will grow without you, if you don't grow with it. In a case of CEOs, that's not the case, the company will become shackled to your level of incompetence, if the company is growing, and you're not growing with it. So there are no free passes for founders law, often, founders would like think there was, you're not special, so don't think you are. The next thing is ownership. Now, if we started, three of us started the company, we would all within clear what we own. And you know, like one of us would be the VP of engineering, one, marketing, one, sales, whatever, so we know what we own. But if you join a company as employee 200, for example, you often find that even despite your job title, you don't actually have clear boundaries and what your own, how often have you seen a situation where you've been hired to be the customer success manager, but then you find out that Jeff, on floor two cents, he owns a bit of that as well. And rightfully so you've got to negotiate, you know, for including start doing things. So, if we don't push ownership out to the frontline and clearly delineated, that tends to cause noise. And I'm always staggered at, you know, what we hold on to a senior people. Analogy I'd give you which I think works quite well is let's imagine that, in our private lives, the three of us decided to start a book club, for example, we'd come up with a theme with texts and books, we'd invite some friends with phone, one of our houses to run it. And what we wouldn't do is go to the prime minister, and ask if we have a book club, but in a startup or in a growing company, that that's effectively what people do, you know, I have seen the case where someone says she would start a book club and somebody else could ask the HR if that's okay. Or let's see what the founder thinks, you know, she's happy with these types of books. So what we need to do to get ownerships healing is consciously push things out to the front line, that ought to be on the front line, and obviously reserve certain matters, like deep strategy, etc, more centrally, but it's so easy to get that wrong. You're going to join Skyscanner, for example, my first management meeting, item number one was, should we buy Company X, which is a question that management should deal with? Item number two was should we give out three luggage tags that say Skyscanner on them? Which, you know, simply because founders had been used to making those decisions in the past, and had forgotten to do the hard work to give people the confidence to know that they own those decisions. It sounds absurd in retrospect, but it's super, super common issue. The third aspect of agency is alignment. And this is a subtle one this because we all understand what we mean when we say or the company doesn't have a sufficient strategic alignment. So Beth and Brandon, you set of strategies, the founders, but I don't really know what that strategy is or how it relates to my work. And you don't really know if I'm aligned, therefore, you can really trust me. So what we're going to do, so that's very common issue. And of course, the response to is a number of ceremonies in place to assure alignment. But in doing so, we essentially remove agency beyond a certain tipping point, because we sometimes put so much bureaucracy around the alignment, that we spend our time operating the bureaucracy rather than using it to enable what We're trying to do. So it's very easy to get alignment rolling in both directions. And I think the final way we take agency away from people, is we deny them access to the necessary resources to do the job that have to do. I don't mean from a kind of headcount, we need more people perspective, it's usually I need access to a designer, while the designers busy, you can put your thing in a tube until the Ready, three weeks go by, you still can't get access to designer. So you're essentially you've lost agency. So when designing an organisation that skills for agency, you have to think of those four areas, and you consciously take steps regularly as organisation grows to restore agency. And in those areas, I believe,

just on the alignment part of things, you said it could go wrong in both ways. Can you maybe just like dive into that a little bit in terms of things that you've seen that don't make sense, and maybe some best practices, but tricks of the trade of how to get that right? Yeah,

certainly. So I'll give you a concrete example from my own experience, again, at Skyscanner. So in early days, you know, of course, like every other startup, we suddenly realised that, hey, there's 100 people in this company now. And we haven't really gone to the effort to ensure that everybody's working on things that align to the strategy sufficiently. So we, we did those things, everybody does switches, write down goals for the company and talk about them. So that's the sensible thing to do. So let's imagine if you were all that as you know, what we've just done there as moved along the agency axis and increase the benefit from doing that the net benefit of that effort. And then we said, well, you know, that's working well. So really, all the major teams should have goals, which explicitly aligned to those objectives. So we put that in place, we move further on agency access, we got further net benefit, it didn't cost as much to do and it was very helpful to build confidence that people were working on the right things, so we can trust them with more agency. And then of course, we say, well, let's do that again. This time, let's make sure all the sub kingdoms of the major teams have goals as well. Now we've all done this Germany organ in this journey. And then we said, well, you know, it's from make sure that people's individual objectives align. And so we've done the whole cascade. And then we said, well, we will need to ensure that they're still line. So starting with the quarter, we'll get each of the team leaders to present to the senior management, what they're working on to show that alignment, we can adjust that catch things if it's not aligned. Of course, that required a slide pack, which people build that cost over time, your people need to say, no, I'd be great if we could also add in this graph and that chart, just so we can get a better view. common mistake is to burden the Organisation for the convenience of the executives not realising the consequences of that, then we did the same thing at the end of the quarter to make sure they had done the things that they said they would do. And then eventually, this became quite cumbersome. So we hired, essentially, this wasn't their job title, but a project manager for alignment. And of course, that person wants to create a full job. So they started innovating. Every night, team leaders would tape in their procedures completing their OKRs. And so to explain to people that need a real time update on progress felt great. And then one day, we realised that we were getting less done than before, you can probably guess why that was the goal for the team has become operating the bureaucracy, not completing the tasks that the bureaucracy is doing to support. So it's like a kind of, you know, those economic Laffer curves, as they call them. For a while you're getting more net benefit. But eventually the net cost outweighs the net benefit. That's a super common pathology. It's not the only one. But I think it illustrates the, the issue. So essentially, to wait till I'm too much alignment, take away agency, which takes me point of having people in the first place, you've got to get it in the middle. And that's trial and error. But you've got to know that so you're trying to do.

And I think as CEOs, there's a real like, just in personalities, it's very logical that a cascade should work. And it feels really good to have a spreadsheet. And it's really good to see what's going on. But my experience has been the same where you get much less going on somehow, you don't even end up with as much alignment, because you end up in these late compromises and people who just have pet projects that they want to do, and almost become lawyers to justify how that pet project is actually going to be part of this goal. And I think what it highlights is not taking the time to really explain not just like in the ceremonies or the quarterly meetings, these are OKRs. But to enable each level of management so that those managers know what actually is going on and what makes sense and buy into the strategy.

That's absolutely true. It's been related to the issue that inexperienced managers and senior managers believe that management is about control. It's not about control. It's about enablement, and it's about influence. And if you're trying to make it about control, then you end up smothering the energy of people by your control mechanisms, hierarchies unnecessary Functional hierarchy isn't necessary in businesses for certain reasons. But that reason shouldn't be to exert control through the layers. I think instead of people are really clear what the objectives are, and they're sufficiently competent to hold the responsibility for meeting those, that's the ideal, essentially. So you've heard the old cliche that if no plan survives contact with the enemy, modern military forces from, you know, the 1900s onwards, have absolutely embraced that idea. And they've ensured that their local commanders on the ground can improvise and innovate to meet the goals of the business, but we don't tend to embrace that in business to the same extent. And we encourage people who want to be creative, to almost behave dysfunctional in order to carry out their projects, we need a different approach. And it starts with my job is to enable an influence. And your job is then to fulfil the goals based on those powers. That's the contract we should have with our people.

I also feel as though the last 15 years, that's basically been the goal of me and many of the people that I've worked with, and yet, when you start to scale rapidly, it seems to break and I don't know why. So I'd like you to tell me why and how we can fix it.

I think partly, the reason is that we neglect one of those four corners of what agency is. So for example, when we scale very quickly, we're almost certainly not managing for competence. Except in retrospect, we're almost certainly doing a poor job on relentless communication, you know, the goals of the business and alignment, we're almost certainly got real fuzziness around who owns what and what they have authority to do. And we almost certainly create fiefdoms and competition between managers to bigger teams, and barriers between them. One other area to bring in, which I think is relevant here is how many networks do you have in your business? Now, we don't tend to think about the networks in our business. In those terms, we tend to think about, we've got an org chart. And that ought to be able to get the job done. And all charts appear scalable, you can always attach people to a node in an org chart. So let's see that just as a thought experiment here, that we had taken care to a sufficient extent of those areas of agency I was talking about earlier. So that's reasonably in shape. But let's see that we then over index on the importance of the functional hierarchy. So what are functional hierarchies do that giving people a place to land in organisation, give them a job title, appraise them, performance, review them, etc? They're not very good at implementing the what I would call the golden processes of the business. What are the golden processes? Well, for example, delivering your service and daily basis, whatever that service may be. Secondly, is acquiring customers to experience that service. You know, that's an end to end thing that that's two. And the third goal processes, the work that goes into improve the first two ploys and product and all that stuff. Now, functional hierarchies. If that's your only mechanism to execute, then the cut rate across those three processes, they actually build walls between them. Because each of these processes let's take for example, customer acquiring and maintaining those relationships. That's about acquisition. It's about activating the into a habit around your product. It's about maintaining that habit, monetizing me, encouraging me to refer other people, not summary, I've just covered a need salespeople, marketing people, data scientists, engineers, testers, product managers. And if you've divided those all conveniently up into different functions, you're essentially putting walls all the way along that process. So when we scale very rapidly, if we're using the functional hierarchy, as our sole networking business, the stealing creates evermore Lycos symmetry, it's like, well, Beth, you're in product management. I'm an engineering, Brandon's and sales. Let's see if we can schedule a meeting a few weeks from now, no, I can't do that Tuesday. Can you do it? I can do the wait and see. Eventually, we get the meeting, we bring our flags in a table and we discuss why we're having trouble acquiring customers. So I think it's important that a growing organisation answers the question of do you subordinate everything to the Gaussian processes. And that requires you to have a different additional structure that's at least appear of the functional hierarchy. Neither of those things by the way, a task orientated network, or a functional network needless market innovation beyond incremental innovation. The functional hierarchy for example, tends to say, we innovate at 330 and a Friday we have renovation meeting, and I don't think that so Leonardo da Vinci went about it, for example. So usually go to three networks in your business one renovation, which is relatively informal and spontaneous one for the execution of your key tasks, three key processes, and one which manages the hierarchy of people and gives them identity. But most businesses only focus on one. And that limitation has shown up very, very quickly as you scale quickly, the functional

we all get the cross functional or the task orientation or the golden process orientation. Some companies are good at this other companies are not we get that as operations professionals in terms of we play a significant role in making that happen. The innovation one that you talked about, I'm very interested in that. Can you kind of unpack that in terms of what should that look like? What are the trappings of that to unleash that?

So innovation needs two things, it needs wiggle room, or you could say time, and it also needs a clashing of different skill sets. Now there's two ways to clash, different skill sets. One is that you somehow find different ways to informally bring different functions together, the famous watercooler lunch hall, or modern day, equivalents of that, but you've got to really actively encourage those relationships. So that's one way to do it. The other way to do it is to meet your people quite, it's called T shaped. If you think about later T, think of the vertical part of that T as the depth of your specialism and think of the horizontal part on the top as your knowledge of adjacent skill areas, it's extraordinarily important to actively encourage or incentivize people even to build those adjacent skill sets. Because that lets them often solve problems and innovate holistically on things without recourse to anybody else, but also builds an appreciation of the importance of certain other skill sets, which encourages people to go find those other people give you a really simple Skyscanner example, again, I remember actively encouraging our marketing team, or our growth teams, we called it to learn how to code not to professional engineering standards, just enough to automate some things. I remember when we first started talking about that, that was met with a lot of apprehension, you know, since natural, and by the way, if you ask engineers to learn about digital marketing, you get at least as much apprehension. So it's the nature of these things. Remember, two young people from one of our country teams took a risk on learning Python. And having done so they were then able to automate the creation of about 100,000 landing pages for the market. And we needed a lot of SEO landing pages, because you know, you take Edinburgh to Shanghai, you've got to have a landing page for that. And there's a lot of combinations. And what's on those, of course, makes a big difference to how they rank. So whereas previously, marketing, people would have built those by hand, you can imagine the quantum that they could do that and, and engineers wouldn't have even bothered, because, well, that's marketing and rebuild product, the T shaped pneus of those two young employees, was extraordinarily valuable to the business. So I think that that T shaped pneus is important, you've got to build that into your incentivization and encouragement and organisation. And that informal collating of people is important. But also your if you run a machine at 100%, it performs badly, you know, just try driving along the motorway in first gear, for example, so long that lasts, it's important to give people a bit of space, to explore things, and we're not good at that. But innovation will come from that. We're

really not good at that. Particularly in a fast growing startup, for ourselves, or our teams,

the T shaped part of it, I get that encouraging individuals to pick up other types of skills or knowledge that seems useful. So got that part of it. The other part that I'm maybe more interested in is how do you as a COO, not just enable the individuals to pick up T shaped skills really allow those individuals to gather in some form to make an innovation difference, because obviously, as an individual, you can only do so much. And if you're willing to create true innovation within the organisation, you have to be working with others. And if you have your structures around the functional, the cross functional, and you're suggesting a third one, what are you really talking about that in terms of trying to collate those individuals together to do something useful?

Let's take the innovation question and think there's a related point on the task orientation. But if you take the innovation side of that, how do we help people do that? We've got to consider how hybrid working post COVID influences some of this, but one of the first things I did in Skyscanner when I joined was essentially randomise, the seating and the office. So we moved from having all the engineers here and all the marketing people hear and feel their salespeople on this floor to basically having groups of desks mixed in with other functions. So he'd have a desk of marketing people sitting next to a desk of engineers and so on, so forth. Also, when we started to grow to be more multi sites, we actively supported a budget for people moving and spending time on those other sites, you know, for different periods of time, you could be a month, it could be longer, only sort of basic things that promote human contact. Another thing we did that was very valuable for us extremely valuable. And this relates partly to the task question, as well. We very actively embrace the squads and tribes model in the organisation. And we crucially that's something that many organisations fail to do is which we went all in on it. But I see squads and tribes feel and your people aren't familiar with squads and tribes, you're listening, the squad model is essentially saying, let's create small multifunctional teams of no more than eight people, which essentially resemble startups in that sense of scale. And you're trying to create an environment and save those coins, which is similar to a start up, the ownership is clear. They have their own mission, KPIs roadmap, they have all the skills they need to complete that task. So it's almost like a microcosm of our agency discussion. And what we did when we put those scores together, as we sat all the different people from different functions in the same squad, which people are very resistant to have our studio people feel an allegiance and identity to their function. And that's the problem. So when they start to switch to feel an allegiance and identity, to the squads into the mission of the squad, then you start to get potentially dramatic productivity improvements. Now, you can implement squads and tribes lightly. You can, for example, implemented but have a code base, which is monolithic and doesn't require teams to release independently. So there's always a significant adoption impact if you're doing it properly. But when I see it fail most often, is because the hierarchy resists because the people who feel most disturbed by scores and tribes are middle to senior managers, who used to own not just management task, personal development, etc, but also the port normally on the how not the words, that makes people very nervous. So a lot of organisations will go halfway towards squads, and then nothing works halfway towards something that you will see licence not working. That's why we shouldn't do it. And they go back to functional dominance, was pointed to is to solve those apprehensions I talked about a second ago. But if you want squads and tribes to work, you have to go all in on it. And we did that. Brenda

and I both come from b2b backgrounds. So I'm thinking about like massive sales teams, massive marketing teams, rather than I'm assuming Skyscanner was more b2c with like some partnership teams.

It was a mixture. I mean, we had to like, notice that 100 million active monthly users, but also we had 1500s Doesn't b2b partnerships, you know, with active integration. So what's better both.

And so when you're talking about cross functional, are you talking about cross functional within the product team or cross functional across the entire business? Because what I've seen in b2b businesses is Pollock's work, sales, marketing, customer success SDRs, but they're all ultimately around customer acquisition and retaining customers. And then the squads working with product developers, testers, but not one that has a salesperson and a product person and a developer together. So how cross functional are you talking?

That's very important question. And it varies across the organisation, depending on the focus of a given squad. So for example, in our product engineering efforts, most of the time, that the consists of some engineers, product management, test person data scientists, for example, it would vary, but that sort of skill set, as you moved into growth tribes, as we call them, we basically would have a growth trade for each major international region, your EMEA, APAC, miracles, and so on, not dissimilar to many other organisations. And where we went with that, and it was a journey, but where we went was those tribes would have in them. And within those tribes, you'd have a squad for, say, Japan and a squad for South Korea and so on. Or for smaller markets, you know, a score that would have a few markets, and those squads would have a commercial person for that market. Some marketing people have different flavours, contents and SEO, etc. And we also eventually had some engineers in that tribe as well. And to give you an example of why that was effective if you're building a product, of course, the goal of product engineering is to build one product that can be adapted or configured for different markets. But what you tend to find as the main set of those product engineering teams, is to wish the world is the same everywhere. We're very good at believing what is convenient. So for many years in Skyscanner, with the people in the Japan market, South Korea saying, This doesn't fit our market, that's not what web pages you look like in South Korea. That isn't how prices are displayed in Chile, and so on. Let me ask you interesting button, the rest of the world is more or less the same. So Sorry, can't help you. We're just too far away from the reality, you know, that sort of visceral experience of a market. When we started to move to this model, we found that, for example, suddenly, our South Korean performance went up by 300%. Because we did engineers close to this, we were sitting with people who were having this problem, and could adapt the product to be relevant to the business case, the South Korean market, that created new problems about how to handle those code bases. But quite often, we have a discussion where Brandon, you might say to Bethany, we've got a big problem here. And if we did this, it would help in NMHC. Either that creates a new problem, Brandon, and then we'd immediately start the discussion, as opposed to saying is that new problem easier to solve than the original problem. So you got to follow the chain through and look at the benefit and the cost in each case. So we eventually did that dramatic results for us. So you have to be thoughtful about this. And you have to get there on stages. And you have to design it for your own organisation. But I would urge people to at least open their minds to considering it, we don't consider it because the functional hierarchy is dominant. And in the early days of such a change, everybody's angry at the CEO, because I don't want to sit over there with those guys, and blah, blah, blah, blah, you got a whole bunch of what seemed like quite childish reasons, actually, for why people don't want to do this. But if you can break through that and stick with it, you can really have dramatic results. I think what SEO is supposed to do is not look for incremental improvement, is to believe that you can make things dramatically better, and act with that mindset. And that tends to open up VISTAs you wouldn't otherwise consider.

I mean, it does seem like a lot of what you're talking about is areas that are probably pretty uncomfortable for CEOs. So it's not around this as the new structure. And this is a process that works. It's around taking your time to properly enable your teams and get out of the way. And that's always harder than here's a great OKRs structure to roll out.

Absolutely. I think you put that really well. I think if you are thinking about it, as you just described a bit, I'm here to put a reasonable logical structure and roll out new york er process, you're not a CEO, you're not achieved anything. Your senior Operations Manager, that's fine, that we all will have to move through stages. But CX level, you're supposed to be transformational. They think about a growing company, where I can Skyscanner, I used to feel that every six months I was in a different company, because we were growing so quickly. Even to just keep the agency high of the organisation to justify hiring those new employees we hire, we had to innovate like crazy. And from outside, it wouldn't have looked at different we just had more customers, you know, but we had to change how the organisation worked every year in a very significant way, in a transformative way, just to keep the agency high. So if you're not of that mindset, and you're ready to do that, then the organisation will leave you behind, and they'll hire somebody else who has that means to if they really are serious about success. We're

rapidly running out of time, we're coming up to the end of our discussion. We've covered a tremendous amount today. If our listeners we're only going to take one thing away from the vast knowledge in your head. What is that one thing?

I would say whenever you change an organisation, either at wholesale or incrementally ask yourself is the agency of the frontline people higher after that change the same or less and use that to guide the organisation? We don't tend to ask ourselves, what are we optimising for when we change an organisation? The way we do it other engineering endeavours we should sort always optimise for agency when you're managing an organisation change would be my takeaway. Awesome.

One more thing remind us of the four elements of agency because some of us might not have always remembered possibly from the start to the end.

The four elements are investing in individual competence. Being very clear on what people want, ensuring sufficient alignment, neither too much or too little. And ensuring access to the necessary resources to get the job done. Which does not mean I need more people. It means I need skill sets complete way to get the job that I want done. So that would be the foreign summary. Lovely.

So thank you Mark Logan for joining us on the operations room and I will take the agency to close this off here and if you like what you hear, please leave us a comment or subscribe and we will see you next week.