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The Functional Consolidation Model
"If you create a division, your division is as successful as you are a priority. So now you have to advocate for your division... that creates what we call politics." — Brian Chesky
What It Is
A restructuring approach that removes General Managers and divisions , organizing the company strictly by function (Design, Engineering, Marketing, etc.). It centralizes decision-making and ensures experts lead experts.
When To Use
- Post-product-market fit companies sensing slowdown in velocity
- Organizations experiencing increased bureaucracy
- When user experience is fracturing across products
- Companies with 100+ employees facing political infighting
Core Principles
1. Eliminate Business Units/Divisions
Move from GM-led verticals (e.g., "Hosts", "China", "Experiences") to central functions.
2. Experts Leading Experts
No generic managers. The head of Design must be a world-class designer; the head of Engineering must be a top engineer.
3. Centralized Prioritization
Resource allocation happens at the top executive level, preventing teams from hoarding resources or building redundant stacks.
4. Influence over Authority
PMs manage by influence, not control. They do not "own" the engineers or designers but orchestrate the outcome.
How To Apply
STEP 1: Audit Current Structure
└── Map all divisions, BUs, and reporting lines
└── Identify redundant roles and overlapping responsibilities
STEP 2: Define Core Functions
└── Engineering, Design, Product, Marketing, Operations, etc.
└── Assign world-class functional leaders
STEP 3: Migrate Teams
└── Move people from divisional silos to functional groups
└── Establish cross-functional project teams for initiatives
STEP 4: Centralize Resource Allocation
└── Create single prioritization process at exec level
└── Eliminate "mini-CEO" budget authority in divisions
Common Mistakes
❌ Keeping "people managers" who cannot evaluate the technical or creative quality of the work
❌ Creating hybrid structures that preserve divisional power while adding functional layers
❌ Rushing the transition without proper change management
Real-World Example
During the pandemic, Chesky moved Airbnb from 10 divisions back to a functional startup structure , reducing headcount while increasing shipping velocity and profitability. The result: "We wanted a company where a thousand people could work, but it'll look like 10 people did it."
Related Frameworks
- Single-Threaded Leadership (Amazon)
- Spotify Model (contrast/alternative)
- Functional vs. Divisional Org Design
Source: Brian Chesky, Lenny's Podcast
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