functional-consolidation-model skill

---
name: Functional Consolidation Model
description: Restructure organizations by eliminating divisions and GMs, organizing strictly by function to reduce politics and ensure experts lead experts. Use when sensing slowdown, bureaucracy, or fracturing user experience post-PMF.
---

# 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*