There isn’t one right way to build an organization but there’s definitely a wrong way — without intention. No matter what stage of company-building you’re in, connecting the different business functions, the people driving them, and how they communicate is an intentional decision a founder must make and continually revise.
Alyssa Henry, the former CEO of Square, thinks about organizational structure like a distributed system. “Just like you learn in computer science, you always need to be thinking about the distance between the nodes in your network and how communication scales across those nodes,” says Henry.
Henry has spent her career developing and growing durable software products. Before her nine-year run at Square, she helped build AWS from the ground up — joining as the first GM less than a year after launch, and eventually leading all of storage services. Before that, she spent 12 years at Microsoft across roles in engineering, product management, and program management. She serves on the board of Intel and Confluent, and has learned directly from Jeff Bezos and Bill Gates.
In this exclusive interview, Henry walks us through how she thinks about building organizations, informed by her first-hand experience inside some of the tech industry’s blue-chip companies. While these companies have different priorities and business models, she identifies two key sides of org design that leaders everywhere must consider: the environmental condition and the human condition.
She starts by providing tactics for identifying and prioritizing the business context for how you’ll shape and build your org. She then gives us perspective on the human condition — creating and operationalizing a culture around a shared set of values. And finally, she assesses some of the squishier parts of org design, specifically scaling taste.
Her guide, which is rooted in systems-thinking, is valuable for founders and execs at any size and scale.
The environmental condition: How your business and customers shape org design
Part of organizational design is a mirror-gazing exercise for your company. The other part is external context — ultimately, the best org structure is the one that supports the needs of your business. Henry shares three areas to consider when thinking about how to build an org.
Know if you’re a follower or a pioneer
Henry believes that most companies fall into one of two buckets: they’re either pioneers or fast followers (and rarely are they able to do both well). Founders and executives should understand where their company stands — which is a combination of many things like their market, the people they bring on, the technology they’re building and more.
“Microsoft is an incredible fast follower, very good at seeing something happening out in the landscape and doing it better, cheaper, and faster,” she says. “Competition has to seep from a fast follower because it’s all you’re defined by. And frankly, in the absence of competition, the company struggles.” Amazon was a pioneer. “Amazon struggled at being a fast follower because its operating mechanisms weren’t built to follow. They were built to pioneer something.”
While both companies obviously have pioneering and following traits, Henry found the distinction really mattered when it came to product-building. When you’re a pioneer, there’s less of a difference between a minimal viable product and a minimal remarkable product (because there aren’t other viable products in the marketplace). “If you’re new, and if it’s viable at all, the reason it’s viable is because it’s remarkable,” she says. “But if you’re a follower going into an existing space, you can’t say ‘Oh, we launched this and it does all the minimal things somebody needs.’ The marketplace is going to say ‘So what? If it’s not 10x better, I don’t care.’”
Early at Square, the card reader was viable and remarkable — partially because it was new and there was nothing else like it in the market. The company’s culture had been built on this concept of pioneering, but that made expansion a struggle.
Moving into other spaces where it was very crowded, the bar for minimum is very high. There’s so much competition that, to stand out, you have to do pretty different things. Culturally that’s very different.
Henry says that part of the reason Square’s initial products got such amazing traction is because they existed in this whitespace. But its payroll product didn’t take off — there wasn’t anything that made it look different than other products in the space. “Teams have to rethink: How do you build a product roadmap? How are you going to differentiate? Or, are you going to play the fast follower playbook?” she says.
Consider which constituents you’ll prioritize and identify ROI
Henry says every company has four constituents: customers, employees, shareholders, and the communities in which they operate. “How you stack rank them really changes how the company ultimately operates and what the culture is like,” she says. “But it’s not just the stack rank, it’s also how much you do on each of these.”
When Henry was at Microsoft, it was more technology-first. Amazon was customer, customer, customer. Square was, in some ways, more employee- and community-first, so much so that the team would pick up garbage around the Tenderloin every Friday. “The culture then, at each of these three companies, was an implicit stack ranking of each constituent,” she says.
If you had $100 to spend, how much would you allocate to each constituent?
This framework forces executives to think about how they prioritize constituencies and moreover, how that business prioritization trickles down throughout the organization, whether that’s where they invest time and capital, or how they staff.
When Henry left Microsoft and joined Amazon, she saw large differences in the lack of quality assurance. “I was like, ‘Where are all the testers?’ We just built stuff, deployed and watched to see what happened — it felt insane. It was incredibly confusing to me that two super successful companies had such different models.” Using the “Five Whys” (a framework developed in the 1930s by the founder of Toyota Industries, Sakichi Toyada) she arrived at the root cause: it all related back to ROI.
Microsoft was shipping physical products, so a failure or bug was incredibly difficult and costly to roll back. It made sense for the company to spend more up-front to prevent this type of incident. At an internet-based company like Amazon, the risk-based ROI equation completely changes — that upfront cost isn’t worth it.
“You really have to think about things like: How much risk are you willing to take? What's the margin of safety? If it goes wrong, how much is it going to cost to prevent it from going wrong?” she says. “Once you’ve gathered that context, it’s your job to manage that equation through people, products, compliance and everything else.”
Understand the role of your customers
A key component in org design is intimately knowing your customers — and in Henry’s assessment, where clusters of customers exist and where the product was fundamentally serving different customer needs. “Having one design team or one product team trying to serve very disparate customers is problematic because there isn’t really common ground,” says Henry. “You’re trying to do very different things.”
Square started in the payments space, which in general is very horizontal — the functionality and software required to take payments across a number of industries and customers was quite similar (and required less software, Henry argues). But for a POS, that wasn’t going to work. “Once you start moving up the software to operate a business and start to look at workflows, it’s entirely different,” she says. “And as you expand and work with larger customers, if you want to replace some of their existing systems, you think about moving into adjacencies for different customers with different needs.”
Henry felt like Square was building product pieces but it wasn’t connected — so they needed to not just assess the product from a feature lens, but also from a customer lens. “Our product team was going ‘We’re hearing from our customers, from our sales team, that for all these major verticals, we’ve got an incomplete,’” she says.
At Square, we didn’t have product bingo. We've got certain squares but none of them line up straight.
This changed how she organized the teams: there was a horizontal payments team, but then verticalized teams focused on different customer segments like retailers, health and beauty. Each of the customers in these verticalized industries had their own needs Henry made sure product teams addressed. “If my head of product is trying to think about how to beat all the legacy players plus the incumbents across all these verticals, I don’t know how you wake up every day and figure out how to do that,” she says. “So instead, we moved to a general manager with the equivalent remit of leading a startup that’s doing the same thing in each vertical.”
Henry believes that every organization is matrixed in one way or another. “If you have a functional org and multiple products, you’re organized by function and matrixing the products across the functions,” she says. “Or you flip it and organize by product, you’re matrixing the functions across the product, where the functions are not rolling up into a functional head.”
There’s, obviously, no right or wrong way to do this. But Henry believes the more products you have in your portfolio, the more you have to move to a model where you’re organized by product at the highest level, not by function — instead, pushing the functional organization one rung down. Though in Square’s case, the platform team remained horizontal to maintain the value prop of the suite of products.
The human condition: How to operationalize culture, values and goals
Henry makes the analogy that joining a new company can feel like traveling to a foreign country. “The food on the menu looks totally different,” she says.
But the more you see different companies, the more you understand what’s part of the human condition and what’s part of the outside environment. “You notice the differences, but slowly, you also start to notice all the similarities you’ve been part of before,” she says.
Regardless of context, Henry has found several elements of human beings that remain true no matter what organization she’s been part of. These beliefs shape the people side of org design.
Create a set of beliefs that lets people opt-in to your culture
Not every culture is right for every person. And that’s okay.
Once you understand that, you can orient around what you want the collective beliefs for your culture to be, and find the people who might share them — this creates belonging. “How do you increase retention? How do you increase job satisfaction? It all comes down to belonging,” says Henry. “You’re less likely to end up with warring factions because warring factions often come from a non-shared belief system.”
The more you can organize to have a shared set of beliefs, the more you can really focus on your customers and your business and the outcomes you’re trying to drive.
Henry fosters belonging by cultivating fulfillment, starting from the premise that everyone is well-intentioned.
“I call it the Thomas the Tank Engine Theory of Humanity. Everyone wants to be a useful engine,” she says. “Knowing that helps you find ways for people to maximize their own utility, because that’s what is fulfilling.” This might sound like an individual pursuit, but it's part of how the entire organization operates. And execs play the role of amplifier. “How do you amplify an organization’s good intent? How do you amplify the utility of people that make up the organization and create a team of complements of folks and skill sets?” she says.
Plus this mentality can be helpful as you navigate the inevitable disagreements that surface during high-stress times.
Motivate by uniting an org around shared goals
Given Square’s breadth of products, Henry felt like it was almost as if she was running a collection of companies with shared infrastructure — a company in service of the beauty industry, another in service of restaurants. Multiple products, serving multiple customers, introduces complexity when aligning them all around shared goals.
“It’s hard to distill down to any one thing because you end up with the least common denominator, usually some financial goal that leaves some teams thinking ‘Hey I can’t move the needle on that,’” she says. Instead, Henry aligned on a set of themes or strategic priorities. And it was always a set of three, not just one, because of the company’s breadth. “Every team fit into one or two of the overall priorities and understood how their work laddered to that,” she says.
Omnichannel was one example. It was important for Square’s business and was a thematic priority that touched many teams. International was another. “When you have a clear set of overall priorities shared by every team, you set your org up to create a whole that’s much greater than the sum of the parts,” she says.
Roll everything up into company values
When company values are just a bunch of words on a page, that’s where they wither and die. Unless they’re operationalized, they don’t serve their intended purpose of helping scale judgement and decision-making.
To actually guide behavior, Henry rooted everything — big and small — in company values. Day-to-day, this might look like referencing values when you’re establishing product strategy. “You can say, ‘Based on our values, the tiebreaker goes this way,’” she says. “Let’s say you clearly define your company as customer-centric. That makes it much easier for a team to make a call when they’re deciding between an option that saves money and one that’s markedly better for the customer.”
When values are imbued into decision-making, employees are more likely to absorb them through osmosis because they’re interacting with these values daily. Key areas Henry found this to be true were hiring and performance. “You’re giving candidate feedback in the context of those values. You’re framing evaluations of people in the context of those values,” she says. “When you’re doing performance reviews, when you’re assessing promotions, all your people processes — they have to tie back to the values.”
Using communication systems to scale the squishy parts of your org
When there’s disconnect between different parts of the organization, Henry believes it comes down to a communication issue — so she intentionally designs and adapts mechanisms of communication. What should be written? What should be talked through? How do these systems change to give everyone the right amount of information at the right time to make informed decisions?
The trick to building a business that can scale is putting in the scaffolding. Strong communication and value systems make up the foundation that will allow you to scale without crumbling.
This is important because, when communication systems are part of the culture and have been clearly articulated, decision-making gets pushed down the organization — which enables scale. “You have a shared framework that, based on your values, helps everyone make decisions,” she says.
Operationalizing “taste”
As organizations grow, scaling their subjective parts becomes increasingly difficult. Taste is one of those things that might feel squishy but needs to remain consistent and part of how every team operates and makes decisions.
Henry had different experiences with this at both Amazon and Square. While each company had its own take on taste, the concept was clearly stated in their company values and operationalized in how teams made decisions.
“A focus on design and aesthetics was not AWS and frankly, it wasn’t Amazon. I figured out the ugly homepage converted way better than the prettier one. So they went back to the one that converted better,” says Henry. This makes sense because of Amazon’s focus on customers and shareholders as part of its four constituents. It was different at Square. “Before I joined, we figured out that the black card reader sold better than the white card reader. And we said, ‘We don’t care, we’re going to stick with the white one.’ That goes back to a cultural element. We value design and aesthetics, maybe more than what the exact data is telling us,” she says.
At Square, this concept of taste was part of the company’s operating principles so that it could scale. The broad product suite made this difficult — you can’t reasonably do a design review for 40 different products. So the company had to be extremely clear on first defining the culture, then thinking through the things that mattered to them, and finally, continually pointing back to those things. This helps train an organization on the company’s shared aesthetic eye or what tradeoffs to make between things like elegance and functionality.
An example was the next generation of its card reader. “One camp said we shouldn’t include the ability to swipe because we should be paring the product down as the most simple. But another camp was saying the US isn’t a tap market yet, so while it looks beautiful, everyone is going to need two of these readers,” she says.
Before you get to the point of having to make a tradeoff, ideally you’ve already made a meta tradeoff based on your values.
From the top down, Henry sought to drive a set of taste-specific values spanning all parts of the org. But she found that different teams would operationalize these differently — hardware, software, sales, HR. “If you’ve got five sets of values, you have no values,” she says. “You have to drive it from the top down at the point where all the different parts of the organization meet.”
Some of that was actually a benefit, especially for Square and CashApp: two very different products, serving very different people, with very different aesthetics, and ultimately, different takes on taste. But it comes to an impasse at some point: “How do you marry hip and edgy with elegant, tasteful, and trustworthy?” she asks.
So Henry found that, outside of trying to operationalize the value of taste through decision-making, the connective tissue of the organization played a large role. “It comes back to how you organize and how you then build some of these supporting functions like HR, where you need to cascade values,” she says.
Intentionally building your org is a lasting bet on your company
Your organization is a living, breathing thing that is constantly changing and requires close attention to work efficiently. It can feel extremely overwhelming to build, scale, and maintain it — but like any other project, knowing how to prioritize for impact is a good place to start.
To figure that out, Henry built a complete picture of the org by surveying the landscape and blending the quantitative and the qualitative. “I spent weekends rummaging around the data warehouse to get that quant view,” she says. “I saw how many customers we had, which customers were using which products and where most of the revenue was coming from. Then I did a total 360, which was going out and talking to everybody — on our team and from our customer base.”
Then, it’s all about evolution. The best companies have the ability at various points along the way to figure out what has served them well and the ways in which they need to update their thinking. “Amazon did this really well, explicitly asking what our ‘sacred cows’ were, and questioning them and revisiting them,” says Henry. “Because there was a ‘why’ initially but context changes and the ‘why’ changes — and some of those things need to get tossed out as you grow.”