Organizational structures define how work, responsibilities, and decision-making are distributed. The four major types are functional, project, matrix, and product (divisional) structures. Each structure has strengths and weaknesses, especially in software-intensive environments requiring agility.
Dysfunctional implementations of Scrum often occur when it is layered on top of outdated matrix or functional structures without addressing organizational design flaws. Large-Scale Scrum (LeSS) offers an alternative by advocating a product-centric structure optimized for delivering customer value through systems thinking and simplification.
Organizational Structures and Their Challenges
Functional Structure
In a functional structure, employees are grouped into departments based on specialized skills (e.g., engineering, marketing, finance).
Characteristics: Hierarchical reporting, deep specialization, and siloed work.
Strengths: Focus on technical expertise and skill development.
Weaknesses:
Limited collaboration across functions (silos).
Delays caused by handoffs and lack of ownership.
Difficult to adapt to changing priorities.
Example: Developers write code but depend on a separate QA department for testing, leading to delays and misalignment.
Project Structure
The project structure organizes work into temporary teams assembled to deliver specific projects. Teams disband once the project concludes.
Characteristics: Time-bound goals, project managers leading delivery, and multi-tasking across projects.
Strengths: Clear focus on project objectives and flexibility for one-off initiatives.
Weaknesses:
Team disruptions as employees shift between projects.
Focus on short-term delivery over long-term sustainability.
Context-switching reduces productivity.
Example: A team is formed to build a new product version over six months. Once completed, team members are reassigned to unrelated projects.
Matrix Structure
Matrix structures combine functional and project-based elements. Employees report to both functional managers and project managers.
Characteristics: Dual reporting lines, resource sharing across projects, and high coordination overhead.
Strengths: Efficient use of specialized resources and balancing functional expertise with delivery focus.
Weaknesses:
Conflicting priorities between functional and project managers.
Increased overhead and delays from coordination.
Multi-tasking and fragmented focus undermine team productivity.
Example: A software engineer reports to a functional manager for career development while working on multiple projects under different project managers.
Product (Divisional) Structure
A product structure, also called a divisional structure, organizes teams around specific products or product lines. Each division operates as a semi-autonomous unit.
Characteristics: Cross-functional teams focused on end-to-end delivery for a product.
Strengths:
Teams own end-to-end features, reducing handoffs and dependencies.
Improved alignment with customer value and faster adaptability.
Teams are stable and long-lived, improving efficiency and learning.
Weaknesses:
Requires significant reorganization to dismantle silos.
Resistance from functional managers who lose control over specialized teams.
Example: A cross-functional team focuses on the “shopping cart” product in an e-commerce platform, continuously iterating and improving it.
Dysfunctional Scrum in Traditional Structures
When Scrum is implemented in functional, project, or matrix structures without addressing systemic design, it often leads to dysfunction:
Scrum Teams as Resource Pools: Teams remain specialists working on fragmented components instead of delivering end-to-end features.
High Coordination Costs: Dependencies across silos require layers of project management, reducing agility.
Lack of Ownership: Teams work on projects with shifting goals rather than focusing on product improvement.
Overarching Project Mentality: Scrum is misused as a delivery framework in long-running projects, reinforcing phase-based workflows.
Disempowered Teams: Functional managers or project managers continue to dictate priorities and decisions, undermining team autonomy.
Large-Scale Scrum (LeSS) as a Product-Centric Alternative
LeSS advocates for a product-centric organizational structure, addressing the limitations of functional, project, and matrix designs. Key aspects include:
Broad Product Definition
LeSS emphasizes defining the product broadly to include all teams working toward delivering customer value. Unlike fragmented project structures, LeSS ensures teams collaborate across the entire product, reducing silos and dependencies.
Cross-Functional Feature Teams
LeSS eliminates functional silos by forming long-lived, cross-functional feature teams. These teams are equipped with all skills necessary to deliver end-to-end features, reducing handoffs and ensuring ownership.
Flattened Hierarchy
LeSS removes matrix reporting lines, eliminating the dual authority of functional and project managers. Managers transition into roles focused on coaching and mentoring teams, not controlling their work.
Focus on Continuous Product Development
Unlike project structures, LeSS emphasizes continuous product development over short-term projects. Teams iterate incrementally, delivering potentially shippable product increments each Sprint.
Simplification Through Systems Thinking
LeSS simplifies organizational design by optimizing for value flow rather than resource efficiency. This reduces queues, delays, and coordination overhead, improving adaptability and delivery speed.
Simplifying Org Structures with LeSS
Traditional organizational structures — functional, project, and matrix — were designed for efficiency, predictability, and control. However, in modern software-intensive environments, these models create silos, dependencies, and coordination overhead, preventing organizations from delivering value quickly and adaptively. This complexity is further exacerbated when frameworks like Scrum are overlaid onto outdated structures without addressing systemic design issues.
Large-Scale Scrum (LeSS) offers a compelling alternative by advocating for product-centric simplicity.
By leveraging “More with LeSS” principles and focusing on simplifying organizational structures, LeSS enables organizations to optimize for delivering customer value. The seven principles for simplification include:
Transitioning from specialist roles to cross-functional teams that collaborate effectively and own end-to-end outcomes.
Shifting from resource-thinking to people-thinking, recognizing team members’ full potential and creativity.
Organizing teams around customer value rather than technical components to enhance alignment and adaptability.
Replacing isolated efforts with continuous cross-team cooperation for shared learning and unified goals.
Reducing reliance on coordination mechanisms by fostering integration through collaboration.
Moving from project-based thinking to long-term product focus, ensuring sustainable value delivery.
Consolidating efforts into broad product definitions to streamline processes and maximize impact.
By embracing these principles, LeSS promotes a simpler, flatter, and more adaptive organizational design. This shift eliminates functional silos, minimizes dependencies, and empowers long-lived, cross-functional teams to deliver customer value sustainably and reliably.
Ultimately, transitioning from complex matrixed systems to a simplified product-centric structure requires systemic change and a commitment to learning.
Organizations that adopt LeSS principles gain the ability to respond quickly to change, focus on outcomes, and unlock innovation by reducing complexity and fostering alignment.
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