They look like this:

What you see is specialization. While the one man band performs all the functions, in an orchestra people perform different functions. And each person performs fewer functions.

But it's unlikely your company produces music so let's dispense with the analogy. In reality, every company needs to do 3 things to survive:

• MAKE something people want to buy
• Find those people and SELL to them
• SUPPORT the making and the selling

The company accomplishes this by having people perform functions such that the output of each function - no matter who performs it - contributes to either MAKING, SELLING, or SUPPORTING.

There's actually a 4th category for companies that want to thrive, not just survive and that is have a VISION of where they're going. I put the CEO in here as an orchestra conductor because like the conductor who makes no music, CEO doesn't produce any of these functions directly. His or her function is to coordinate all the others - even if that same person does perform some of the other functions. (Which usually happens in smaller organizations.) 

As soon as you start to hire people, they perform some of those functions and it usually makes sense to break them down into sub-functions. It turns out that all the sub-functions in every category look very similar (except for the MAKE functions because the products are different.)

The first level of sub-functions looks like this:

In a well-run company the functions all work together to make things people want to buy, find those people and sell to them, and support the making and the selling in the direction envisioned by the people who run the company. Each of those functions has an output. Even the one-man-band is producing all those outputs when needed. Of course, a smaller company doesn't need most of these functions as often as a larger one.

When you break down all the sub-functions it looks like this. Too much detail to go into here but you get the idea. 

You can actually build your entire org chart around functions (rather than a hierarchy of people) to help you scale more easily. I have a short (9min) video about it here. And other videos on my YouTube Channel. 

When you think of your company structure, you probably think of people with jobs and job titles. Thinking of people performing functions is a better model. That's because in most companies, many people perform multiple functions. They wear many hats. Think of each hat as a function they perform. 

Every function has four parts.

THE TRIGGER

The first part is the trigger. It's what sets the function in motion. It could be a date. For example, the payroll function is triggered every other Wednesday. Or it could be an event. The proposal function is triggered when an RFQ arrives. Or it could be a status. The re-order function is triggered when inventory gets to a certain level. 

THE INPUT

Input is what is needed to perform the function. Using payroll as an example, we need people's salary or hourly pay rates, their hours worked, tax deduction rates etc. Or we can't run payroll. 

THE TRANSFORMATION

This is where the work gets done. For payroll that means formatting the data to send to the payroll company and then they perform additional transformation work to that data. 

THE OUTPUT

This is why you perform the function. The outputs from payroll are paychecks, taxes withheld, and payroll entries in the accounting system and reports. 

Benefits of Functional Thinking

Have you ever known of a person leaving a company and they needed to hire 2 or 3 people to replace them?  That's because that person was performing multiple functions, even if they only had one job title.

• By understanding the outputs of the different functions your people perform you'll be better able to know when additional personnel are needed, and you'll be able to monitor production better.
• By knowing how the transformation works, you'll find it easier to to train people.
• By knowing about triggers and inputs for each function, you'll be able to design more efficient workflows. 

Here's a short (9min) video about building your org chart around functions. There are more videos at my YouTube Channel.