Uber is cutting about 10% of its workforce, or roughly 3,300 people, according to TechCrunch. In a September 2 memo to employees, CEO Dara Khosrowshahi said Uber’s top line has nearly tripled over the past five-plus years, while the organization accumulated “more layers, more coordination, more fragmented ownership.”
The company reduced the number of employees sitting seven or more layers below the CEO by 20%. It cut nearly half of its “micro-teams,” where a manager had only one or two reports. Roles primarily focused on coordination were reduced too. Uber’s internal Pulse surveys had been telling management that too much work required cross-team coordination, debates took too long and decision rights were unclear.
Let's talk about the micro-teams. How do they form? Mostly around good intentions, and usually not from a mechanical approach to spans-and-layers work.
- A strong individual contributor became a manager (because of career aspirations, status, retention priorities, genuine need?), but there was not enough additional work or enough people to create a real team around them.
- A team split before either half was large enough to operate independently, leaving two small groups where there had previously been one viable team.
- A specialist needed an organizational home, so we created one around them. Instead of placing a specialist inside a larger team and letting them operate with less oversight, we create a small reporting unit to give their work clearer ownership.
- A temporary project became permanent. A small project team was created for a specific initiative, the initiative stayed important, and nobody later revisited whether the team still needed to exist as a separate unit.
- We optimized for clear ownership and created too many separate teams. Giving every problem, product area or capability a single owner can improve accountability, but taken too far it creates many very small teams with narrow scopes.
- Instead of asking an existing team to absorb, trade off or stop work, we create a new team for the new priority. Over time the organization fragments.
- A team may lose scope, automate part of its work or hand responsibilities elsewhere while keeping the same manager and reporting lines.
- Management capacity is often added ahead of expected hiring. If that hiring never arrives, the manager can be left with only one or two direct reports.
- The team shrank through normal attrition. A healthy team of six can become a team of two after departures, transfers or hiring freezes. Unless someone deliberately redesigns the structure, the manager and team often remain.
- Two people really do have different work, but not enough work to justify a separate team.
- When work crosses several teams, adding a manager can feel easier than redesigning ownership, interfaces or decision rights. This can produce managers whose main job is coordinating a very small group.
- Nobody has a strong incentive to remove a tiny team. The structure is usually workable enough, the manager understandably wants to keep their role, and the costs are spread across the wider organization. So the micro-team persists.
This is mostly bad for everyone involved.
But Clay! Are you not a staunch proponent of small teams!? Yes, but not this small. IMO the lower boundary of a team is five, and if you have two micro-teams assembling to get one important thing done, now we have two manager-opinions to resolve. Separate teams need separate priorities, roadmaps, staffing decisions. When their work overlaps, somebody has to negotiate between them. Eventually the company starts employing people whose job is mostly to coordinate across boundaries the company itself created (and cause 11, above, becomes self-replicating).
For example, at Uber, Restaurants, Retail and Direct previously had three separate Delivery Ops organizations. Uber is combining them into single teams at the global, regional and country levels and putting their P&Ls under single owners. Core Services Engineering and Science are being combined too. Khosrowshahi says the separate Delivery structures made sense when the businesses were younger and no longer do.
The P&L moves are things that leaders are reticent to do unless there's substantial evidence for it. But when three related businesses have separate economics, shared resources become negotiations. Putting them under one owner allows one non-CEO person (and usefully, not a committee) to make the tradeoff instead.
Uber is also changing four things at once: headcount, layers, team boundaries and geography. Global teams will concentrate in New York and San Francisco, regional and local teams in designated hubs, and fully remote roles will fall to roughly 1%. So margins six months from now won’t tell us much about whether the redesign worked.
As ever, YMMV!
