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786: The Problem with Reorgs and How to Do Better, with Phil Le-Brun
Brief
Reorganizations fail, Phil Le‑Brun argues, because leaders focus on changing the visible artifact (the org chart) instead of the lived dynamics that actually produce work. Drawing on his roles at AWS and as a former McDonald’s international CEO, and on research and co‑author Jana Werner, Phil contrasts the 20th‑century “Tin Man” (predictable, mechanical, compliance‑driven organizations) with the “Octopus” that distributes intelligence, learns locally, and adapts quickly (two‑thirds of its neurons are in its arms). Dave Stachowiak and Phil agree that the org chart gives identity but not reality: informal cross‑functional ties, tacit knowledge, and trust‑based relationships often determine outcomes, yet senior leaders redesign boxes with only partial knowledge—Phil cites an HBR finding that managers understand ≈40% of what their teams do.
The conversation moves from diagnosis to practice. Phil recommends small, reversible experiments instead of sweeping, 12–18 month transformations that sap productivity and lock leaders into loss‑aversion. Concrete patterns he endorses include Amazon’s two‑pizza teams (about 8–12 dedicated members), minimizing part‑time contributors (to reduce combinatorial communication paths), and making decisions one level lower. Leadership style is central: be a coach who asks questions (Phil invokes Indra Nooyi’s emphasis on storytelling and curiosity and Patrick Lencioni’s hungry/humble/smart model), be candid about motives (don’t hide cost‑cutting intentions behind buzzwords), and involve frontline people early by framing desired outcomes rather than premature org designs. Phil also relays a statistic from Reorg authors Stephen Heidari‑Robinson and Suzanne Heywood that roughly 70% of employees immediately worry “Do I still have a job?”—a dynamic leaders must address up front. Dave closes by pointing listeners to related Coaching for Leaders episodes (301 with Patrick Lencioni, 621 with Claire Hughes Johnson, 777 with Anthony Klotz) for deeper practical steps on team selection, logistical planning, and helping employees through jolts. Overall, the episode argues for structural stability plus internal flexibility: protect teams, create agency, run continuous, small‑scale change, and prioritize coaching and honesty over headline org chart surgery.
Why it matters
Phil Le‑Brun (co‑author of The Octopus Organization and executive in residence at AWS) contrasts the old 'Tin Man' factory model with an 'octopus' model: two‑thirds of an octopus's neurons live in its arms, which Phil uses to argue for distributed autonomy and local learning rather than top‑down mechanical designs.
Key details
- Phil cites a Harvard Business Review finding that the average manager understands only ~40% of what their teams do, which helps explain why wholesale org‑chart rewrites often fail because they ignore informal, horizontal work and social networks.
- Phil recommends Amazon's 'two‑pizza teams' (roughly 8–12 people) as a practical pattern: dedicated, outcome‑focused teams with cognitive diversity, allowed agency to decide how to achieve outcomes and kept stable over time to preserve tacit knowledge.
- Phil and Dave warn against large transformations: long, 12–18 month 'transformations' typically cause big productivity drops, create irreversible structural bets, and trigger loss‑aversion where leaders keep pushing failing designs instead of reversing course.
- Practical leader behaviors that improve reorg outcomes (Phil): be a coach not a commander; be honest about objectives (e.g., say if cost‑cutting/layoffs are possible); communicate outcomes early and involve frontline employees in brainstorming and experiments.
- Phil cites Reorg authors Stephen Heidari‑Robinson and Suzanne Heywood: ~70% of employees ask only one thing when leadership announces a reorg—'Do I still have a job?'—so leaders must address that directly to prevent survival‑mode responses that suppress curiosity.