The Functional Consolidation Model
"If you create a division, your division is as successful as you are a priority. So now you have to advocate for your division... that creates what we call politics." — Brian Chesky
What It Is
A restructuring approach that removes General Managers and divisions, organizing the company strictly by function (Design, Engineering, Marketing, etc.). It centralizes decision-making and ensures experts lead experts.
When To Use
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Post-product-market fit companies sensing slowdown in velocity
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Organizations experiencing increased bureaucracy
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When user experience is fracturing across products
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Companies with 100+ employees facing political infighting
Core Principles
- Eliminate Business Units/Divisions
Move from GM-led verticals (e.g., "Hosts", "China", "Experiences") to central functions.
- Experts Leading Experts
No generic managers. The head of Design must be a world-class designer; the head of Engineering must be a top engineer.
- Centralized Prioritization
Resource allocation happens at the top executive level, preventing teams from hoarding resources or building redundant stacks.
- Influence over Authority
PMs manage by influence, not control. They do not "own" the engineers or designers but orchestrate the outcome.
How To Apply
STEP 1: Audit Current Structure └── Map all divisions, BUs, and reporting lines └── Identify redundant roles and overlapping responsibilities
STEP 2: Define Core Functions └── Engineering, Design, Product, Marketing, Operations, etc. └── Assign world-class functional leaders
STEP 3: Migrate Teams └── Move people from divisional silos to functional groups └── Establish cross-functional project teams for initiatives
STEP 4: Centralize Resource Allocation └── Create single prioritization process at exec level └── Eliminate "mini-CEO" budget authority in divisions
Common Mistakes
❌ Keeping "people managers" who cannot evaluate the technical or creative quality of the work
❌ Creating hybrid structures that preserve divisional power while adding functional layers
❌ Rushing the transition without proper change management
Real-World Example
During the pandemic, Chesky moved Airbnb from 10 divisions back to a functional startup structure, reducing headcount while increasing shipping velocity and profitability. The result: "We wanted a company where a thousand people could work, but it'll look like 10 people did it."
Related Frameworks
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Single-Threaded Leadership (Amazon)
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Spotify Model (contrast/alternative)
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Functional vs. Divisional Org Design
Source: Brian Chesky, Lenny's Podcast