Functions organize resources. Value crosses functions.

An important customer complains about a delay. The meeting to work out what happened brings four areas together, and each one is right. Sales closed within target. Operations delivered to plan. Finance approved credit within policy. Technology hit the integration deadline.

Every dashboard is green, and the customer is unhappy. Nobody failed, and the result failed. The scene repeats in almost every company, because the problem isn't in any of the areas. It sits between them.

Functions exist for a good reason

Functions organize resources. They concentrate expertise, give the budget an address, make it clear who answers for what, and allow scale. A company without functions would be one permanent meeting.

The org chart answers one question well: who looks after which resources. The mistake is to expect it to answer another: how value reaches the customer and the business.

Value doesn't move vertically

Value moves sideways. From demand to delivery. From idea to launched product. From strategy to budget, from budget to execution, and from execution back to the next decision. Each of these flows crosses several areas, and none of them controls it end to end.

More than thirty years ago, Geary Rummler and Alan Brache called this territory the "white space on the organization chart": the space between the boxes, where operations are literally unconnected. That is where the most expensive problems live: the poor handoff, the targets that contradict each other, the decision nobody has the authority to make alone.

Management tends to copy the org chart

The problem grows because the management system almost always takes the shape of the boxes. Budgets are by area. Targets are by area. So are incentives, reports and meetings. Management sees what happens inside the boxes very well, and almost nothing of what happens between them.

An Atlassian survey of executives found that only 7% are confident they know how each team's work supports the company's biggest goals. The link between the parts and the whole is exactly what the management system doesn't show.

The result is local optimization. Each area improves its own number while the flow gets worse. Sales pulls deals into the end of the quarter, and operations pays for it in the next one. The cost is real, but it doesn't show up in anyone's number.

Three signs the problem is between the areas

• The same discussion comes back every meeting, with each area defending a different number for the same problem.
• Decisions that involve two or more areas wait. They wait for the committee, the director or the end of the quarter.
• Every area has its own improvement project, and the customer, or the result, notices no difference.

What changes in management

The first reaction is usually to reorganize. A new org chart, though, only moves the white space somewhere else. What works is managing the flows alongside the functions, without dismantling what functions do well.

• Name the flows that matter. Three to five at most: the ones that carry the most important value to the customer and the business.
• Give each flow an owner across areas. Not of the resources, which stay in the functions, but of the end-to-end result and the handoffs.
• Design the handoffs. Who delivers what, when, and to what quality standard, instead of improvising every time.
• Measure the flow, not just the parts. End-to-end lead time, rework between areas, and the value that actually arrives.
• Put the flow into the leadership rhythm. Read, decide, mobilize and adapt on the whole flow, not only on each area.

This work rarely fits in the diary of someone who already runs an area. That's why many companies don't need another layer of hierarchy. They need management capacity dedicated to what happens between the areas.

A question for your leadership team

What is the most important result your company produces that no single area can deliver alone? And who looks after it today?

Sources

• Geary A. Rummler and Alan P. Brache, Improving Performance: How to Manage the White Space on the Organization Chart (1995), summary
• Atlassian, State of Teams 2025