The power of T shaped employees (draft)

Properly allocating resources is one of, if not the most important jobs of any company or organization. Those resources (money, time) are finite, especially for startups, and how a company allocates those resources can mean the difference between success and failure.

Lets assume that the creation of value can be thought of as a function of the output each team within that company. As a simplified example:

Value = Output (Marketing Team) + Output (Sales Team) + Output (Product and Technology Team) + Output (Customer Service Team)

$Value = O(m) + O(s) + O(p) + O(cs)$

And that the output of each team is equal to the Total Resources Spent x Output Per Resource Spent.

$Value = R(m)*(O/R(m)) + R(s)*(O/R(s)) + R(p)*(O/R(p)) + R(cs)*(O/R(cs))$

But importantly, the value created by any given team has a different importance coefficient. This is a multiplier that indicates the relative importance of a given teams output to a given company, at a given point in time.

$Value = I(m)*R(m)(O/R(m)) + I(m)*R(s)(O/R(s)) + I(m)*R(p)(O/R(p)) + I(m)*R(cs)(O/R(cs))$

So, the value of a startup is proportonal to the following variables:

1) Importance coefficient for each team: $I(m)$

2) Resources spent for each team: $R(m)$

3) Output per resource for each team: $O$

As a CEO or founder, you can mostly control 2 and 3. 1, the importance coefficient, changes on a near daily basis.

However, for startups operating at full capacity, 2 and 3 are often mostly static. They've either raised funding or are profitable and have a somewhat static amount of resources to spend. The output per resource spent is crucially important, and can be improved, but a good management team will have their teams working at maximum output, or close to it. And 1 is often outside of a company's control. What is important in any given moment is dependent on the market and the needs of your customers.

So what do you do? If 1 is external and 2 and 3 are static, how do you increase value?

The key is T-shaped employees

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Lets look at a practical example. If lead volume is low, Output (Sales) will be low because Total Resources Spent (the input to Output (Sales) will be low. The Importance Coefficient goes up for the Output (Marketing) item because more Output (Marketing) lead to more Output (Sales), which increases the total Value created.

For another example, lets say Output (Sales) is high but Output (CS) is low, reducing the total Value creation. Why might that be? According to the function above, either Total Resources Spent (CS) is too low or Output Per Resource (CS) is too low. Either there aren't enough CS people or the current CS people aren't doing their job properly.

So what does this have to do with T-shaped employees?

At startups, resources are tight. And the bulk of resources spent are on people. So how can you maximize the Output of each team. You can either increase Total Resources Spent or the Output Per Resource. Improving Output Per Resource requires personnel development. But this takes a long time (and sometimes for certain people, may not happen). So what can you do?

Be able to deploy more Total Resources Spent to various groups based on their current Importance Coefficient.

If, for example, the Importance Coefficient for Marketing goes up (because no leads means no sales means no need for CS or product), you NEED to either get more Output Per Resource or more Total Resources Spent. Output Per Resource is extremely difficult to improve in the short term. Ideally your teams are operating at maximum Output Per Resource at all times. If they aren't, this is a much more systemic issue with your management or your employees (who aren't giving their best at all times). But, lets give your people the benefit of the doubt. Lets assume they're working at full capacity.

The only other thing you can do is reallocate Total Resources Spent from one group to another. If the Importance Coefficient is 0 for CS at a given time (meaning more Output (CS) drives zero incremental Value), being able to take Total Resources Spent from that group, and to put them into Total Resources Spent (Marketing). Value will increase as you can see in the function. All else equal, Value will never go up unless you get more resources. But investors don't want to give you more resources if you can't do the first exercise.

T-shaped employees are so necessary at smallish companies because they can jump in as a Total Resource Spent in another group. When the Importance Coefficient goes to 0 (or close) in Product (because, lets say, the Product is really good, but there are no customers), being able to take this person and make them an input to another group is crucial. A Product employee that can double as a Marketing resource can be enormously helpful when the Importance Coefficient goes up in Marketing relative to Product. Value increases when you have people that can make that shift.

So, this is a longwinded way of saying: Hire T-shaped people. Their Output Per Unit will be high (The long stem of the T), and you can shift them into other groups to increase Value when the Importance Coefficient of their current job goes down and they're needed elsewhere.