How Team Structure Creates Bottlenecks (And How to Fix It)

Last time, we explored how viewing your company as a single system-not separate departments-reveals hidden bottlenecks. When you optimize one part (like sales hitting targets), another part struggles (developers drowning in work).

Today, we’re going deeper: how your team structure creates those bottlenecks in the first place.

The Transformation Failure Rate

Did you know that 70-80% of change/transformation initiatives fail? And that’s according to McKinsey-the same people who consult on such projects.

It’s because the basic problems haven’t been addressed: minimizing dependency between teams and optimizing for flow.

Most organizations focus on improving processes, tools, and individual team performance. But they ignore the fundamental structure that determines how teams interact, how work flows, and where bottlenecks naturally form.

Understanding Team Topology

How you slice your teams defines your topology. In turn, this defines higher-level processes like handoffs, interactions, feedback loops, incentives, and ultimately how productive your teams are.

Team topology isn’t just organizational chart design-it’s the architecture of how work flows through your organization. Get it wrong, and you’ll create bottlenecks no amount of process improvement can fix.

Common Dysfunctions: Function-Based Teams

A very common pattern to structure teams is based on their function/skillset:

Product Team: Product managers, business analysts
Frontend Team: React developers, Mobile App Developers
Backend Team: Backend developers, Database engineers
QA Team: Manual Testers, SDET
Design Team: UX designers, UI designers

Why This Structure Emerges

It’s justifiable to structure teams like this, at least in the early stages of a company when there’s only one of each type. As a company grows, however, many problems emerge from this structure.

Early-stage companies often start with function-based teams because:

Hiring is easier: You hire specialists who can work together
Management is simpler: Each function has clear responsibilities
Career paths are clear: Developers become senior developers, then tech leads
It feels organized: Clear separation of concerns

But as the company grows, this structure becomes a liability.

The Handoff Problem

A single feature may need to pass through multiple different teams:

Product defines requirements
Design creates mockups
Backend builds APIs
Frontend builds the UI
QA tests everything

Each handoff introduces delay, miscommunication, and the possibility of rework.

The Priority Conflict

The backend team has their own backlog of work-wanting to refactor their services. At the same time, the frontend team is asking them for a new API endpoint, but they’re busy refactoring. On the flip side, the design team is asking when the frontend team will be ready with their latest design.

Each team optimizes for their own goals, creating conflicts and delays.

The Queue Problem

When work flows through multiple teams, queues form at each handoff:

Product creates a queue of features waiting for design
Design creates a queue of designs waiting for backend
Backend creates a queue of APIs waiting for frontend
Frontend creates a queue of features waiting for QA

These queues grow, work waits, and delivery slows.

Same Concept from Last Time

Local optimization but global harm. Each team might be performing well individually, but the system as a whole struggles.

Common Dysfunctions: Product Area Teams

Suppose you’re working for an online store for physical goods. It’s reasonable to think you can slice teams based on the areas of your domain:

Product Catalog Team: Manages product listings, search, categories
Inventory Team: Tracks stock levels, warehouses, suppliers
Basket Team: Shopping cart functionality
Payments Team: Payment processing, checkout
Order Processing Team: Order fulfillment, shipping

For the sake of the example, let’s say they are cross-functional and each have a PM, designer, tester, and a few developers.

The Isolation Problem

What happens in such a structure is that each team has their own set of sprint ceremonies. Their regular touch points are only with their immediate team members. On standup, the payments team only talks to their peers on the payment team, and so on.

This creates silos. Teams don’t understand how their work affects other teams. They make decisions in isolation that create problems downstream.

The Cross-Cutting Initiative Problem

But what happens if there’s a new business initiative to add digital items to our online store? Suddenly every team needs to shift their priorities because everyone needs to change something to facilitate a new type of product:

Product Catalog: Needs to support digital products
Inventory: Needs to handle digital inventory (licenses, downloads)
Basket: Needs to handle digital items differently
Payments: Needs to handle instant delivery
Order Processing: Needs to handle digital fulfillment

Because of the topology, we have introduced complex dependencies between teams that need to be managed.

The Dependency Management Problem

We task a few people to track dependencies-delivery managers, engineering managers, program managers. They end up in a role where they solely organize status meetings, manage backlogs, and play politics to convince other teams what’s top priority right now.

This is expensive overhead that doesn’t add value. It’s a symptom of poor team structure.

The Coordination Overhead

The more dependencies between teams, the more coordination is required:

Status meetings: To understand what each team is doing
Planning sessions: To align priorities across teams
Dependency tracking: Spreadsheets, JIRA, project management tools
Escalation processes: When teams can’t agree on priorities

All of this slows down delivery.

The Result

Local optimization → complex cross-team dependencies → global flow suffers.

A Better Way: Value Stream Teams

Maybe you’ll say that’s just how building software works. But what if there’s a better way?

The main lesson here is: the more dependency between teams you have, the slower your organization will move.

It’s inevitable there will be some dependencies, but the goal here is to minimize them, not remove them completely.

Mission Teams

One of the most powerful ways to organize teams is around value streams that are aimed at concrete customer outcomes.

This concept is sometimes called mission teams and is similar to the Spotify squads and tribes framework.

These teams are still cross-functional but aimed at having all the expertise required to deliver a new customer-centric feature end-to-end.

The Digital Products Example

Going back to our previous example with the online store-you could form a new squad called “Digital Products” that is formed from people with expertise in relevant domains:

A PM who understands digital products
A designer who can create digital product experiences
Backend developer/s who understand the relevant parts of the codebase
Frontend developers who can build the digital product interface
A tester

All of their Agile ceremonies are with each other and nobody else.

What Changes

When the PM needs to clarify a requirement, they’re sitting next to the developer. When a designer needs to adjust a flow, they can show it directly to the engineer. No tickets bouncing between teams. No waiting for the next sprint planning. No dependency tracking spreadsheets.

You remove the bottlenecks, put people in the same room (either virtual or physical), and the work starts flowing like never before.

Real Results

I’ve seen teams cut delivery time in half just by reorganizing this way. Here’s why:

Faster feedback: Questions get answered immediately, not in the next meeting
Better alignment: Everyone understands the full context
Fewer handoffs: Work flows within the team
Less coordination: No need to sync with other teams
Clearer ownership: The team owns the outcome, not just their part

The Team Topology Patterns

There are several patterns for organizing teams effectively:

1. Stream-Aligned Teams

Teams aligned to a single, valuable stream of work. They can deliver value to customers without depending on other teams for most activities.

When to use: For core product features and customer-facing functionality.

Example: A team that owns the entire checkout experience-from cart to payment to confirmation.

2. Platform Teams

Teams that provide a platform of services, tools, and capabilities that other teams use.

When to use: For shared infrastructure, frameworks, and developer tools.

Example: A team that maintains the shared authentication service or design system.

3. Enabling Teams

Teams that help other teams overcome obstacles and acquire missing capabilities.

When to use: For specialized expertise that’s needed across teams but not full-time.

Example: A team of security experts who help other teams implement security best practices.

4. Complicated-Subsystem Teams

Teams that work on a particularly complex subsystem that requires specialized knowledge.

When to use: For systems that require deep expertise and are too complex for stream-aligned teams.

Example: A team that maintains the payment processing system with complex compliance, security, auditing requirements.

How to Reorganize

Reorganizing teams is a significant change. Here’s how you can approach it:

1. Map Your Value Streams

Start by understanding how value flows to customers:

What are the main customer journeys?
What features do customers use?
What outcomes do they achieve?

2. Identify Dependencies

For each value stream, identify:

What teams are involved?
What dependencies exist between teams?
Where do handoffs occur?
Where do queues form?

3. Design New Team Boundaries

Create teams that can deliver value independently:

Minimize dependencies between teams
Maximize autonomy within teams
Ensure teams have all necessary skills
Keep teams small (typically 5-9 people)

4. Plan the Transition

Reorganizing is disruptive. Plan carefully:

Start with one team as a pilot
Learn and adjust before scaling
Communicate the why, not just the what
Support people through the change
Measure the impact

5. Evolve Continuously

Team structure isn’t set in stone. Too many teams avoid shaking the boat even if it’s about to go off a cliff. As your product and organization evolve, your team structure should too:

Regularly review team effectiveness
Adjust boundaries as needed
Split teams that grow too large
Merge teams that have too many dependencies

Measuring Success

How do you know if your team structure is working?

Lead Time

How long does it take from idea to delivered value? This should decrease as dependencies decrease.

Throughput

How much value are you delivering? This should increase as teams become more autonomous.

Dependencies

How many dependencies exist between teams? This should decrease as you optimize team boundaries.

Team Satisfaction

Are teams happier? Do they feel more ownership? Do they have clearer goals?

Customer Satisfaction

Are customers getting value faster? Are features more cohesive?

Conclusion

Team structure isn’t just organizational design-it’s the architecture of how work flows through your organization. Get it wrong, and you’ll create bottlenecks that no amount of process improvement can fix.

The key principles:

Minimize dependencies: The fewer dependencies between teams, the faster you’ll move
Optimize for flow: Structure teams around value streams, not functions
Enable autonomy: Give teams everything they need to deliver value independently
Evolve continuously: Team structure should change as your product and organization evolve

If your roadmap feels like a dependency puzzle, it’s time to reconsider your team structure. The best teams aren’t the ones with the most process-they’re the ones with the right structure.

The goal isn’t to eliminate all dependencies (that’s impossible), but to minimize them and make the remaining ones explicit and manageable. When you do this, you’ll see delivery speed up, quality improve, and team satisfaction increase.

Your team structure is a choice. Choose one that optimizes for flow, not for local efficiency.

If you want a fast, objective view of what’s slowing delivery down in your organization, you can do my 2-minute Delivery Flow Assessment to get a personalized report of how your team operates and suggestions on how to improve.

Or if you’d like to a more personalized approach and 1-to-1 time with me let’s have a conversation - Book a Call here

It’s a more comprehensive analysis where we’ll map your value streams, identify bottlenecks, and outline how we can work together to improve your delivery system.