Principle 4: Basis for Substructure
Divide a function into groups at the next level based on what they're supposed to be good at.

If an organization is big enough to require multiple groups in essentially the same profession, how do you divide responsibilities among those multiple groups?

The way you divide a specialty into sub-domains is termed the "basis for substructure."

Structure determines each group's focus. And you want people to focus on excellence in their specialties.

Therefore, use a basis for substructure that exactly matches what people are supposed to be good at.

There's no one right answer for an entire organization. A substructure that's right for one function may be wrong for another. But once you know what a function is supposed to be good at (its specialty), the right basis for substructure should be evident.

For example, if the job is knowing clients (Sales), then the right basis for substructure is territories of clients. On the other hand, if the job is developing solutions (Engineering), then the right basis for substructure is the various engineering disciplines (technologies).