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Structure First, People Second: Why Most Businesses Design Backwards

Written by Rentwell | May 18, 2026 1:00:00 PM

The Lemonade Stand Principle: Why Your Organizational Chart Should Be Written for a 10-Year-Old

Jason Jannati's daughter Lola was setting up a lemonade stand.

As an EOS implementer who works with complex businesses daily, Jason could have approached this with sophisticated business terminology. Market positioning. Brand awareness. Customer acquisition strategy.

But as he puts it: "I love her to death, but she got her father's IQ, so she needs things very simple."

He couldn't tell her "social media brand awareness." She wouldn't know what that means.

So instead: "Marketing. It's design the company logo, right? It's like simple stuff."

This is the test every organizational chart should pass: Could you explain it to someone running a lemonade stand?

Because if you can't break down the roles in your business into plain English that a child could understand, you probably don't understand them clearly yourself.

The Fancy Speak Problem

Walk into most businesses and ask to see their organizational chart. If they have one, it's likely filled with impressive-sounding titles:

  • Vice President of Strategic Initiatives
  • Director of Business Development
  • Chief Revenue Officer
  • Head of Customer Success
  • Manager of Operational Excellence

Now ask: "What does that person actually do?"

Watch the explanations get vague and circular.

Jason cuts through this with brutal clarity:

"Break it down into English, not in like fancy speak. Like, be very—this is very tactical. Should be plain English. The function and the roles."

Not titles. Not status markers. Not corporate hierarchy.

Functions and roles. What work actually needs to get done?

The One Rental Property Question

Jason offers a perfect example:

"To operate one rental property, I don't know, maybe that's 12 different roles when you really broke it down."

Wait—12 roles for one rental property?

If you're a solo investor managing your first property, you might think: "I don't have 12 roles. I just manage the property."

But right now, you're wearing all 12 hats.

And that's the problem.

The Scale-Up Test

Jason shares the mental model that clarifies everything:

"The easiest way that I always learned to look at it is like if you had 1,000 rental properties."

Suddenly it becomes obvious:

"Oh okay, well yeah, then there's like one person that's fielding in calls and posting on social media. There's another person that's like doing showings. Maybe there's another one that's like, did they pay rent or not?"

At scale, the roles become clear because they have to. You can't have one person doing everything when you have 1,000 properties.

But here's the insight: Those roles exist at one property too. You're just doing all of them yourself.

The E-Myth Franchise Question

This connects directly to Michael Gerber's E-Myth principle:

"Just pretend like you're gonna franchise your business even if you're not."

Why? Because thinking about franchising forces you to document what actually needs to happen, regardless of who's currently doing it.

If you were going to sell a franchise of your business:

  • What roles would need to exist?
  • What would each role actually do?
  • How would you train someone to do each role?
  • What systems would need to be in place?

These questions reveal the true structure of your business—the functions that create value, not just the people you happen to have.

Rob Coldwell explains:

"When you just take it up to scale, that's what E-Myth would say... And then it's easier to see what these unique roles are because like when you do it at 1 to 10, probably still the same. 1 to 1,000, Gary Jonas level of 1,500, it's much different, but it helps you to determine the right roles.

The Energy Cup Question

Once you've identified all the roles, Jason introduces a critical self-awareness question:

"What roles really fill my energy cup and what roles do not fill my energy cup? What do I love to do and what do I not like to do?"

When you've clearly identified all the roles, you can start making strategic decisions about which hats to keep wearing and which to hand off first.

This is how you build a business that serves your life instead of consuming it.

Structure First, People Second

Here's where most businesses get it backwards, and Jason is emphatic about this:

"Think structure first, people second."

What does that mean in practice?

"Design the structure, then put the people in the seats. Don't design it based on the people that are already there."

This is crucial. Let's see how it plays out:

Wrong approach (people first):

"Well, Jason does sales. I do operations. Sarah handles some admin. Let me create an org chart that reflects what we're currently doing."

Problem: You're documenting your current reality, not designing what you actually need.

Right approach (structure first):

"What functions need to exist for this business to work? Okay, now who should fill each function?"

The Right Approach

Structure first means:

Step 1: Define what the role actually needs

Step 2: Assess if current person fits

Step 3: Make the hard decision

So if Jason does sales, but can’t do certain aspects the role requires, for example cold calling:

  • Jason isn't the right person for this seat (move him or let him go)
  • This role gets split (Jason does parts, someone else does the rest)
  • You redesign the role (but acknowledge this might hurt sales results)

What you don't do is pretend the role doesn't need cold calling just because Jason doesn't like it

The Bottom Line

Most organizational charts are either:

  1. Non-existent ("I'm a solo operator, I don't need that")
  2. Backward-looking (documenting current people, not needed roles)
  3. Overcomplicated (fancy titles that obscure actual functions)

The alternative Jason advocates is elegantly simple:

Think like you're explaining it to a kid at a lemonade stand.

What actually needs to happen? Break it into plain English roles.

Think like you're franchising the business.

What roles would exist at scale? Those roles exist now too—you're just wearing all the hats.

Think structure first, people second.

Design what you need, then fit people (including yourself) into the right seats.

Think about your energy.

Which roles drain you? Which fill you up? Build toward doing more of the latter.

This isn't revolutionary. It's not innovative.

But it's the foundation that most businesses lack.

They build around personalities instead of functions. They create roles based on who they have instead of what they need. They use fancy language that obscures simple truths.

And they wonder why they can't scale.

The businesses that grow successfully? They figured out the lemonade stand principle:

Break it down simple. Make it plain. Know what needs to happen regardless of who's doing it.

Then build from there.

So here's your assignment:

Pretend you have 1,000 [whatever your business unit is].

What roles would exist?

Now write them in language simple enough for a 10-year-old running a lemonade stand.

That's your structure.

Everything else follows from there.

Jason Jannati is an EOS Implementer who helps leadership teams build clear organizational structures that enable growth. The Accountability Chart (structure-first organizational design) is a core component of the People component in the Entrepreneurial Operating System (EOS) framework.

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