Molly Graham builds on Lenny’s newsletter a recent podcast conversation to unpack a management framework that will change how you tackle team challenges : the Waterline Model.

Let’s walk through each level and use common examples of issues on underperforming teams to show how you can use the model.

1) Structure : the most common culprit

A few years ago, I was asked to take over a struggling marketing team : “Go figure out what this team actually does, and why we’re spending so much money without seeing results.”

The temptation in a situation like this is to diagnose the people—who is a high performer, who is dragging people down—but the Waterline Model has taught me to start by evaluating the structure. So instead, I asked each person on my new team how they would describe their role, what goals they thought the team was responsible for, and what numbers they believed they personally owned and were expected to move. Almost immediately, those questions surfaced structural issues.

The team’s answers were wildly inconsistent. Individuals had no idea what their goals were or which metric the team was responsible for. People defined their roles in ways that were far too narrow, or disconnected, to make sense. What leadership thought the team was responsible for, and how success was measured, were very different from how people understood their own jobs.

In this case, it was impossible to determine whether the individuals were the right fit, because they were operating inside a deeply broken structure. If I had automatically assumed people were the problem, I probably would have fired the whole team and started over again. And then I’d likely have ended up with the same issues all over again. But once I realized this was a structural problem, the fix was clear.

I started by re-clarifying the team’s mandate, the goals the team actually owned, individual role definitions, and what success looked like for each role. Only after that work was complete did it make sense to evaluate whether each individual was a good fit for their role.

That clarity surfaced a few real fit issues. But it also immediately improved performance for most of the team—simply because people finally knew what their job was and what was expected of them. People are often smart and motivated, but (to use the boat analogy) they’re rowing in different directions because the structure isn’t doing its job. Structural clarity alone often resolves more issues than you’d expect.

2) Dynamics : teams behaving rationally inside bad systems

Dynamics are the cultural norms you’ve built for how the team actually works together day-to-day. What’s experienced, not what’s written down. You can have clear goals and roles and still find yourself with decisions bottlenecked at the top, endless debate with no resolution, or constant confusion about who has input versus who actually decides.

As an example, one member in Glue Club came to us with a familiar story : “My founder is constantly frustrated that the team is moving more slowly than they want. But when people try to move quickly or ship things or make decisions, the founder swoops in and unmakes decisions at the last minute or second-guesses people’s judgment. It doesn’t feel safe to move quickly.”

This wasn’t a structure problem. Goals were clear, roles were defined, and, on paper, people had decision rights. But in practice, decisions weren’t stable. Work would move forward, then get reversed later. Context would change after the fact. People learned that even if they did what was asked, they could still be wrong.

The team adapted in a very rational way : They slowed down. They added extra layers of alignment. They escalated decisions that technically didn’t need to be escalated. They optimized for not being wrong instead of for progress.

From the outside, it looked like a performance problem. From the inside, it felt like self-protection. The dynamics of this team taught people that speed is risky, and that was the problem.

People adapt quickly to what’s rewarded, punished, tolerated, or ignored. Over time, the team learns how to survive inside the system a leader creates, whether implicit or explicit. Dynamics problems show up when a team’s behavior makes sense given the environment—even if the results are exactly what you don’t want.

Dynamics problems often show up as process issues, but they’re rarely solved by process alone. They usually trace back to the signals leaders send through their behavior : what gets rewarded, what gets second-guessed, and what happens when things go wrong. That’s why dynamics issues can feel harder than structural ones. Fixing them doesn’t require a re-org or a new doc ; it requires leaders to be consistent about how decisions are made, how disagreement is handled, and when they intervene. It requires a hard look in the mirror at how your behavior or the behavior of those above you is causing people to respond.

The good news is that when those signals change, behavior changes quickly. Teams adapt fast to new rules, especially when they’re enforced through action, not words. That’s the leverage at the dynamics level : change the rules of interaction, and people will respond.

3) Interpersonal : don’t assume interpersonal conflict, but don’t ignore it either

When something feels off on a team, leaders almost always leap to this layer first—“those two people hate each other.” To be fair, a lot of the time that instinct isn’t wrong ; it’s just incomplete.

Very often, what looks like interpersonal conflict is actually being caused by something higher up the waterline. Roles aren’t clear, ownership overlaps, or individual or team incentives are not aligned. Two people are stepping on each other’s toes because the structure put them there. In those cases, the conflict isn’t really about the relationship. It’s a structural problem wearing a human face.

But interpersonal dynamics can absolutely destroy teams all on their own. You can have clear goals, clean roles, solid decision-making, etc., and still have two leaders who fundamentally don’t trust or like each other. And when that’s true, it always shows up in the business eventually, through slowed decisions, hoarded information, and teams quietly picking sides.

Once you’ve ruled out structure and dynamics issues, you move to interpersonal, and this is the moment where management gets more direct. At this level, the fix isn’t redesigning the system but, rather, addressing the relationship itself. That usually means naming the tension explicitly, grounding the conversation in how it’s affecting the work, and being clear about what needs to change for the relationship to function. You can make building a solid relationship with a business partner an expectation of someone’s role—something you judge their performance on, particularly if it’s business-critical.

This is the more familiar work of team leadership and management. Sometimes that work leads to repair. Sometimes it becomes clear that trust won’t be rebuilt in a reasonable time frame, and a change has to be made.

4) Individual : only make it about the person after the system is sound

If your goals are clear, the role is cleaned up, the dynamics are working well, and someone is still not performing, then you’re likely looking at an actual individual issue. At that point, the work is no longer diagnostic. It’s about making a decision.

Individual issues can be personal. Someone going through a tough time outside of work may not be able to meet the expectations of the role right now. Your job as a manager is to decide whether the person can successfully fulfill the role, given the current circumstances.

Evaluate the person against the role as it exists today. Decide whether the gap is coachable in the time frame the business can afford. If it is, invest and be explicit about what needs to change. If it’s not, change the role or make a clean exit. What doesn’t work is lingering in ambiguity.

That’s the leverage at the individual level : once the system is sound, clarity and decisiveness are kinder than dragging things out.

In conclusion start at the top. Always. If your team isn’t working well, here’s what the Waterline Model tells you to do .