The article actually jumps right to the three major points that I see, rephrased to: (1) misaligned priorities, (2) policy flux, and (3) attrition.
The most damning trend I have witnessed first hand is that directors have extreme agency and are most of the time not incentivized to help other directors, especially if they’re under a different VP or SVP. The high-level leadership are too detached from the details (as they should be — but this is the thing that is most different in large orgs — it becomes more and more difficult to know everything, eventually becomes impossible, and then even knowing “enough” becomes impossible) to make centralized decisions so you’re left with one organization at a standstill with another, which causes attrition in the lower ranks of people who just want to get stuff done. That attrition results directly in knowledge loss and overall reduced productivity, which hampers most teams from breaking out of their set of problems. And it all just gets worse with time.
Large companies have way more guardrails and standards than smaller companies and they also change at a greater rate. Since these policies so rarely help improve or ship features, it’s just an ever-increasing source of productivity loss from the perspective of someone who wants to get stuff done. When internal politics are complained about, this is typically the root cause.
Hiring and retaining talent becomes harder as all companies grow and previous top talents becomes disenfranchised over time. Average talent hits an inflection point and then begins a descent. This just adds fuel to the fire, but I believe things would still become extremely difficult without this trait as well.
All of this becomes only more difficult to deal with over time as the company increases in size and age.
Nepotism, cronyism, etc.. all factor in as well, but those issues also affect small organizations and their impact there is even higher.
Big[1] companies tend to collapse under their own bureaucracy.
Executives either don't really care, don't hear about problems, or don't trust anyone enough to delegate power to someone who would care (or they are incapable of hiring people who do care / are trustworthy)
Middle managers don't get rewarded for risks that succeed, they are motivated mostly to CYA
Committees are inherently unproductive, and become "scorekeeping grounds" for petty people who are in otherwise denied any power
Jobs are staffed with people who won't rock the boat because the reward for rocking the boat doesn't offset the downside of getting fired
Everybody down to the "productive" employees (somebody who might actually redesign the site) gets so whipped and dispirited that they tell themselves that this is how The Real World is.
Turtles all the way down... apathy, self-deception, excuses, and groupthink.
[1] I say big, but at one job, I saw this happening in a team of about 20. It really depends on the individual group's inclination towards buck-passing and bet-hedging
You're missing one piece which degrades performance of all corporations over time - bureaucracy with politics. I don't mean the sane one, I mean processes for the sake of processes, people entrenched in their comfortable managerial positions, battling any change that doesn't benefit them directly. I mean brutal management pyramids, so often seen in older corporations or banks for example.
It comes naturally over time, every single time. Organization can fight it, but it needs to be a dedicated effort and priority. If let on its own, complexity arises.
I've seen medium-sized young companies trying hard to have flat hierarchy and least amount of processes, committees etc. It worked. It really did. But everybody understood this is the goal, it was clearly communicated. It attracted amazing talent of brilliant people fed up with the (common) opposite.
I can see now in oldish bank how a simple change might involve 20 people having their say, often managers with their own political agenda not always aligned with what's best for the employer. Stuff that gets actually developed in 2-3 MDs takes overall easily 10-20x more because of this.
Most of these issues can be traced to a single cause, which is that as companies grow, there's a growing 'diffusion of responsibility' effect that takes place in terms of people's responsibilities towards one-another. Bosses and managers are clustered and have an ever-changing set of direct reports, ergo they see the responsibility of engaging and keeping talented people as a 'company' problem and not their problem. Similarly, talented people see the company as an uncaring monolith, and not a set of individuals that can help them get to where they want to be.
In the end, there is no 'company', there are only the individuals that compose that company. Their decisions make things happen. The less agency you give those individuals (or perceive those individuals to have), the harder it's going to be to keep the most talented around.
I see the same disease in many large organizations -- governments, corporations, NGOs. Incredible resources and time routinely wasted.
Maybe the assumptions underlying the Theory of the Firm [1] are changing, making internal transaction costs approach or even exceed external transaction costs.
If so, we should see large organizations disband into smaller, more efficient, more accountable components.
Tangential, but it seems to me that as organizations grow, more and more resources are poured into everything other than what made them successful in the first place. Bureaucracy grows, hierarchies increase, teams upon teams organize, things are envisioned and realized and KPId, volumes of messages and emails shift back and forth, endless hours are met in meetings...
At the same time, productivity is reduced, actual communication diminished, gatekeepers slow everything and everyone down, fiefdoms form with their territorial turf wars, naked emperors run amok fanned by yes-men. On average three people out of a hundred are doing something actually useful, while the company slowly loses its grip on whatever niche monopoly has allowed it to so grotesquely exist thus far.
Everyone else is gradually PTSD'd into a corpo version of Homo Sovieticus, filling out time sheets and RTO attendance records while duly marching towards V17 in the most recent two-year plan, aligned with the corporate values writ large on the HR site's main banner.
Makes me think of the Peter principle. Pretty depressing conclusion though: a large company is bound to be an environment with many distractions by underperformers. Any way out?
I worked for two separate Fortune 500 companies that had byzantine internal political struggles like that. My hypothesis is that large organizations inevitably accrue that sort of cruft.
This kind of finger pointing / blaming is not helpful. Basically, the reason why big organizations are a lot less efficient than smaller ones is the communication overhead; and the resulting miscommunication.
Small groups of people don't even need managers because they can figure out between themselves what needs doing and in what order. Management is introduced when small groups become larger and point to point communication breaks down.
Point to point communication works great with 3 people, a lot less with 30. Forget about it with 300 or 3000. And so on. Big hierarchical organizations get bogged down in management structures and there's a lot of communication that starts happening via multiple hops. So, a lot gets lost in translation. That kind of collective stupidity is very hard to deal with. Add politics to the mix and now you get intentional miscommunication, selective communication, and very biased communication as well where people work against each other. All that result in a lot of wasted effort, unnecessary meetings, and other non productive work. It's not fake. But also not all that valuable.
Agree with your points. There are plenty of smart people in the org all trying to do the best they can. There is a sink or swim mentality, which can be effective, but as the company grows it’s tougher to reward the swimmers and not have their work obfuscated by politicians. It’s also tough to promote cross team collaboration in this environment.
Building something from nothing is tough, and so is turning an elite team into multiple elite teams. It strikes me as the latter gets less focus in SV since it is much less frequent and goes against the entrepreneurial grain. It’s easier to bash large companies than to think about how to actually build one.
I recognize that I’m likely missing relevant factors, but some of the key problems seem to be a flat org, no VP of engineering, and no encouragement of cross team work.
When managing people, you really need to meet with more than one level below you. In a flat org, with 20 people reporting to the CEO and 40 people reporting to each of them, there is no way for the CEO to meet with all 800 people. The CEO just ends up having to blindly trust his or her direct reports that everything is good. A few bad ones can result in large sections of the company rotting from within.
Promoting cross team collaboration is tough. A company needs to emphasize this in how it promotes / rewards people and crafts the org chart. Easier said than done, but no VP of Engineering and directors promoting loyalists with no emphasis on helping other teams doesn’t help. Having multiple directors involved in promotions may help.
I like the CEO and think that he does care. He may be able to fix things, but unfortunately I don’t see it happening. I am tired of hearing everyone complain and find myself getting angry at nice people that I like due to bad incentives. My only option is to vote with my feet. He can trust his ‘Generals’ but thankfully this isn’t the military and I can leave. The grass may or may not be greener, but I’d rather take a chance on change than the status quo. Putting in my notice was an amazing relief.
Thanks for sharing this. It just goes to show that even the best of us can find it difficult to effect change in a big company. The nature of a large organization is it requires lots of communication, alignment, and on-the-ground politics to make things happen, which is definitely a challenge for those of us who just want to get shit done.
I’ve experienced this myself in companies that have gone from <100 people to thousands over a handful of years. In the small days it’s easy to stay current and coordinated with everything. As the company grows new teams are added, there’s more specialization and teams begin looking more inward as their size has grown.
You don’t realize it right away but your processes, methods, and networks are breaking down with the new scale and what was once effective stops being so. But it’s hard to detect right away - it’s the “boiled frog” problem.
The company defines themes or goals or priorities and small cross team groups are assembled but it only gives the illusion of being coordinated. You still have a bunch of teams vaguely working towards solving a greater problem but not actually working together.
There’s a general sense of “losing our way” and disillusion from the veterans who don’t recognize the company anymore and attrition sets in causing even more disillusion and attrition. The company is growing headcount but it seems like everyone is leaving.
I think this is the point (hopefully we’ll before) the company realizes the old ways that got them there don’t work so well as to get them to the next place.
What I’ve found works is senior management that can not only identify what the company priorities should be but also understand that every team should participate in it and allow the teams to determine how to execute. Defining programs and having coordinators work with the stakeholders helps scale communication and coordination. It’s another layer that wasn’t needed in earlier days of the company but becomes critical in my experience.
And the cycle begins again. If the company does achieve the next level of scale similar problems will set in as coordinating 3000 people is just as different than coordinating 15,000 as it was from 700 to 3000. More layers of indirection are required.
I think it's just the result of assembling a large number of humans. Beyond some size, relationships get replaced with internal politics and aggregated individual shortcomings become organizational pathology.
I feel it's all rooted in bad leadership. Leaders who don't understand who's actually doing the work hire more folks like them and then there is a chain reaction. Unfortunate, but true, part of most big companies.
"1) Communication breakdown. Multiple offices in multiple locations and no one knows what other people are working on, how much progress they have made and how what they are doing fits into the overall scheme of company goals.
2) Productivity vs. time spent in office. The office can be a wasteland for productivity and time spent in an office building does not directly correlate to more productive progress.
3) Creativity is implicitly discouraged. Creative talent is vastly undervalued, misunderstood and malnourished. The default American workplace murders creativity.
4) Inefficient management. Inter-office politics and personal agendas often influence executive decision making more than shared company goals. "
These are all signs that you need better Middle Management, not less of it, and not sex with it.
Let us hope. But what ends up happening in a big company is that their is tighter coupling between concerns, which locally looks like interference. At the very least it increases the resistance to iteration, and diffuses focus. Psychologically, I think it's also extremely difficult to go from being self-directed to manager-directed. That can build a lot of resentment that comes out in funny ways, like quitting.
My (limited) experience is that with most organizations, the fault is neither with the rank-and-file, nor with the boardroom table, but either with the organizational design / incentive structures, or with the corporate culture.
Tech is a bit different, since things move fast. Less organizational cruft has time to accrue, so I'd agree boardroom table is the predominant problem. But most companies don't move that fast.
The deeper problem is companies change. You can't have the same organization, culture, environment at 10, 100, 1000. You really can't. Laws change. The CEO no longer has time to talk to everyone. Structure must be applied or company becomes unmanageable mess.
The lesson is you will loose waves of talent at certain transition points. This can't be helped (other than by not growing). Leaders need to be aware and plan for this.
The most damning trend I have witnessed first hand is that directors have extreme agency and are most of the time not incentivized to help other directors, especially if they’re under a different VP or SVP. The high-level leadership are too detached from the details (as they should be — but this is the thing that is most different in large orgs — it becomes more and more difficult to know everything, eventually becomes impossible, and then even knowing “enough” becomes impossible) to make centralized decisions so you’re left with one organization at a standstill with another, which causes attrition in the lower ranks of people who just want to get stuff done. That attrition results directly in knowledge loss and overall reduced productivity, which hampers most teams from breaking out of their set of problems. And it all just gets worse with time.
Large companies have way more guardrails and standards than smaller companies and they also change at a greater rate. Since these policies so rarely help improve or ship features, it’s just an ever-increasing source of productivity loss from the perspective of someone who wants to get stuff done. When internal politics are complained about, this is typically the root cause.
Hiring and retaining talent becomes harder as all companies grow and previous top talents becomes disenfranchised over time. Average talent hits an inflection point and then begins a descent. This just adds fuel to the fire, but I believe things would still become extremely difficult without this trait as well.
All of this becomes only more difficult to deal with over time as the company increases in size and age.
Nepotism, cronyism, etc.. all factor in as well, but those issues also affect small organizations and their impact there is even higher.
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