Institutional Structure isBullShit

“Inertia is powerful. We will do anything to maintain a system that has failed us.”. — John Perkins, Confessions of an Economic Hit Man

History is written by the winners and the people that were leading the charge. That is why the people’s version of history is radically different from the history books. Read a book written about the gilded ages and you will believe it was a time of prosperity, fabulous parties, and abundance for all. In reality 99% of people lived in squalor, died at a young age, and were exploited on a daily basis. It is fallacy to romanticize the past — making anything great again is a desperation cry of the winners to hold on to power. Perhaps it can be great again, but it will be in a different way. Institutions only survive if they evolve, adapt, and constantly reinvent themselves.

The first time I read about failures was in a masters degree case study analysis class. These classes were intended to learn from the losers, or about the losers. The best way to learn is not repeat the mistakes of the past. In Search of Excellence (focused on culture and values) and Good to Great (focused on strategy and culture) are written about the winners (or at least when they were winners) by influential people that helped create the winning narrative. The information was provided by the winners — the business leaders. The irony is that many of the companies in these books eventually failed.

I worked at technology companies at their pinnacle — Electronic Data Systems (EDS — the original ‘cloud’ provider), Sybase, Oracle, and AWS. These companies hired the best and brightest, and let people, not institutions, win. Their culture, processes, people, and products were once the envy of the industry. During their apex, you could get a job anywhere simply by having worked at these companies. Recruiters and partner companies called me pleading to provide names of people that made it to the AWS “loop “and failed (one out of three failed). Companies would hire these castaways without an interview, because they made it to the prized on-site loop.

Below is my AWS ten year anniversary reflection. The same sentiment expressed in this AWS ten year declaration permeated me each time I joined a technology vendor that was admired, thriving, and a harbinger of new technology dawn. It was an ephemeral state of euphoria, bliss, and transcendence. I place this below as a reminder and testament to how exhilarating, rewarding, and fun it is to be part of something fresh, novel, and meteoric. The words encapsulate the “lighting in a bottle” that is present when an institution’s culture, process, people, products, and its’ customers exist in equanimity.

It was evident I found ‘home’ after three months at AWS. I was surrounded by intelligent, nonconformist, selfless, self-aware rebels. These mavericks possessed incredibly diverse life experiences and backgrounds. My life seemed mundane and boring when I listened to their antidotes — landed a hand glider at a cemetery in the middle of Berlin, professional boxer, shaman healer, hiked Mount Everest, and the beat goes on. Each week I learned a dozen new things, and failed a few times. My loop monologue to entice potential candidates during interviews went something like this, “I have worked at places with harder working people. I have worked at places with more intelligent people — well, at least they had PHDs. I have worked at places with high emotional quotient individuals. However, I have never worked at a place where smart people with high EQs work so hard”.

Coaching hundreds of Amazonians and direct reports has been rewarding, thrilling, and humbling. Having them listen, at least indulge me, as I espoused my favorite mantras — ‘try not, do or do not, there is no try’, ‘put a pretty bow on it’, ‘80% is good enough’, ‘outcomes not activities’, and ‘do, delegate, or drop, has been a privilege. The late nights crafting, editing, and rewriting promotion documents, narratives, and PR/FAQs was both exhilarating and, at times, had you question your sanity. Working two in a box with Chris Niederman as co-leaders of the AWS Global System Integrator (GSI) organization was the pinnacle of grit, scrappiness, perseverance, and fortitude in my career. It is rare, at work or play, where two individuals have unconditional mutual respect, admiration, and trust.

It is the people and the customers which make things real, and force you to ‘keep it real’ — truth, honesty, and candor. The brilliant build-out partner organization ‘lunatic heroes’ leaders Tom Stickle, Matt Yanchyshyn, Steven Jones, Kyle Lichtenberg, and Brian Bohan were a pleasure to be associated with and learn from. Collaborating with AWS legends Maureen Lonergan, Frank Fallon, Stephen Orban, Charlie Bell, Carol Potts, and Todd Weatherby was stimulating, challenging, rewarding, and pushed my intellectual limits. Driving transformations and billion-dollar initiatives with Fortune 100 customers including Accenture — Accenture AWS Business Group, Project Icelander — DXC private labeled powered by AWS joint venture failed after Andy Jassy approval, Capital One — CIO delivered narrative led to a successful Chaos Kong exercise, and John Deere — two-year people, organization, and platform transformation, were all agonizing and exulting — depending upon the day or even hour. The more recent efforts as co-developer of the initial Blackstone narrative, first TDDs with Kurt Gilman @ Vista Equity, and building a community of 100+ CTOs, CIOs, CPOS, and COOs across 40+ PE Firms and 60+ portfolio companies with Declan Morris have provided fresh personal and career fulfillment. Nothing bonds people and solidifies relationships like the gleefulness of a joint success, or the anguish of a valiant effort.

Life is connection, empathy, and paying it forward. AWS has granted me the opportunity to live life to its fullest through enduring relationships, the space to exceed self-imposed limits, and assisting team members and colleges maximize their potential. I have grown mentally, spiritually, intellectually, and emotionally during my 10 years. Thanks to the AWS community for cultivating an environment where living my values of passion, integrity and fun is easy. Thanks to Paul for providing an environment to be a truth teller, and gratitude to my coworker, and friend, Declan for being a voice of reason and confidant.

The list of failed technology companies is long and perpetually being added too: Cullinet, Napster, Wang, Kodak, Pets.com, DEC, Compaq, BlackBerry, and AOL. Remember IBM and the BUNCH — probably not. I learned this acronym in my introduction to data processing class in college; an antiqued term that was commonplace 40 years ago. The BUNCH was Burroughs, Unisys, NCR, Control Data, and Honeywell. IBM and the BUNCH held a monopoly on business technology. Now most of these companies are in the bit bucket of “have beens”, vanished by new technology trends and evolving business models.

Technology companies that failed have these things in common:

1. They commercialized, democratized, dis-intermediated, and dominated the technology space with an innovative product or solution.
2. They attracted and hired the best and brightest during their hyper growth phase. The companies found it challenging to hire A, or even B, players as the luster of the company weaned.
3. They experienced meteoric growth. Growth in the 50–100% a year at it’s peak.
4. They had gross margins of 40%+ during their apex.
5. The company’s end was near when the rate of change on the outside exceeded the rate of change on the inside.
6. They became complacent, content, and arrogant. Refusing to recognize competition was encroaching on their customer base. After all, they had the superior product everyone wanted (said with sarcasm).
7. They lost focus on the customer, and became inside out organizations. They were once purely outside in (aka customer obsessed) companies.
8. Resisted change and evolution when they once embodied and embraced the novel and unorthodox.
9. The ”black market” (aka getting things done through undocumented, informal ways) became a more efficient method to get things done quickly and informally without following the self-imposed rules, process, and procedures.
10. The core product or products went from being unique, rare, unconventional solutions to mundane, easily replicated commodities.
11. The race to the bottom (decline of margins) commenced as formidable competitors emerged from incumbent technology vendors and startups.
12. The company refused that the race to the bottom had commenced, and a new technology wave was already underway.

This blog is an inside (innovator/vendor) out perspective of the evolution of a company. The outside in view is covered in the infamous book Crossing the Chasm. You will notice the usage of the Crossing the Chasm stages of early adopters, early majority, late majority, and laggards. This blog uncovers and exposes what is going on internally at these technical juggernauts. The expose is based on my experiences from working at some of the most esteemed technology companies in the world. The blog is an account of what happens at these companies as their culture, organizational structure, processes, people, and products decline, decay, and fall into disarray.

There are six epochs. Each epoch describes the evolution of a companies’ customers, people, programs (aka processes), culture, organizational design, and products. I can not predict the length of each epoch. I will utilize a common business consulting refrain as my noncommittal excuse — it depends. It depends on the size of the company (revenue and people), the age of the company, the hype cycle of the technology, the growth rate (meteoric growth rate companies raise fast and fall hard and fast), macroeconomic conditions, and competitive pressures the company faces.

Epoch One — Vendor Attributes Innovators and pioneering stage

Harmony and alignment.

Symmetry between vendor and customer — Customer needs dominate

The top five characteristics of this epoch:

1. The vendor is focused on product and delivering results for the customer — outside in approach.
2. The customer is paramount. The vendor solution solves an egregious, monumental problem, reduces costs tremendously, or leads to increased revenue for the customer.
3. The vendor lacks internal structure including minimal programs, management overhead, and limited, nascent internal processes, policies and procedures.
4. The culture is results orientated, and the organization is a meritocracy.
5. The organization is flat with no team leaders, and an individual contributor to leader ratio of over ten to one. Managers are leaders and doers, and not task masters and administrators.

Vendor Attributes — Innovators and pioneering stage

Keepin it Real: The culture and people are no bullshit during all internal and external engagement and communication. Communication is objective, explicit, and non-judgemental. Individuals are self-aware so they are not defensive or offended by the brutally honest delivery of feedback or constructive criticism.

Epoch Two — Vendor Attributes Early Adopters stage

Not much has changed in regards to the internal aspects of culture, organizational structure, processes, products, and people. The product set is evolving and maturing, but the core product continues to dominate sales. The products add security, reliability, and scalability features as these attributes are attractive to enterprise customers.

Customer and vendor are growing harmoniously

The top five characteristics of this epoch:

1. The vendor adds additional products. These products are MVP, and immediately solve problems, reduce cost, or increase revenue for customers.
2. The vendor adds a partner organization, a fledgling BDM practice is formed, and professional service and training organizations are formed.
3. Mavericks, disruptors, and rebels continue to dominate the hiring, and the company attracts the best talent in the technology industry.
4. The vendor moves beyond technical developers and engineers to include VPs and CTOs as vendor purchasing decision makers, however, builders/tech geeks dominate the engagement with the customer and still make most purchasing decisions.
5. A minimal set of programs are added, including basic partner tiers and fundamental/essentials training classes.

Vendor Attributes — Early Adopters stage

Keepin it Real: The culture remains one of ‘get shit done’, and break all the rules. KPIs are simple (increase revenue by 80%, for example), concise (publish five customer case studies), and customer focused (gain twenty new customers), or non-existent. The people work hard, play hard, have fun, and our passionate about work and life. There is no distinction of power, decision making prowess, and authority between individual contributors and leaders. Anyone can call out anything, anyone, and anybody. People are ruthless in their feedback, and compassionate in their intent.

Epoch Three — Early Majority stage

This is when significant degradation to the people, programs, culture, and products commences. The leading indicator is the hiring of lower quality people. The degradation of people started with the hiring of B players. Now B players are recommending friends that are C players. Even worse, is the abundance of B and C leaders. These leaders are individuals that moved up the ranks at other vendors through politics, posturing, and pummeling people that were less aggressive but more competent. These leaders have been promoted two levels beyond the Peter Principal.

Customer and vendor are growing in an incongruent manner

The top five characteristics of this epoch:

1. Vendor’s sphere of culture, programs, people and product begin to loose their harmony/symmetrical with the vision, objectives, and needs the customer maintains.
2. Mavericks and rebels attempt to suppress the demise and degeneration of company culture, people, programs, and products. They are the first to notice, but most people at the vendor are in denial — especially leadership.
3. The company is becoming internally focused, and customer-centricity is waning. Customers don’t stop buying the vendor’s product, the vendor stops serving it’s customers
4. Program sprawl is pervasive and systemic, causing confusion for the customer and adding complexity to the vendor field engagement model.
5. The vendor ‘bus’ has arrived. The customer was initially supported by one to two individuals with range, but now the customer is greeted with four to eight individuals. This includes the account team (account manager, account sales engineer, account customer satisfaction manager, support engineer) and the extended #oneteam (product specialist(s), industry BDMs, partner manager and more).

Vendor Attributes — Early majority stage

Keepin it Real: The company is in denial. Leadership and ‘the machine’ is attempting to convince themselves, Wall Street, and Main Street that everything is fine. The blame will be placed on the economy, changing customer needs, a brief/transient slow down, and/or competitors that have maliciously instigated a ‘race to the bottom’. Rebel A players inject objections, empirical evidence, and anecdotal customer evidence to refute the myths of denial. They are attempting to reject, disrupt, and expose the negative momentum that is systemic in the company. They will be ignored, silenced, or, perhaps, fired.

Epoch Four — Late Majority stage

There is severe incongruence between the customer, and the products, organizational structure, people, processes, and company culture. A healthy company has processes that compliment the people and the culture, and a product that is aligned to customer needs. The company at this stage exhibits no alignment with the customer, and internally the processes, culture, and people are clashing. Tension has arisen within the company between teams, people, and duplicate processes. The stress and friction manifests itself in dissatisfied employees, missed deadlines, stagnate products, and demoralized customers. The company is a machine (precise, predictable, and not deviating from its instructions), and still ‘minting money’. The organization values resource efficiency (internal focus) over customer efficiency (external focus).

The proverbial fitting a square peg into a round hole has arrived

Not just the rebels and mavericks attempt to poke holes in the vendors, but people, new and old, that can not tolerate incompetence and burdensome processes. These individuals seek the ‘old days’ of ownership, accountability, dynamic, transparency, openness, non-conformity, and autonomy.

The top five characteristics of this epoch:

1. The sphere has changed and has morphed into a box (metaphor and pun intended). Vendor is attempting to put a box into a round sphere. It is not working so well.
2. Mavericks and rebels attempt to change the company culture, people, programs, and products by providing customer antidotes and providing empirical customer data — to no avail, or little success.
3. Outside business consulting firms are hired to analyze the company’s people, processes, programs, organizational structure, products, and balance sheets. Reorganizations happen, but the same ineffective and inept managers are simply moved around the organization. Layoffs happen, and the consequence is the best people leave the company.
4. SAs (technical gurus) are now sales engineers (Powerpoint specialists) selling new products that are not relevant to customers, or new features and functions that up-sell the customer on existing products. BDMs, PDMs, and CSMs are pervasive — overly people and organizations run rampant.
5. Vendor events which were the domain of techies are now saturated with individuals in suites and ties. The events are repetitive in content, and devoid of roadmaps, anti-patterns, and transparent dialogue.

Vendor Attributes — Late majority stage

Keepin it Real: The company has become accustomed to being order takers. Now that the race to the bottom is here, the company is struggling to implement changes to people and processes to match the new normal. The new normal consists of multiple competitors, reduced margins on legacy products, and sales teams lacking real sales skills (aka not just order takers). Both product and management rapid “reproduction” is stifling growth and perplexing customers. Product proliferation has introduced product dependencies that delay introduction of new product releases, and reduce time spent on innovation. The products have vast amounts of technical debt. This is when invasive, expense product code rewrites happen, that put a freeze on new features or new product development. The vendor assumes they are going to grow hyperbolic forever — a fairy tale that lives in perpetuity. The ranks of middle management swell to support this anticipated growth, as well as to manage the B and C players that require more oversight. The span of control for a leader quickly goes from 12:1 or more, to 5:1 or less. Read the middle management isBullShit blog post to glean more insight into the phenomenon of middle management as chief impediments to culture, process, organizational, and technology change.

Epoch Five — Laggards stage

The thought occurred to me regarding the congruence between the customer and the vendor at this epoch. Perhaps, the customer and vendor are aligned as they are both laggards. Expense reports are scrutinized, and travel is restricted to save money. Managers are in self preservation mode as the company is noticeably in decline, and everyone is clinging with fear to stay afloat. Fear is pervasive. The adage from Yoda beckons, fear leads to anger, anger leads to hate, and hate leads to suffering. There is anger, hate, suffering and mistrust within and between the people and organizations at the vendor, and between the vendor and the customer.

Internally, everyone is talking about the decline of the company. External customers are sharing tales of dissatisfaction. The customer perspective has been obliterated. It is like they don’t exist. Instead, individual’s at the vendor point fingers at each other, deflect blame, and assert other organizations’ people and processes are the root cause. The vendor forms a committee and has internal working groups that could solve the problem if someone just spoke to the customer. Issues can not be resolved without executives as people are operating in survival mode, and afraid to make a mistake. People deflect and throw other people under the bus.

The top five characteristics of this epoch:

1. Vendor putting an even more outlandish box into a round sphere. The vendor is forcing sales through discounts, high pressure sales tactics (audits anyone), and increased quota demands for account managers.
2. Mavericks and rebels attempt to change the company culture, people, programs, and products but have limited ability to do so, and find themselves less able to work outside in. Mavericks and rebels are accused of “throwing arrows” at the organization and its products.
3. More business consulting firms are hired to analyze the company’s people, processes, programs, organizational structure, and products. Change management, inclusion, and employee ‘feel good’ programs are introduced. EDS introduced the Quality Management Systems during this epoch. It did nothing to abate the demise of the company. It may have even hastened it as it pissed off a lot of people, and took away from servicing customers.
4. Overlay organizations wield more power than product and sales people.
5. Completing internal training and internal meetings have priority over customer interactions.

Keepin it Real: The end is near for the vendor. It was a great ride. The people that remain don’t have the skills (many have been middle managers far too long) or motivation to move on. The middle managers continue to make outlandish salaries when compared to the going market rate. Whey would they leave their cushy, overpaid position? The company is left with content, complacent, and antiquated leaders and individual contributors. Leaders value loyalty over competence. The spirit and soul of the company has been extinguished. The A players that decide to leave now will find opportunities, however, not near the money and stature of roles of those that anticipated the demise and left a few years back.

Epoch Six — Renaissance stage (for the lucky few)

There are those companies that can reinvent themselves — Microsoft did. The book Hit Refresh is an aptly titled book (rebooting can solve many frozen screens, or any computer problem for that matter) that describes the process of being a born again technology vendor.

Customer is in sight

The top five characteristics of this epoch:

1. Mavericks and rebels have successfully poked some holes into the vendors products, programs, culture, and people.
2. The size of the box is diminishing. The next wave of technology has arrived, and the vendor (they are incumbent) may not be the first to market but they still make money, have relationships, and CEO/board level relationships.
3. Depending upon how dismal the culture and people have dissolved, the vendor may have avoided the hit refresh or hit hard reboot buttons. Most vendors will have to do a hard reboot, or they will slowly become extinct. Some of the ‘old guard’ is returning to infuse the company with the mindset and energy from the glory days.
4. Finally, executive leadership has realized that placing individual contributors on Performance Improvement Plans (PIPs) is not changing the downward trajectory of the company. People that don’t make major decisions, have influence at the board level, or define strategy are not the problem. Seems foolish, but leaders protect and keep their club together — it is the laborers fault. Eventually, leaders and managers that led the vendor astray are forced out (aka put on special projects), or forced to leave (aka forced retirement).
5. Companies compare the new investments against the Internal Rate of Return (IRR) — benchmarked against existing investments. Innovation is stifled as new ideas have to compete with exiting, highly profitable ‘cash cows’. Most innovative products cannot match the performance or profitability of established products while they are still in their early stages. Traditional budgeting processes may therefore reject new and promising ideas, a phenomenon that Christensen coined in the book Innovators Dilemma.

Keepin it Real: Leaders blame the workers. The leaders are the ones that lowered the hiring bar, stifled creativity, built empires, made selfish decisions, set new policies and procedures, and created an inward focused culture. Leaders don’t fire other leaders. Leaders firing leaders would be like firing a family member. Nepotism runs high, leaders protect their own, and reciprocal favors keep the leadership club intact. No leader is about to escalate a problem, or speak the truth. Instead they cover up major mistakes they were responsible for the last few years that have led to the loss of business.

According the Jeff Bezos stasis is inevitable — “Day 2 is stasis. Followed by irrelevance. Followed by excruciating, painful decline. Followed by death. And that is why it is always Day 1.” I agree that all institutions deteriorate from being anti-fragile organisms into a machine that demands the status quo be maintained. Continuing to repeat the mantra of “we are Day 1” does not make it so. A company must admit it is failing, and take decisive action to fix the people, culture, process, product, and organizational problems.

Unlearning and abandoning what made them successful in the past is one of the biggest transformation hurdles for traditional companies. Talk to the people that were at the company in its burgeoning years. These individuals experienced the meteoric raise, and witnessed its decline. They will convey the real story. A story that is brutally honest and radically transparent. A tale that is closer to the truth than those told by those with so much to lose.

About the author : Tom Laszewski is the founder of the AWS Enterprise Technologist team (2018), and the AWS Private Equity Transformation Advisor program (2021). Tom is currently the Global Account Strategist (GAS) for Blackstone.

Tom established the AWS Global Solution Implementers and Influencers (GSII) Solution Architects (SA) team while co-managing a $1B business. As founder of the Americas Enterprise Technologist team, Tom built relationships with C-level executives at Fortune 1000 customers, designed cloud native solutions, and supported large scale transformations. Prior to AWS, Tom spent fifteen years at Oracle in a variety of leadership roles, including Director of Cloud Migrations He is the co-author of five modernization, integration, and cloud books. His last two books are Migrating to the Cloud and Cloud Native Architectures. Tom holds a MS in Computer Information Systems from Boston University.

Tom is the founder and curator of the isBullShit brand.