Avoiding Organizational Debt

Leaders who can’t make tough decisions cause teams to accumulate “organizational debt.” Steve Blank, who first coined the term, described how “all the compromises made to ‘just get it done’ in the early stages of a startup…can turn a growing company into a chaotic nightmare.” But a lot of these compromises are less about the pursuit of lean productivity and more about avoiding conflict. Like the notion of “technical debt,” which is the accumulation of old code and short-term solutions that collectively burden the performance of a digital product over time, organizational debt is the accumulation of changes that leaders should have made but didn’t.

The consequence of delayed optimization adds up over time. Image by O.R.Orozco — 99U

The consequences of this kind of organizational debt were abundantly clear during my tenure at Adobe and experiences working with other companies. In large companies that pride themselves on having a friendly culture and comfortable work environment, leaders are liable to refrain from causing ruckus. Sometimes leaders opt to isolate or transfer under-performers and bad actors to other projects and teams rather than deal with the difficulty of firing them. Often times, when it’s necessary to reorganize a team, leaders are dissuaded by the time it takes to plan, coordinate with HR, and communicate the change (especially if the communication involves upsetting someone). As a result, the most common decision is to not make a decision yet. Organizational debt accrues.

Especially when companies are successful, the repercussions of moving people around or changing team structure and practices are amplified. The old adage “don’t fix it if it ain’t broke” becomes the law of the land. The incremental optimizations that leaders should be making never happen, and the company’s organizational debt accrues. Eventually, the mountain of organizational debt compromises the team’s operations and product. Progress slows as people become misaligned, and motivation dwindles as bureaucracy sets in. And then a nimble start-up (or better-led competitor) outpaces you and wins.

What to do? Small companies with a culture of honesty and a commitment to continuous improvement have an advantage. You should alway be optimizing how you work. My friend Aaron Dignan from TheReady shared some great ideas for eliminating organizational debt in big companies, including launching a “bounty program,” where, like a bounty program to catch technical bugs, “any employee that encounters a policy or process that is hindering their ability to deliver value to the customer can submit the policy/process (and a recommendation) to the program website.”

Keep an eye out for the symptoms of organizational debt. When you find yourself waiting for changes that seem obvious, speak up. When you implement a process, be sure that it it isn’t an escape door from taking action. A great process advantages conviction — when people you trust on your team know what needs to be done, they should be empowered to do it.

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