Maintaining Productivity with Growth

Friday Jun 24th 2016 by Gigi Sayfan
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The real issue is maintaining organizational productivity as the level of unproductively traditionally increases with scale. This is nothing new. It is one of the reasons that miniature startups can beat multi-billion-dollar corporations.

The traditional view of productivity and how to improve it is completely backwards. Most people think of productivity as a personal attribute of themselves (or their subordinates). X does twice as much as Y, or yesterday I had a really good day and accomplished much more than usual. This is a very limited view and it doesn't touch on the real issue.

The real issue is organizational productivity. The bottom line. The level of unproductively increases with scale. This is nothing new. It is one of the reasons that miniature startups can beat multi-billion corporations. But, most organizations look at the inefficiencies introduced with scale as a process or a communication problem, "If you improve the process or the communication between groups, then you'll improve your situation." There is some merit to this idea, but in the end, larger organizations still have a much greater amount of unproductivity compared to smaller organizations.

The individual employees at the bottom of an organizational hierarchy work approximately as hard as individual startup employees. The middle management does its thing, but is unable to eliminate or significantly minimize this large-organization unproductively tax. In some cases, there is a business justification for the larger organization to go more slowly. For example, if you have a mature product used by a large, and mostly happy, user base then you don't want to change the UI every three months and frustrate your existing users with weird design experiments. You might want to do A-B testing on a small percentage, however. The current thinking is that this unavoidable. Large companies just can't innovate quickly. Large companies either create internal autonomous "startups" or acquire startups and try to integrate them. But, both approaches miss out on important benefits.

I don't have an answer, just nagging feeling that we shouldn't accept this unproductively tax as an axiom. I look forward to some creative approaches that will let big companies innovate at startup-like speeds, while maintaining the advantages of scale.

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