Bottlenecks and Backstabbing: Leading Your Company Out of Organizational Debt

In this era of uncertainty and exponential change, running an organization can be harder than ever — even by seasoned leaders. Markets, technology, and knowledge are evolving faster that organizations can learn or adapt. The speed of change is even affecting the organization itself. This is why leadership skills, both innate and learned, are becoming increasingly important during this age of innovation.

Great leaders leverage strengths to compensate for weaknesses by knowing how each team member influences the probability of success within the entire organization. According to Olin Hyde, CEO of San Francisco-based LeadCrunch, “Great leaders get teams to transform visions into reality by accomplishing things they would never be able to do alone.”

How exactly do great leaders do this? How do they motivate and inspire their teams to greater heights? It all starts with the elimination of Organizational Debt.

Great Leaders Recognize Organizational Debt

Organizational Debt was a term coined by serial-entrepreneur and academic Steve Blank for the chaos that inevitably comes to all startups from all the people and culture compromises made to “get it done.” It is equal to Technical Debt which is the extra development time you must spend to fix, modify or re-develop code that was created to solve a short-term issue. It is what happens when you sacrifice speed for efficiency and you wind up getting neither. Organizational Debt like Technical Debt will expand exponentially the larger the organization grows. Many people, including Sam Spurlin, co-founder of The Ready, have expanded the definition of Organizational Debt to include all organizations, not just Silicon Valley Startups. According to Sperlin, “[Organizational Debt is] the interest companies pay when their structure and policies stay fixed and/or accumulate as the world changes.

Once you recognize Organizational Debt in your company, how do you reduce it and how do you keep it in balance?

Great Leaders Share Authority

It seems everyone is extolling the virtues of the flat organizational structure. This is one of the biggest misunderstandings about organizational structure because it is not hierarchy itself that causes problems, it is a hierarchy of relatively static and ambiguous roles that stifles teams and fosters micromanagement.

Leaders often have access to a level of information and data that would help their teams to accomplish their goals successfully and more efficiently. Great leaders are not only providing their teams all the information they need to do their work, but they are also giving them space and authority to do the work as they see fit.

Employees performing in non-management roles are generally closest to the customer and often know what matters most to them. Smart leaders advocate empowering these employees with the knowledge and authority to make decisions. This can eliminate the need for customers to demand to speak with a supervisor to gain satisfaction which in turn creates a better customer experience overall.

Great Leaders Share Information

Organizations are networks. They are comprised of the relationships between individuals and teams. The quantity and quality of these relationships are the true structure of the organization. High-quality connections foster the easy flow of information throughout the network. Unfortunately, because of an organization’s culture, overly-complicated structure, or inefficient processes, the flow of information can be stagnated — or even stopped, altogether.

Great leaders can root out the bottlenecks and inefficiencies to get the flow of information moving again. Processes can be improved, but one of the larger issues is information hoarding. Employees hoard information if they think it will provide leverage in the future or give them the illusion of job security.

  • In the face of human jealousy and outdated and inefficient processes, how do you get information flowing again?
  • Create diverse teams that are multi-functional and horizontally connected.
  • Encourage transparent working methods so that no one is working in a vacuum.
  • Develop mechanisms for teams to share information with each other so the no one is searching for the same answer over and over again.
  • Root out and eliminate all barriers to the flow of information.

Great Leaders Protect Their Teams

Organizations can also be seen as a living organism that needs to be nourished and protected in order to flourish. Great leadership cultivates an environment that is free from harmful internal toxins and provides teams the resources they need to thrive. Just like a farmer does not need to tell seeds how to grow a crop of wheat, good leaders know that their teams don’t need direction or instruction on how to accomplish their tasks. Healthy teams self-regulate and great leaders simply provide the resources needed and protect against harmful outside forces that can derail a team’s agenda.

When teams are fragmented and inefficient, how do you get everyone headed in the right direction again?

  • Talk to people and teams to identify frustrations that can be easily culled and eliminate common bureaucratic minutiae.
  • Keep teams from being “randomized” by controlling access and requests from above or outside the organization.
  • Run interference and advocate on issues that affect the team to keep them on task.
  • Think of yourself more as a coach rather than a boss and seek to inspire rather than manage.

Great Leaders Make Room for Everyone

According to Kathryn Maloney, Org Designer and Organizational Transformation Consultant, the one thing that people are not talking about in regards how to make organizations better, “Change begins with individuals.”

Truly great leaders make room for individuals to break boundaries and leave the safety and comfort of being told what to do and what to think with the audacity of ownership and the freedom of curiosity.

When leaders rebalance their role within the organization to provide the space for good decision making and thoughtful perspectives, a more collaborative vision can take root. In these environments, the leader’s role is to encourage teams to focus on the collaborative vision to guide the choices they make on behalf of the organization as a whole.

Great Leaders Adapt and Change to Avoid Organizational Debt

Static roles, structures, and policies prevent organizations from adapting to changing with evolving markets, technology and knowledge. Inflexible organizational designs lead to employee frustration, information hoarding, micro-politics, and micromanagement.

All of these lead to Organizational Debt which leads to declining commercial success, reduced speed, unhappy customers, diminished employee engagement, and loyalty all of which has an immediate impact on innovation. This can paralyze the entire organization. To survive, address Organizational Debt head on by fostering a modern mindset of adaptive and self-organized organizational design and participatory governance.

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