The perils of organizational debt
A common problem for leaders
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The past year well, it was something wasn’t it? Some days it felt like getting work done and making dinner before plopping down in front of a movie was all we could manage. Keeping up with smaller tasks became harder. Piles of stuff started to grow around our apartment. While I was focused on day to day life, the clutter debt amassed. So, I did a declutter challenge to get rid of 465 things in a month. I met the goal but dealing with clutter debt was a massive project. I decluttered at least one item every day. Finding small improvements was relatively easy. Then I spent the better part of two days going through old paper debt — receipts, feedback from a writing class taken 10 years ago, business cards of people I no longer knew. It was a bigger project than I imagined.
It's not unlike what leaders at scaling startups face. Things that were important but ignored in favor of the urgent finally become critical and have to be addressed right away. We're all familiar with technical debt. It's super common, even expected as the team runs full out to find product market fit. There's another kind of debt we talk about less — the organizational kind. New leaders at scaling companies often encounter heaps of organizational debt. It's the reason many were hired. When I became a COO it showed up right away. Resolving organizational debt was a large part of my work and some of the most difficult.
This isn't unusual — when you're just fighting to get a hold of enough market share to stay alive like startups do, organizational activities often fall to the way side. Over time these delayed actions pile up into organizational debt. As the company begins to scale, these heaps become obstacles. Collaboration is thwarted, projects delayed, goals missed, and morale plummets.
What does organizational debt look like?
Hiring processes that are too cumbersome, delaying the timeline to bring on critical new hires. The brewing conflict between product and engineering has grown into a full-blown control battle slowing down development and the ability to ship critical features. Unaddressed behavior problems like the toxic teammate who acts out, frustrating the whole team. The team structure is silo'ed which means everyone is going in different directions, rather than in the same one.
Ignore organizational debt at your own peril. Organizational debt is one of the biggest roadblocks to leaders scaling themselves. It also slows the entire team down, putting important goals at risk. Resolving organizational debt is one of the most powerful things you can do as a leader.
How do you begin to unwind it?
Be prepared for it. Actively seek out places where it might be lurking. Persistent problems might be a signal there’s an iceberg of debt lurking underneath.
Look at how much you take on vs how you delegate. As companies scale, many leaders struggle to move away from executing and into guiding or directing. There's a good chance you or your predecessor accidentally fell into this behavior. This results in organizational debt of the capacity kind. While you are under water others may not have enough to do or aren't given the opportunity to challenge themselves with new tasks. In order to get organizational debt under control it needs to become one of your top priorities. You can't do this if you're too in the weeds, too involved in the day to day. Delegate, delegate, delegate. Your priority list should be focused mostly on increasing individual and organizational capacity.
Assess what skills are needed at this phase of the organization. Review your hiring criteria — there's a good chance you need to adjust it. To scale requires teams that work well together. While technical expertise was important in the startup phase, now those with a different skill set are critical. Instead of hiring the super technical expert with a prickly attitude look to those with enough technical skills but who know how to mentor and work with others without friction. Then look to leveling up the collaboration skills of those already on the team. Many of them have the capacity, they just need to a bit of support to level up.
Finally, don’t neglect brewing behavioral issues. Toxic behavior slows the team down and makes everyone miserable. Never tolerate it, even if they’ve been with the company a long time. Sometimes this phase just isn’t the right fit for everyone. The scaling phase often means letting go of control which is hard for some. Address the behavior but if it doesn’t change, letting them go is sometimes the best thing for everyone.
What else to read
Another way this scaling misstep shows up.
Hire superstars or remove toxic employees? The answer might surprise you.
Why the stressed brain falls back on old habits.
I want to hear from you
I'm working on a megathread on emotions at work. I'd love to know what you want me to address. I look forward to seeing you in my inbox!
Written by Suzan Bond, a leadership coach and former COO. Based in Brooklyn. You can find me elsewhere on Twitter and Medium. Comments or questions about leadership or scaling startups? Send me a note.