Scale vs. Speed: Why organizations slow down

If you compare a Starbucks of ten years ago to a current one, they’re virtually the same. Compare this to the originals in Seattle, and the difference is startling.

The same goes for the design of a typical McDonald’s.

Apple launched the Mac with about a dozen full-time people working on its development. Today, they have more than a thousand times as many engineers and they haven’t launched a groundbreaking product in a while.

The same goes for Google. And Slack.

It’s not just famous big brands. Just about every organization hits a point where the pace of innovation slows as scale increases.

This happens for a number of reasons, and there are two ways to deal with them.

Technical debt is the result of shortcuts taken to get things to work right now. As a result of these shortcuts, the software (or hardware) isn’t easily expandable for future needs.

Handshake overhead is the result of the simple law of more people. n*(n – 1)/2. Two people need one handshake to be introduced. On the other hand, 9 people need 36 handshakes. More people involve more meetings, more approvals, more coordination.

Customer commitments are an asset but also a brake on innovation. The customers you already have didn’t necessarily sign up for you to change things.

Partner preferences are similar to customer commitments. The partners you work with have their own objectives and pace, the easiest common denominator is ‘slower.’

Wall Street’s fear is common, but fading a bit. This is the instinct that many institutional investors have to avoid the unknown. “The stock is going up, don’t blow it.”

Managerial anxiety is what happens when an operating bureaucracy comes to replace daring leadership. People get promoted because they’re good at their jobs, and innovation isn’t an opportunity, it’s a threat.

So, what to do? Ignoring everything above isn’t going to work. Tasking your people to burn all candles at both ends and to change their approach, while also violating the laws of institutional physics is simply not going to work. You’ll hit the wall. Every time.

There are two useful options:

Boring as a strategy is the approach that Apple and a large number of famous brands have taken. As you cross the chasm, the bulk of your new customers don’t want innovation at all. They want promises kept, a lack of surprises and reasonable prices and efficiency. Shipping your improvements on a regular schedule and bringing predictability to your offering allows you to reach more people and make a bigger impact. Small innovations allow an organization to avoid falling too far behind innovative competitors, and it can take decades before the gap is big enough to matter. And then you become Yahoo. Or Chrysler. Or Carvel.

Structural bankruptcy is a daring alternative. Create a skunkworks. Refactor your code from scratch. Spin off the cash cow and assemble a team to start something new from scratch. The new things probably won’t work at first, but if you do enough of them, your experience and persistence will pay off.

I’ve faced these choices many times in my career, and neither choice is easy or obvious, but the choice itself shouldn’t be ignored. If you simply hope for the best of both worlds, you’re likely to be frustrated at the same time you disappoint the people you work with and serve.