So here I go through all the effort of finally making a blog, and I’m totally ruined. Paul Graham just said everything I want to say. This will be the one and only post Mad Man or Slave post ever. Maybe.
Graham’s article is titled, “You Weren’t Meant to Have a Boss”. Essentially, it’s advice to young programmers to avoid working at a big company – but it’s also a really good statement of many of the ideas I’ve had floating around in my head for the last three years.
Graham argues that it’s unnatural for humans to work in the huge groups that companies create. We evolved to work best in small groups, certainly not more than 50, and working in bigger groups forces us to adopt technologies (including organizational structures) which, while allowing the work to get done, make us unhappy. Technologies like hierarchy, for example.
“ These smaller groups are always arranged in a tree structure. Your boss is the point where your group attaches to the tree. But when you use this trick for dividing a large group into smaller ones, something strange happens that I’ve never heard anyone mention explicitly.”
Well, he can’t be blamed for that. I don’t teach organizational theory classes yet.
“In the group one level up from yours, your boss represents your entire group. A group of 10 managers is not merely a group of 10 people working together in the usual way. It’s really a group of groups. Which means for a group of 10 managers to work together as if they were simply a group of 10 individuals, the group working for each manager would have to work as if they were a single person—the workers and manager would each share only one person’s worth of freedom between them.”
In practice a group of people never manage to act as if they were one person. But in a large organization divided into groups in this way, the pressure is always in that direction. Each group tries its best to work as if it were the small group of individuals that humans were designed to work in. That was the point of creating it. And when you propagate that constraint, the result is that each person gets freedom of action in inverse proportion to the size of the entire tree.”
The constraint is key – but Graham conceptualizes it a bit differently than I do. For me, the constraint that causes this entire phenomenon is the fact that our puny human brains have limits. That’s why we like working in small groups, and that’s what underlies the limitation of freedom that Graham talks about. The boss becomes the unique receptacle for the knowledge of his subordinates – whether 10 or 10,000 – and can only take so much with him to the next level. The boss will take some information, discard other information, request more codified, less detailed information from his subordinates (“We need to talk about your TPS reports”)… whatever he can do to get it down to a manageable quantity. That’s not so awful in smaller companies with, say, two or three levels of hierarchy – but it gets rough when you’re talking about massive corporations.
Certainly, there are technologies that can help. Anything that routinizes (bureaucracy and Taylorization) or codifies (statistics) makes things work better. One of the major reasons we can have such spectacularly overgrown organizations these days is that we have developed a huge number of methods for dealing with complex information – we do it surprisingly well. But the further information has to travel, the worse the signal gets.
So if these big groups blow so fiercely, why are they the predominate organizational form in our nutty world? Here’s Graham on the topic (making an apt analogy to overprocessed food):
“If “normal” food is so bad for us, why is it so common? There are two main reasons. One is that it has more immediate appeal. You may feel lousy an hour after eating that pizza, but eating the first couple bites feels great. The other is economies of scale. Producing junk food scales; producing fresh vegetables doesn’t. Which means (a) junk food can be very cheap, and (b) it’s worth spending a lot to market it.
If people have to choose between something that’s cheap, heavily marketed, and appealing in the short term, and something that’s expensive, obscure, and appealing in the long term, which do you think most will choose?
It’s the same with work. The average MIT graduate wants to work at Google or Microsoft, because it’s a recognized brand, it’s safe, and they’ll get paid a good salary right away. It’s the job equivalent of the pizza they had for lunch. The drawbacks will only become apparent later, and then only in a vague sense of malaise.”
Both of which are certainly true. But there’s more to it than that – things like isomorphism, which is basically the tendency of organizations to be more and more like each other over time. When people think about what a company should look like, they think about the big corporations. More importantly, when bankers decide to whom they’ll lend, they pick the big, familiar ones (unless you work for Y Combinator like Graham). This little bias of capital is arguably one of the most significant reasons we have so many major corporations. Small businesses like the ones that Graham is talking about kick ass when they’ve got enough capital, but banks are too scared to give it to them. It’s one of those idiotic statistical feedback loops: small businesses fail at a higher rate than megacorps because they’re undercapitalized. They’re undercapitalized because they fail at a higher rate than megacorps. Granted, that’s not the only reason, but a significant one.
Also: “vague sense of malaise”? Get this man some Marx!
“Working for a small company doesn’t ensure freedom. The tree structure of large organizations sets an upper bound on freedom, not a lower bound. The head of a small company may still choose to be a tyrant. The point is that a large organization is compelled by its structure to be one.”
YES. Agency versus structure. Think about the disconnect between the people you know and groups like politicians and CEOs. Why do the latter two groups seem to have so many more douches than the people we know in everyday life? Structure. They have to be that way to succeed at what they do.
So what does it all mean, Paul?
“That has real consequences for both organizations and individuals. One is that companies will inevitably slow down as they grow larger, no matter how hard they try to keep their startup mojo. It’s a consequence of the tree structure that every large organization is forced to adopt.
Or rather, a large organization could only avoid slowing down if they avoided tree structure. And since human nature limits the size of group that can work together, the only way I can imagine for larger groups to avoid tree structure would be to have no structure: to have each group actually be independent, and to work together the way components of a market economy do.”
Indeed. And there you have it: the three ways of organizing human activity. Hierarchy, market, and trust. Corporations are certainly hierarchical, but every organization combines the three. At the superficial level, corporations are fundamentally market mechanisms, but markets also determine the content of the corporation – what functions are internalized, and which are outsourced. The role of trust networks is also undeniable: both within groups at each level of the hierarchy, as well as across levels. Knowing someone who outranks your boss is a huge advantage to employees, but I imagine that organizations themselves depend on those non-hierarchical paths of information to stay afloat, too. Managers are critical chokepoints for information, and network connections that don’t duplicate hierarchical connections can serve as essential overflow valves for information that managers block out.
This is what I’m crazy about, sadly. If you are too, stick around. It’ll be fun.