What Holds This Company Back?

From Robin Hanson’s post today,

For most such design problems, most organizations have some standard ideal design criteria. The organization is supposed to search in the space of possible designs for ones expected to do well according to the ideal criteria. And then adopt those better designs. In profit-oriented firms, many key criteria are closely aligned with firm profit.

This conflict between design choices that meet ideals and those that help coalitions drives many of the illusions and hypocrisies in organizations. For example, people are often placed in positions of power for reasons other than their superior design competence, such as their info and abilities regarding key decisions. This creates a demand to give those people the illusion of design competence.

For example:

When I started at Lockheed Research in 1985, my mentor was a veteran who explained his secret for getting funding from the other Lockheed divisions:

Find an idea for a project we could do for them, but don’t tell them the idea. Instead break the idea into a few key parts, describe the parts to them, and let them put the parts together into the total idea. They will be much more willing to fund a project that is their idea.

(A similar idea to the Lockheed example appeared in “How To Make Friends and Influence People”, by Dale Carnegie). He continues,

Meetings in organizations often take the appearance of searching for design proposals and evaluating proposals presented. But in fact proposals have usually been selected beforehand, and the meeting is to create an appearance of support for them, and for the story presented about who deserves credit. If a problem is presented for which a solution isn’t offered, that is probably because they don’t see a solution with which they’d want to be associated, and would rather someone else take on that failure area.

As investors, instead of only asking what drives this company forward, you should also ask, “what holds this company back?”

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s