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The Bureaucracy Myth

2011 May 1
by Greg Satell

Everybody loves a hot young tech company.  They arrive as little bundles of joy, filled with excitement.  They brim over with potential and we can imagine that one day they will rule the world.

As they grow older, they lose some of their charm.  Their products seem less unique and amazing.  We start seeing mistakes, even failures and become disappointed.  How could it happen?  Who’s to blame?

Ah!  It must be bureaucracy!  Those kafkaesque, small minded suits throwing wrenches into the gears of innovation!

It’s easy to blame bureaucrats. People who fill out forms for a living seem deserving of our ire.  After all, they can’t code, sing or dance.  However, the notion that they bring down tech companies is not only a myth, it’s a cop out.

The Microsoft Bugbear

Every techie loves to hate Microsoft.  Just mention the name in certain circles and you will inevitably hear about bloated, messy code, crappy user interfaces and mediocre products.  Every self respecting tech entrepreneur worthy of the name vows to be different.

Really?  Would it be so bad?

Let’s take a quick look at Microsoft as a business.  With a market cap of nearly $250 billion, they are one of the most valuable companies on earth.  Last year they had profit margins of 30% yielding them $20 billion.  They have over $30 billion in cash and return on assets and equity are an absolutely stellar 20% and 47% respectively.  The horror!

And their products?  Windows and Office still dominate, of course.  The XBox, Kinect, Windows 7 and even their new mobile operating system have received reviews ranging from good to positively gushing.  Bing, of course, has emerged as the only serious competitor to Google.  Not exactly a tale of woe…

The Google Impasse

The more recent darling of the tech world, Google, has now become a target.  No longer the precocious love child of idealism and an algorithm, it has become a global behemoth with over 20,000 employees.  Already active in virtually every country in the world, growth in its core search business is beginning to slow.

In their quest to find success in new lines of business, they have begun to stumble and some are wondering if they’ve lost their mojo.  Their android operating system had an embarrassing SMS bug.  Google Wave, Google Buzz and the Nexus One phone were all flops and talented people have left the company.  The culprit: Bureaucracy.

However, how does that explain Google’s successful product launches like the Android mobile platform and the Chrome browser?  Moreover, it must be said, if there ever was a company that needed more bureaucracy it was Google.  Anybody who has ever done business with them can attest how frustrating and confusing it can be.

Tech companies, just like in any other industry, run into problems as they grow, but it has nothing to do with bureaucrats and everything to do with a failure to scale management.

The Realities of Increased Scale

As a business grows, the challenges change.  When you’re young and lack resources, everything is potential.  If success comes quickly, you feel invulnerable.  The team is small and esprit de corps is buzzing with enthusiasm.

However, as rapid expansion gives way to the realities of running a business, some basic facts of corporate life rear their ugly head:

The “Nut”: As revenues grow, so do expenses.  Mature companies need to strive not just to win new customers, but to keep existing ones.   That entails spending lots of time servicing core products rather than dreaming up exciting new launches.  That might seem boring, but it pays the bills.

The Dunbar Dilemma: Once teams grow significantly larger than 150 people, organic connectivity is lost.  Management needs to find new ways to communicate and inspire.  What used to feel like a family starts to take on an institutional feel.

A Culture of Hiding: Another consequence of growing big is that it becomes easier to deflect responsibility.  If no one steps up and makes a decision, things don’t happen.  Many of the gripes in personal accounts of stagnating companies refer to the final result being a product of the “lowest common denominator.”  That’s what happens when people hide.

Monday Morning Quarterbacks: Once you become successful, everybody has an opinion about what you do.  You try to block it out, but it’s difficult.  Every decision is second guessed, which makes decisions harder to make.

Fear of Failure: When you have a breakout success, it’s natural to expect that everything that comes after will be successful too, but, that’s unrealistic.  Seen in this light, Google’s readiness to fail should be seen as a strength, not a weakness.  Especially since theirs are cheap failures that have negligible effect on the bottom line.

Begging the Question

At the heart of the issue is the logical error of begging the question.  Bureaucracy is assumed to be bad, as companies get bigger bureaucracy expands and therefore it must be bureaucracy that humbles companies that were formerly juggernauts.

Yet who says bureaucracy is bad?  As businesses develop, they take on staff that perform mundane tasks like organizing health care coverage, making sure the rent is paid and arranging for the office to be cleaned.  People who do these things allow others to focus on their core jobs.

The tendency to put the blame on faceless “bureaucrats” is nothing more than a ruse put forth by those who wish to avoid taking responsibility.

If software developer teams are bloated, software developers need to fix that.  Bad decisions are made by bad managers.  Poor marketing is done by poor marketers.  You have communication problems?  Pick up a phone or send an e-mail (and do be civil!).

All of the griping that goes on obscures the real issue:  A change in scale creates new types of problems.  The way to solve them is to stop avoiding them.

– Greg


12 Responses leave one →
  1. May 1, 2011

    Hi Greg – useful reality check.

    I think there are additional realities at work. You describe an organisation as if it were a flat network and that people can just bust through the bureaucracy by getting on with it.

    Bureaucracies cast people into certain roles – innovators and free thinkers are squeezed out while in many cases politically astute manipulators types thrive and rise. At best “busting through” is simply smothered, at worst such organisations operate like dictatorships where free thinking is dangerous. If you need to keep your job then it is not always possible to even speak up.

  2. May 1, 2011


    I just came across the blog below – this is what I was meaning – the political pathways and “weapons” used for power

  3. May 1, 2011


    I can see how it could be taken that way, but respectfully, I think you missed my point.

    Technically, bureaucrats are people with bureaucratic (i.e. administrative) responsibilities. Businesses are run by managers. While it is easy to blame faceless bureaucrats, inevitably the problem lies with crap management.

    Although I do agree that there is little that people without management responsibility can do, the ones who complain thew loudest are usually those with quite senior positions. In other words, they are using the “bureaucracy excuse” as just another way to absolve themselves of responsibility.

    On a different note, as someone who lives in a quasi-dictatorship, I do see your point:-)) I should mention, however, that in those cases as well, the problem starts at the top, not somewhere in the middle.

    – Greg

  4. May 1, 2011

    Good read. Thx.

    – Greg

  5. May 1, 2011

    As someone who worked at Microsoft in its heyday and was there for part of its decline, I agree that it wasn’t bureaucracy that killed Microsoft. It was management. I used to love my job. It was like working at a small company, even though it was a large company. I was able to thrive and lead as an individual contributor, meaning I never had to take the management path in order to have a major impact on my product. We were cutomer-centric, believe it or not. And we all hoped that Microsoft could make the turn into a large company without becoming the IBM that everyone talked about and despised.

    Didn’t happen. Parts of MS did become bureaucratic, but I think that’s more of a symptom than a cause. I’m not sure what to attribute it to except that management didn’t help shape an environment that could still allow for creativity, productive dissent, and so on. It rewarded climbers who were more interested in their career than in the customer. Microsoft never had a good system for helping to teach and grow it’s managers, and often promoted individual devs and contributors into management positions they weren’t suited to. When it grew larger, and politics became a bigger factor, the problem was exacerbated. There were other problems as well. You’d think that a company led by such smart people could develop systems that would work better and allow a large company to remain successful.

    What small companies do you know that have really succeeded in this transition, Greg?

  6. May 2, 2011

    Interesting question Neicole. I’m not sure that you ever really succeed. It’s a constant battle. The problems of increasing scale are always with you and you always wish you could go back to the early days.

    However, if there is one company that I would pick that I think does a pretty good job it is Google. They still seem to be able to attract people who are super smart and creative (which is the reason Facebook is trying so hard to poach them) and those people are invariably enthusiastic about the company and its prospects.

    – Greg

  7. May 2, 2011

    Great post, Greg! Actually one of the very few ones that go against the cliche that Bureaucracy is bad and to blame for everything.

  8. May 2, 2011

    Thanks Stan. Keep in touch.

    – Greg

  9. May 2, 2011

    Greg – I had a mentor in my first corporate sales position who explained big company culture to me this way:

    There comes a point where companies have more to lose than to gain by changing. When a company hits that point, everything changes from grow to protect. Decisions become more guarded and cautious. The people are different, too. Instead of idea people, they look for safe people who just want to survive by towing the line. Managers go from being leaders to being bean counters.

    The only way out seems to be a disruption that changes the dynamic from “little to gain… everything to lose” to a focus on having something of great value to gain.

  10. May 3, 2011


    I think there’s a lot of truth to that. However, there are some big companies that are able to remain super innoivative. Some, like Google and Apple are obvious, but others, like Wal-Mart and 3M are less so (and 3M is a century old!).

    So I still think that the bureaucracy excuse is something of a cop out.

    – Greg

  11. June 9, 2011

    I can write from a particular perspective, and that’s more than thirty years’ experience as a career bureaucrat in the UK, in both public and private sectors. I can only agree that the problem isn’t bureaucracy, it’s crap management.

    When I was a public-facing bureaucrat in the UK social security system, I saw my job as being a facilitator; using my knowledge of the system to ensure that citizens got their entitlements as quickly and easily as possible, with the minimum of trouble on their part and the minimum of work on mine. That “minimum of work” wasn’t so I could put my feet up and slack off; rather, it was to enable me (and my colleagues, who were doing the same thing one way or another) to get down that day’s pile of work as best we could, knowing that the next day would bring a new pile of work just as tall. We knew what corners we could cut whilst staying within the law and ticking all the appropriate boxes. The trick with this was to keep your immediate line managers fully informed and to try it out on them before doing it (otherwise you could get into a world of trouble…) It wasn’t perfect, it didn’t work every time, but if we could get the right result more easily, then we were into win-win situations and we made someone’s difficult life just a bit easier.

    Nowadays, that’s not permitted. The people at the sharp end have to follow the rules laid down; in the public sector, by politicians who don’t have to take the flak for it going wrong, or in the private sector, by boards of directors or by middle managers who turn up with an MBA, a sharp suit and nothing else to their names. Because “bureaucracy” is such a bad word, the assumption is that anyone with any experience in how to make an office-based system work is, by definition, some sort of dinosaur who has to be shaken out of their complacent and old-fashioned ways, or be pensioned off.

    Of course, what actually happened – at least in the UK public sector – was that middle managers from the private sector were drafted in (often with generous salary deals that came out of everyone else’s pay budget) to shake up the sleepy old civil servants. What actually then happend was that they cut corners that they shouldn’t cut, because they a) didn’t know any better, or b) thought they did know better and wouldn’t be told “you can’t do that”. Result? A number of scandals a few years back in the UK, such as the one where a vast amount of sensitive personal data was lost because a middle manager decided that it was too expensive and time-consuming to have software that encrypted data discs; and another decided to go with the cheapest bidder for courier services instead of using the Royal Mail (the dedicated Government courier service having been abolished long ago because it was too expensive and “it’s not the business of government to run courier services”; but at least they didn’t leave sacks of sensitive post on rubbish heaps or park them in trailers in Glasgow for six months because the courier firm had sacked two-thirds of the manual workforce who did the mail sorting).

    The problem was then one of “deputy heads must roll”, or worse. Many of these Wunderkinds were imported with reputations out of all proportion to their abilities, except for their ability to cover their backs when the nasty stuff hit the twirly-twirly machine; and there were a few cases where they tried to load the blame on the junior who they told to cut the corner. Fortunately, the UK public sector still has strong trade unions who were able in some cases to prevent junior staff being sacked for the errors of their managers.

    I was once criticised by a manager because I was spending time checking the regulations on employing an Indian citizen in the UK Civil Service – “Don’t throw these obstacles in my way! I want to employ whoever I think is best for the job!” – until I told him that I was anticipating his decision because this was probably the best candidate out of those shortlisted, and I was trying to find out ways for him to justify the appointment if he actually decided that he did want to employ that person: “If you want to employ candidate K, you will have to ensure they’ve got a valid document P, and you will have to justify conditions A, B and C to the Immigration Service by telling them that this person fulfils criteria X, Y and Z. I’m sure you can manage that, but I can draft that for you if you like so thagt it will get accepted.” Collapse of stout party.

    In short, a good bureaucrat uses their knowledge of the system to present solutions; only a bad one uses that knowledge to throw up problems.

  12. June 9, 2011


    Really fantastic! I rarely get comments that are both so well written that they’re fun to read and I learn a lot to boot. Thank you so much for sharing your thoughts. I hope you don’t mind me using excepts in another post.

    You also confirmed one thing that I’ve often thought about people with (sorry about this) seemingly boring jobs. I’ve often found that when I’ve taken time to talk to them and get to know them, that they have other creative outlets. Sometimes, I’ve been successful in placing them in another area where their talents could be of more use, but unfortunately much more rarely than I would like.

    In any case, good luck in your new career as a photographer. For everyone else, check out Robert’s site:

    – Greg

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