In his book, The Messy Middle, Scott Belsky describes “organizational debt”:
Leaders who can’t make tough decisions cause their teams to accumulate “organizational debt.” Like the notion of “technical debt,” which is the accumulation of old code and short-term solutions that collectively burden a team over time, organizational debt is the accumulation of changes that leaders should have made but didn’t. Silicon Valley entrepreneur Steve Blank, who first coined the term, described how “all the compromises made to ‘just get it done’ in the early stages of a startup . . . can turn a growing company into a chaotic nightmare.” A lot of these actions (or the lack thereof) are less about the pursuit of productivity and more about avoiding conflict. As a result, the most common decision is to not make a decision yet.
Organizational debt is pernicious. By avoiding conflict and delaying decisions in the early stages, you generate more conflict in the later stages. As more people join the organization it compounds the problem, resulting in politics and communication issues.
We moderated a strategic planning session for a client in the software industry. There were heated debates on the strategy and on how they could build the capabilities to support it. During the session, participants agreed that everyone in the organization should work on their listening skills.
I found this statement odd. They were pretty good listeners! One thing that came up often during the 3 months we spent preparing the strategic planning session was the need for stakeholders to gain conceptual clarity: define and interpret terms in the same way.
We did this exercise to detect the core issue: map the evolution of the market, the offerings and processes to support the offerings. The takeaway was that their listening skills problems came from the lack of conceptual clarity due to organizational debt.
Exercise to detect organizational debt
Step 1: Map the X axis. It represents evolution (Source: Learn Wardley Mapping - Climate).
Step 2: Map the Y axis. It represents your verticals/field of play.
Step 3: For each vertical fill the box with where the market is and where the market is going. Sometimes the evolution of the market will be different depending on the personas. For example, enterprise customers might request a custom product whereas SMBs customers are fine with a standardized product.
Step 4: For each vertical fill the box with where your offerings are and where your offerings are going.
Step 5: For each vertical fill the box with where your processes are to support your offerings and customers.
At the end, it should look like this:
Some parts of the market want products, whereas other parts want custom solutions and/or integrated solutions (product + custom). Some of the organization offerings are where the market is, at other places there are gaps. While they have offerings in products, custom and integrated solutions, the organization is structured to deliver custom/integrated solutions.
In these situations, the need is not to define and interpret terms in the same way. The need is to define what you are doing and, most importantly, what you are not doing. Strategy is about making choices. To compete, a company must choose to do some things and not others. If an organization is in the position above, it is either time to decide what you are not going to do or how you can structure the organization to serve different verticals/personas.
