12 Jul 2015

Org Chart Debt - A Risky, Off-Balance Sheet Liability

Recently, Steve Blank, a luminary who developed the Customer Development methodology, a precursor to the Lean Startup movement, said that organizational debt is like technical debt in software but worse: “Organizational debt is all the people/culture compromises made to 'just get it done' in the early stages of a start-up.”
“Just when things should be going great, organizational debt can turn a growing company into a chaotic nightmare. Growing companies need to understand how to recognize and “refactor” organizational debt.”
He was talking about organizational debt incurred by startups at the time of hiring lots of people as it prepares to grow. On the other hand, Enterprise IT incurs organizational debt throughout the course of its existence.
“IT organization design is rarely thought out from a baseline of principles. The prevailing design is mostly a product of happenstance, mergers or acquisitions, people-retention compulsions, and the ideas of whoever is in charge at various levels in the organization. It resembles how software accumulates technical debt over time unless we periodically step back and reassess the design.” Agile IT Organization Design
And as with all debt that isn’t repaid on time, unaddressed organizational debt creates more problems. It results in silos, politics, unclear accountability, slow decision making and poor responsiveness to the market in general. Read further.