Organizational Physics | The Science of Growing a Business

As organizations succeed and grow, they become more formalized, more bureaucratic, more careful, more remote from customers, and slower to act. Diseconomies of scale begin to work, overshadowing the cost advantages of size. Overhead grows, decision-making slows. Direct feedback from customers is reduced, filtered, and often ignored. The demon of af

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As the small startup’s size gradually increases, it will eventually reach a breakeven point where the two incentives, pulling in opposing directions, are equal. Above that size, a behavior appears across the organization that favors killing loonshots and supporting franchises. Let’s call that behavior the Invisible Axe. The sudden emergence of that

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There are portions of organizations, and even of economies, that are chain-linked. When each link is managed somewhat separately, the system can get stuck in a low-effectiveness state. The problem arises because of quality matching.1 That is, if you are in charge of one link of the chain, there is no point in investing resources in making your link

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In well-run organizations, people can focus on their work (as opposed to politics and bureaucratic procedures) and have confidence that if they get their work done, good things will happen both for the company and for them personally. By contrast, in a poorly run organization, people spend much of their time fighting organizational boundaries and b

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