"Organizational debt" harms my business

FringeSport has experienced growing pain. I recently became aware of the idea of ​​"technical debt" and realized that we have "organizational debt". Then I googled organizational guilt and was told that I'm not the first to think about it.

What is organizational debt?

I start with technical debt. It refers to operation or "cruft" (or inefficiency) in code or software systems. When someone writes good code, the resulting software is narrow and meant.

But the code is often sloppy or so becomes over time. Sloppiness adds complexity, which makes the code run slowly or not at all. In addition, sloppy code is often time-consuming.

Similarly, organizational debt has unwanted complexity. It is caused by creating an operation or organization that suffers from "debt" – inefficiency in processes, systems and procedures.

In my case, FringeSport's business (and revenue) has grown significantly. Older systems and processes no longer work for us due to organizational debt.

In this post, I will describe four different types of organizational debt and suggest ways to overcome them.

Organizational debt refers to outdated businesses or systems that lead to inefficiency, which limits a company's ability to grow.

Organizational debt refers to outdated businesses or systems that lead to inefficiency, which limits a company's ability to grow.


The first type of organizational debt is intentional – do what is quick and convenient. We understand that it is not scaled and it is not the ultimate solution. But it works now.

Here is an example. Say you have a customer who wants to repay. Your company needs a clear return process in order to improve efficiency in the future.

But the first time you experience a refund request, you only credit the customer for completing the task. However, the problem is that you have not built any return process. You have also created a precedent for solving problems on the go without them or a system.

The way to fix intentional organizational debt is to avoid it in the first place or to commit not to do so.

At Fringe, we will no longer create intentional organizational debts. We will create systems and processes for recurring tasks instead of relying on staff assessment and quick decisions.

It is a difficult change from our usual practice. But we do.


The second type of organizational debt is outdated processes. You implemented a solution that worked at that time. You now have better and more efficient alternatives, but your systems and processes depend on the old way.

It is difficult for employees to recognize a better alternative. There is a strong attitude: "We have always done it this way."

I have adopted two methods to minimize or eliminate organizational aging. The first is to eradicate the attitude "we've always done it this way" and replace it with "let's find a better way."

However, beware of excess. I have found that employees can change a process simply because it is complicated. I ask them to understand the original reason and then decide if it needs to be changed.

The other way to combat outdated organization is for managers to do employee jobs quarterly or annually. This helps managers develop better systems and processes.


Our third type of organizational debt is fractal. We have systems that have solved problems. However, new problems have arisen. We changed the system, and then new problems arose. We changed again, and more problems arose. And so on.

The result is complicated systems that go from the original purpose.

To resolve fractional organizational debt, we first try to recognize it. Then we steal an idea from the technical debt scenario: we go back to the basics. We wipe the border as best we can and start from the beginning. The following process is hopefully simple and elegant.


Our last type of organizational debt is people. It is the most difficult debt to deal with.

Some employees have helped us get to where we are but can't help us take the next step. It is difficult to know when an employee has reached his or her limit. Still, it affects the entire team and the company's mission.

We try to train our employees to help them develop with the organization. We have changed job descriptions to better suit employees' skills. However, I am careful about this.

The danger is to keep an employee who no longer fits the company. How does that person affect other employees? She may have been qualified initially, but no longer.

Transitions can be painful. They require compassion. We first offer internal instruction and coaching to help the employee develop. If that doesn't work, we will help him to his next job.

Replacing an employee is difficult. But I try to remember a quote from Brené Brown, the author and university professor, from a conference a few years ago. She said, to paraphrase, "Your capacity for success will never exceed your ability for difficult conversations."

So I have the difficult conversations.

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