[tadkar]

I have a theory that organizations that grow fast and scale well all have this “cellular model” at their core.

Investment bank trading desks in the pre-2008 era, partnership at the big strategy consulting firms and even “multi-strategy hedge funds” now are actually all collections of very incentive aligned businesses. They share the Creo quality of making lots of millionaires and people looking back on their time there as one of great freedom and achievement.

In all these places, employees are paid according to the revenue they generate, with seemingly no ceiling to what you can take home. It is true that the size of any one cell doesn’t scale beyond a small number of people. But all the organisations I mentioned above scale by having units tackling small pieces of vast markets.

The main lesson I took away from reading “Barbarians at the Gate” is that big companies hugely suffer from the principal agent problem, where management is mostly out to enrich themselves at the expense of shareholders and employees (sometimes). This looting is however only possible at a company that was established by a founder with a deep vision and passion for the product and has set up systems and culture that generates sufficient cash for the professional management to leech off.

What I have not read yet is a systematic study of these “cellular organizations” and what the common features are that make them successful. My guess is that the key is that each “unit” or “cell” has measurable economics that makes it possible to share the economic value over a sustained period of time. A bit like why sales people get paid a lot.

[freetanga]

Agreed on cellular, but life is not a picture, rather a movie… what works at a stage starts attracting people, and eventually you let the wrong people in. A bit like the hype curve. These wrong people start poisoning internal processes and culture, seeking to cash out. And then the model blows up.

The migration of shitheads from Wall Street 80s 90s to Silicon Valley - technobros is for me a solid example of this.

[nine_k]

Indeed, an organism can only survive long enough if it can resist infection. For this, an organization should be openly hostile to certain forms of conduct, and should have a way to expel people who bring in wrong values, especially in management.

This is a really hard problem, due to its influence on the morale, and the danger of weaponization of these mechanisms by bad actors.

[rgbrgb]

And don’t forget, people change too, sometimes becoming misaligned over time. Maybe that’s a little like cancer. Org resilience is hard to model.