FringeSport has been experiencing growing pains. I recently became aware of the notion of”technical debt” and realized that we have”organizational debt.” I then Googled organizational debt and learned that I’m not the first person to have thought of it.
What is organizational debt?
I’ll start with technical debt. In regards to ramble or”cruft” (or inefficiency) in code or software systems. Whenever someone writes code well, the resulting software is lean and mean.
But code is often cluttered or becomes that way over time. Sloppiness adds complexity, which contributes to the code to run slowly or not at all. Moreover, cluttered code is often time-consuming.
Likewise organizational debt has undesirable complexity. It is because of creating an operation or business that suffers from”debt” — inefficiencies in processes, systems, and procedures.
In my case, FringeSport’s surgeries (and earnings ) have grown significantly. Legacy systems and processes no longer work for us, as a result of organizational debt.
In this post, I will describe four types of organizational debt and propose strategies to overcome them.
The first kind of organizational debt is deliberate — doing what’s quick and convenient. We know that it doesn’t scale, and it’s not the ultimate solution. However, it functions now .
Here’s an example. Say you have a customer that needs a refund. Your company needs a clear process of returns, to streamline moving ahead.
But the first time you experience a refund request, you just credit the client to finish the job. The problem, however, is that you’ve built no process for yields . You also have made a precedent for solving problems on the fly without judgment or a system.
The best way to mend deliberate organizational debt is to keep it in the first place or commit not to do it.
At Fringe, we’ll no longer produce deliberate organizational debt. We’re going to create systems and processes for recurring tasks as opposed to relying on the judgment and snap decisions of employees.
It is a challenging shift in our habitual practice. But we’re doing it.
The second sort of organizational debt is obsolete processes. You implemented a solution that worked in the moment. You now have better, more efficient options, but your systems and processes require the old manner.
It’s difficult for employees to recognize a much better choice. There’s a strong attitude of,”We’ve always done it this way.”
I’ve adopted two approaches to minimize or eliminate organizational obsolescence. The first is eradicating the mindset of”we’ve always done it this way” and replace it with”let’s find a better way.”
Beware, however, of overkill. I’ve found that employees might change a process solely because it’s complicated. I ask them to understand the first rationale and then decide whether it must be changed.
The second method to resist organizational obsolescence is for managers to do employees’ jobs yearly or quarterly. This helps managers develop advanced systems and procedures.
Our third kind of organizational debt is fractal. We have systems that have solved problems. However, new issues have arisen. We changed the system, and new issues came up. We changed again, and considerably more problems arose. And so on.
The result is complicated systems that drift in the initial purpose.
To mend fractal business debt, we try to recognize it. Then we steal an idea from the debt scenario: we return to fundamentals. We wipe out the cruft as best we can and start from scratch. The ensuing process is, ideally, tasteful and easy.
Our final kind of organizational debt is people. It is the toughest debt to look after.
Some employees have helped us get to where we are but cannot help us take another step. It’s tough to know when an employee has reached his limit. Yet it impacts the whole team and the assignment of the company.
We strive to train our employees to help them evolve with the organization. We’ve altered job descriptions to better fit a worker’s skills. I am wary of this, however.
The danger is maintaining a worker who no longer matches the organization. How can that individual affect other employees? She might have been qualified originally, but no more .
Transitions can be painful. They require compassion. We provide internal training and instruction to help the employee evolve. When it doesn’t work, we ease him to his next job.
Replacing a worker is tough. But I try to bear in mind a quote from Brené Brown, the author and college professor, by a seminar a few years back. She said, to paraphrase,”Your capacity for accomplishment will not ever exceed your capacity for hard conversations.”