Why ‘Organizational Debt’ is Such a Powerful Concept

(whether or not you work in an organization)

I came across a business concept this week which instantly captured my attention. I felt instant, visceral recognition of the concept being described, and the power of being able to sum it up so succinctly.

organisational debt

The term was ‘Organizational Debt’.

I was scrolling through twitter when I saw this tweet from Scott Belsky

 

“the accumulation of changes and decisions leaders should have made but didn’t.”

Boom.

In a quick exchange with Belsky, he pointed back to the originator of the term, Steve Blank. Blank comes from a background in tech, and in 2015 wrote a blog post coining the term as an extrapolation on a coding concept called ‘Technical Debt’.

In tech start-up terms, technical debt is created by all the short-cuts taken when coding in order to ‘just get it done’ for market. These add up and create technical problems down the line if not reckoned with.

Blank writes in his post

While technical debt is an understood problem, it turns out startups also accrue another kind of debt – one that can kill the company even quicker – organizational debt. Organizational debt is all the people/culture compromises made to “just get it done”…

 

No matter who you are and what kind of organizations you’ve worked for, everyone knows that pressure to ‘just get it done’. It can be for the sake of stakeholders, the cause, or the bottom line, but the consequences are the same. At a point, you accrue organizational debt.

Processes get sloppy. Tough decisions aren’t faced, because work-arounds are more expedient. Risks are heightened. Frustrations rise.

And after a while, the effects of organizational debt, accumulated in aid of faster outcomes, end up slowing the organization down. People and processes aren’t frictionless, stable and agile. Instead, things become complicated, unreliable and weighed down by all the niggling little issues not resolved.

Culture suffers. Effectiveness suffers. People suffer.

Sometimes it’s not even just ‘speed’ driving organizational debt. Sometimes it’s a desire not to rock the boat, or a reluctance to take a hard decision in a highly uncertain or complex environment. Sometimes it’s an unaddressed need to make changes in order to better meet the demands of a rapidly changing reality. Sometimes it’s a lack of prioritisation leading to no margin for leaders to attend to the accumulating underlying issues.

Whatever is behind it, as Belsky says in the screenshot of his upcoming book ‘The Messy Middle‘, “Leaders who can’t make tough decisions cause their team to accumulate ‘organizational debt'”.

At the end of the day, organizational debt is the result of all the things that should have been done to ensure an organization is operating at peak health and efficiency – but weren’t. 

[Tweet “Organizational debt: things that should’ve been done to ensure health & efficiency, but weren’t.”]

So why is this such a powerful concept?

Because it identifies and names something that is powerful enough to make or break an organization.

But if we take a step back, it’s even more than that.

In fact, this is a concept that is powerful for every single person to recognise, whether they lead or work in an organization or not.

Because every life reflects the same dynamic.

We are never living or working in ideal circumstances. There’s never enough time, or money, or bandwidth. So we compromise.

But when we compromise on the – 

  1. same things
  2. long enough
  3. without reckoning with the cost…

we accrue debt in the overall ‘organizational landscape’ in which we’re operating – in life or work. 

We might be compromising on doing the hard work of standardising and documenting operating procedures, or compromising on doing the hard work of getting organized in our life admin so we stop missing bills that are still going to that old address.

We might be avoiding digging into years of accumulated and conflicting staff contracts in order to create a HR system that actually works and can meet the demands of the future, or avoiding digging into years of accumulated emotional baggage in order to eliminate self-destructive thought patterns and actually set ourselves up to thrive.

We might be trying to find ways around having a hard conversation with that employee who just isn’t what the company needs in that role, or trying to find ways around having a hard conversation with that family member whose behaviour is hurting everyone around them.

Organizational debt happens when we don’t tend to the success of the big picture by making hard decisions, changes and investments. 

So why does it matter whether there’s a term for it?

Because naming it makes it visible, when our flawed human natures want to ignore it. It gives us a tool for recognising and addressing it. 

I know how easy it is to justify. I’ve accrued my fair share of organizational debt in the name of ‘getting it done’.

I also know how hard it is to tackle. I’ve beat my head against a few walls of trying to straighten out old messes.

But I know, too, that’s it worth it.

I wrote in another post about the handwritten note I kept pinned above my desk during university. It held a reminder to myself – the difference between where we are and where we want to be is the painful decisions we are unwilling to make.

Sometimes it is within our power to make those painful decisions all by ourselves. But sometimes we need wider buy-in. Changing culture and processes in an organization, or a family, is not typically going to happen most successfully by the actions of one person. You need collective action.

And that start with discussing the problem.

And that starts with naming the problem.

And that makes ‘Organizational Debt’ a powerful concept indeed.