That doesn’t matter much to the successful company, it makes more than enough money to cover the inefficiency, and the inefficiency isn’t causing any real trouble - it just means that a lot of people are being paid either to not produce very much or to produce things that will end up being thrown away.
Most executives and high level managers are used to this environment. You don’t actually need to be lean or very effective, you just need to pretend to be and know that whatever the company’s main revenue source is will cover you whatever you do. As long as you can tell a good story internally to justify your position.
Turns out that doesn’t transfer well to startups that actually need value out of every dollar spent.
Everything was done by committee in increments of the 1-hour recurring meeting once a week. You could be on 10 of these recurring meetings for 10 different projects.
The first part of every meeting was a recap of last meeting. The middle part was about 20 minutes of trying to make progress on blocking items while the ex-BigCo managers came up with excuses for why they didn’t do their part yet (usually it was because they had too many meetings). The last 20 minutes was a performative exercise where we decided on action items for the week which we all knew were unlikely to get done.
The company went on like this for years after I left until they ran out of extra funds to keep the charade going. The management scattered to other “startups” where I’ve heard they’re continuing to repeat the same games.
If you get the wrong people in the beginning, it can throw you into a wrong trajectory that's almost impossible to correct later.
What you describe sounds like a "founders just came together" trying to impersonate the IBM org chart without having figured out product-market fit yet, or even earlier than that.
Was it a new space startup in the Bay area?
If a large, successful company operated extremely cleanly, wouldn’t that increase stock price even further?
What are the disincentives to doing so (beyond the need for requiring more from people)?
Second, it’s also about redundancy, having more employees covers you from key man syndrome where your operations could be adversely affected by an employee leaving. Even if it means you technically have more employees than you need at a bare minimum.
Third, I’d argue that the level of “efficiency” required by a startup simply isn’t sustainable in the long run, unless you want everyone to burn out. Successful companies likely span a spectrum of efficiency, but none of them need to be on the far efficient end like startups do, and that’s better for everyone working there.
Yep, just look at 3M for instance. They were already an established chemical manufacturer, but they could afford to have some people spend their time investing adhesives. One of these was a total failure for the desired application (they wanted a strong adhesive for aerospace, they got a weak but reusable adhesive), but then they spent more time looking for applications for this, and now everyone and his dog uses 3M Post-It Notes.
Executives are solving for their job, not for the company's success.
This is 100% bad from a country/market level but is what you get when you let local optimizations trump capitalism. In some sense that local optimization also isn’t bad - it’s not uncommon that that behavior is also what lets efficiencies be extracted.
In other words, in many ways all of this is inevitable behavior as things grow and a lot of it are themselves (perhaps inevitable) symptoms of the mechanics at play rather than the mechanics themselves.
In other words, once “founder mode” is documented, you’ll have everyone claiming they’re doing founder mode same as how everyone says they’re now doing agile or whatever other fad you want to pick and you’ll be back at square one until someone then invents “strategic founder mode” or “growth founder mode” and claims to have figured out how you can spot that vs what everyone is just pretending to do right now.
I’m not convinced this is necessarily true. JIT implies making all of your buffers more obvious, and you will want to reduce unnecessary buffers to save cost, but maintaining some buffers for the sake of resilience isn’t incompatible with JIT supply chains. The problem comes when you combine short-term oriented management with JIT supply chains; if you quantify the cost of a buffer, you make it easier for that type of management to make that kind of decision.
Toyota, for example, is one of the firms that popularized JIT, but they don’t usually run into the same short-termist problems that afflict other firms. Relatedly, Toyota’s senior management have all spent decades if not their entire careers at Toyota and still includes members of the Toyoda family. Those guys are probably not going to play fast and loose with resiliency just to make quarterly numbers look good. They are going to look at the quantified and understood cost of their resiliency buffers and say, “removing this buffer might save lots of money next quarter but in the long run that represents a risk to a company I intend to pass down to my grandchildren so I won’t do it”. Whereas a different manager at a different company might say, “this will definitely make the next quarter’s numbers look amazing and if there are consequences in the long run, either I’ll have switched companies or I can just say it’s not my fault”.
Is it really 100% bad? Do people really think that the goal of humanity is to work in the most efficient way to extract the most economic value from everything possible? Can't we just be content being 50% efficient and use the other 50% of that effort to chill with family and friends and talk about films or something?
Working out how to motivate people whose individual impact now has near zero impact on the stock price.
