Small companies will win

Without fail, big companies become bureaucratic and cumbersome beasts. There are no exceptions. Even Google has gone down this path.

My knee-jerk was to blame the leadership. The company is a reflection of its leader; therefore a bureaucratic company means the CEO is a bureaucrat.

And then I read Uncertainty by Jonathan Fields.

Turns out I was wrong. All of us humans have a major hidden weakness. We have evolved to constantly search for causality. We need reasons! It is completely unacceptable that things just happen. There MUST be a reason.

The news media are the greatest symptom of this innate need for correlation.

Oil price shoots up. Why? USA invades Iraq. World is worried about oil supply.

Oil price falls. Why? USA invades Iraq. World is assured of oil supply.

We need a reason for everything.

Back to the curse of big companies. Turns out the reason for bureaucracy is not the leader. It just simply is.

Small companies are started by people with a high tolerance for uncertainty. These people comprise the minority of the world’s population. The “Tolerance For Uncertainty” pyramid looks like the “Income” pyramid. The vast majority of people are in the middle and bottom of the pyramid.

As you hire more people, the average tolerance for uncertainty in your company starts falling. It’s inevitable. Most people in the world are in the middle and bottom of the pyramid, therefore the more people you have the more your internal tolerance levels will revert towards the mean.

The lower your tolerance for uncertainty the greater your need for structure, rules and policies. The more staff you have, the lower your average tolerance, the more bureaucratic you become.

That’s it. It’s no one’s fault. It just is.

As sure as the sun rises in the east, the speed of a company is inversely proportional to how many employees it has.

What’s the answer? Don’t hire more people. Hiring people is the lazy option, and ultimately will destroy your business because it will slow you.

That doesn’t mean no more jobs. It actually means more jobs! Some companies have a “we can do it better internally” mentality. These are the companies that keep hiring. If you freeze the hiring the company must then think of partnering in order to move forward!

If more companies partner rather than build internally, more businesses will thrive and more jobs will be created.

Isn’t that a great irony? Not hiring people creates more jobs in the economy.

Small companies will win.