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I have a theory about why turf wars like this happens: the more successful and wealthy an entity, the greater opportunity there is for a manager to take wealth

I have a theory about why turf wars like this happens: the more successful and wealthy an entity, the greater opportunity there is for a manager to take wealth instead of make it. When you’re scrappy and broke, the only path to success is to make the company successful. When the company is rich and multitudinous, an individual can gain more from politics and turf wars rather than actually trying to push an already high enterprise value higher. The “maker:taker” opportunity ratio changes, and so does the type of personality the organization attracts.

systemvoltage 6y ago
You put it so well, having worked in both large and small companies - I can attest to this theory. An exception might be SpaceX where you have a strong dictator at the top and any annoyances of tribal war get direct authoritarian spanking.
- PakG1 6y ago
  Is SpaceX already that big to be in the class of overweight titans like Intel?
  - systemvoltage 6y ago
    You could imagine the division responsible for mobile chip design to be of similar size to a mid-sized company like SpaceX. The optics are the same. You're right Intel is massive - the logistics department at Intel doesn't have any friction with the teams tasked with mobile chip design.
  - manquer 6y ago
    perhaps not in absolute terms, however In the launch industry they are almost as massive if not bigger . spacex also employees 8,000+ people. That is a scale large enough for it to have similar problems of intel size companies.
- paganel 6y ago
  > An exception might be SpaceX where you have a strong dictator at the top I think a similar thing is happening at Amazon (the strong dictator stuff, I mean), and it's my hunch that Google has started following Intel's trajectory, they just haven't realised it just yet.
  - haramboy 6y ago
    Similarly in US politics. And before we get emotional, how is it different from those examples?
    - fsloth 6y ago
      A company and a sovereign state are completely different things. Both have politics since they are structures made of humans. But they are completely different. A company is a legal entity functioning within the framework of the legislation of a state, to start with.
      - JAlexoid 6y ago
        Only the government can use force openly on you with complete impunity.
      - goatinaboat 6y ago
        A company and a sovereign state are completely different things. It depends on the level you look at. For example the political skills of a manager to advance themselves at the expense of the organisation and their subordinates is identical whether at Raytheon or the DoD (to use an American example).
    - goatinaboat 6y ago
      All countries where there is a class of people who go into politics as their only career. The UK is riddled with them.
      - rleigh 6y ago
- ckemere 6y ago
  Despite their size, I think they're still in the startup phase where they have a large number of starry-eyed (pun intended) folks coming in because of the mission. That really is Musk's secret - you can get a lot done churning through people.
guscost 6y ago
Not just attracts - rewards and cultivates, too. People already working somewhere don’t have immutable personalities. If an employer is a bad influence on its employees, problems will manifest not only with new hires.
mathattack 6y ago
It’s time horizons too. The time horizon of creating the next great thing can be 3-5 years. An office politician can spend a lot of time grabbing value rather than creating it in that time span. This is one reason to be suspicious of senior folks who job hop too much.
VHRanger 6y ago
That's more dependent on a firm's monopoly power than scale or wealth. If you're in a competitive market you're forced to innovate. If you're a monopolist you can just sit there and extract wealth. Which Intel was for a while. By the way, your little theory has support and a name, it's the resource curse in political economics.
- dash2 6y ago
  I think scale might matter too. Companies are partly public goods problems. Each individual's hard work benefits the whole company. As a result they will undersupply hard work. If the company is size N, they only share 1/N of the total benefit they provide. So, the public goods problem bites harder when companies get big - even holding the level of competition in the market constant.
  - robocat 6y ago
    > If the company is size N, they only share 1/N The graph of the distribution for value per person must be wierd, and definitely not flat. Maybe based on a power law, but I am unsure how to model the people that provide negative value, for example bad managers.
    - pclmulqdq 6y ago
      Supposedly, in knowledge work like programming, the distribution follows a pareto distribution: for n people, sqrt(n) produce half the productive output.
    - dash2 6y ago
      Well, the question is how much of the output they get :-) Though actually note that the classic Mancur Olson result is "the exploitation of the strong by the weak". That is, the person who has the largest share of output contributes disproportionately much to the public good. Simple proof: write individual i's marginal benefit from the company's total effort X as s_i f(X) - x_i where s_i is i's share of the output f(X), and x_i is i's own effort. Taking everyone else's effort as given, i will equate marginal benefit of own effort to marginal cost, so that total effort solves s_i f'(X) = 1 equivalently f'(X) = 1/s_i Now suppose the person with the largest share satisfies the above. Then everyone with a smaller share must have f'(X) < 1/s_i and therefore, if they are contributing more than the minimum possible, they have an incentive to reduce their contribution. So, this extreme version has that only the largest "shareholder" does any work. (A more realistic model has a convex cost of effort, so smaller shareholders do something, but they still contribute less than their output share.)
switch11 6y ago
that's a very astute observation having worked at all three of A Trillion Dollar corporation A smaller company that grew quite a bit and sold for $5 billion+ A start up now * People optimize for what will make them rich/wealthy In larger companies, the ENTIRE function of middle management is to extract wealth and not create it In some ways it's a miracle Microsoft managed to get Satya Nadella as CEO. Normally the people who rise up the ranks are the politically astute
- jodrellblank 6y ago
  What is it that makes you think Satya Nadella is not politically astute?
- sjansen 6y ago
  > Normally the people who rise up the ranks are the politically astute Don't discount Nadella's political astuteness. I think it would be more accurate to say he is not merely politically astute, but instead able to combine his skill at internal politics with customer empathy and technical intelligence.
  - texasbigdata 6y ago
    The conversation in Satyas own book of the trip to try to recruit some HP exec with Balmer where Satya pushed to take over some division and Balmer reluctantly agreed on the flight down to SF but told Satya he better be able to execute and quickly or he should work on his parachute skills, alone is hilarious when viewed through the lens you describe.
    - sizt 6y ago
      Balmer is not an intelligent person.
    - Rzor 6y ago
      I just read that part of the book[0]. Actually, Satya says that Ballmer offered him the position because MS had to answer to AWS. >[...] Steve had invested in it because [search][1] would require the company to compete in a sector beyond Windows and Office and build great technology—which he saw as the future of our industry. There was tremendous pressure for Microsoft to answer Amazon’s growing cloud business. This was the business he was inviting me to join. >“You should think about it, though,” Steve added. “This might be your last job at Microsoft, because if you fail there is no parachute. You may just crash with it.” I wondered at the time whether he meant it as a grim bit of humor or as a perfectly straightforward warning. I’m still not quite sure which it was. But yeah, funny, though. [0] The book is Hit Refresh, if anyone is curious. [1] It was Bing: >There was no mention of the cloud in that year’s shareholder letter, but, to his credit, Steve had a game plan and a wider view of the playing field. Always a bold, courageous, and famously enthusiastic leader, Steve called me one day to say he had an idea. He wanted me to become head of engineering for the online search and advertising business that would later be relaunched as Bing, one of Microsoft’s first businesses born in the cloud.
rconti 6y ago
I was thinking precisely this as I read parent's comment. These are managers/teams fighting in zero-sum game (or something they THINK is a zero-sum game) for a bigger share of stock bonuses of the existing extremely valuable company. Take that win and that bigger chunk of a massively valuable company, and in a way you don't really care what happens with the phone chip market; by the time it really pays off big, in 6 or 8 years, you might be somewhere else anyway. Whereas, in a smaller company with a smaller pie to divide amongst folks, the growth of the pie is the most important thing.
jodrellblank 6y ago
> the greater opportunity there is for a manager to take wealth Pieter Hintjens (creator of ZeroMQ) wrote a lot about this, and how organizations from big companies to small charities to software projects ought to design their internal structures of roles, titles, voting, auditing, to defend themselves against this kind of attack. Particularly if there's any kind of treasury, an opportunist will become tempted to take that role, but any kind of credit will attract people who want to take the credit without doing the work, power structures will attract people who want the power, and programmers who "just want to code" and avoid politics will find themselves at the bottom of a dysfunctional infected organisation structure with no power, no credit, and being instructed by distorted requests. IIRC he tried to design the ZeroMQ organisation so that there wasn't any way for one person to insert themselves in a key point. I'm not sure where on his blog I was reading that, but it's related to his writings about psycopaths[1] as the opportunists, and might be part of his book Social Architecture[2] [1] http://hintjens.com/blog:_psychopaths http://hintjens.com/blog:_psychopaths [2] http://hintjens.com/books http://hintjens.com/books
- phkahler 6y ago
  That sounds very interesting. Has there been any update on how successful or not his ideas are in practice?
  - hitekker 6y ago
    They're unsuccessful. His book on Psychopathy was panned on Reddit, as well as on Goodreads: https://www.reddit.com/r/IAmA/comments/4c27ss/im_pieter_hintjens_and_im_here_to_discuss/ https://www.reddit.com/r/IAmA/comments/4c27ss/im_pieter_hint... Likewise, the wikipedia article for Social Architecture has been listed "not notable" for the past four years, and hasn't seen any meaningful edits since 2016. https://en.wikipedia.org/wiki/Social_architecture https://en.wikipedia.org/wiki/Social_architecture With respect to the author, I'm not surprised. Nerds like ourselves enjoy "discovering" ideas, slapping pretentious labels on them, and then evangelizing them to the whole world... without checking if other people know more about those ideas than we do.
kofejnik 6y ago
Pournelle's Iron Law of Bureaucracy states that in any bureaucratic organization there will be two kinds of people: First, there will be those who are devoted to the goals of the organization. Examples are dedicated classroom teachers in an educational bureaucracy, many of the engineers and launch technicians and scientists at NASA, even some agricultural scientists and advisors in the former Soviet Union collective farming administration. Secondly, there will be those dedicated to the organization itself. Examples are many of the administrators in the education system, many professors of education, many teachers union officials, much of the NASA headquarters staff, etc. The Iron Law states that in every case the second group will gain and keep control of the organization. It will write the rules, and control promotions within the organization.
- alisonkisk 6y ago
  That's an arvitrt judgment. Workers can be lazy and bad that their jobs, and leaders can enable workers to perform better.
adrianmonk 6y ago
You can include wealthy nations in that list of entities. It's not just the leaders but also the individual workers. This is not a slam against people from wealthy nations. I am one of them. I just think it's a danger to be aware of.
ben_w 6y ago
I’ve been thinking similar thoughts about politics. Normal countries can turn into superpowers, and then it looks (from my non-politically astute eyes) as if politicians fight for power over the nation at the expense of the nation itself, and in so doing turn the superpower back into a normal nation.
- texasbigdata 6y ago
  An additional set of guesses to add on: some individuals are temperamentally better at the extraction than production, prefer it, are more able to exercise deceit, and have less regret or self shame.
  - alisonkisk 6y ago
    That's obvious but doesn't explain why some organizations are vulnerable to it while others aren't.
    - texasbigdata 6y ago
      Wasn’t meaning to be cheeky. Have been thinking about this for a few years and those are observations that took a while. There’s analogies to building institutions in developing countries. See the constitution in the Ukraine (I think) or South Africa. Ginsberg commented publicly and Brayer agreed with (at a talk I attended) from a “source code” perspective those constitutions are superior to the American one. Sort of v2 efforts where you can adopt best practices. Yet most people would agree those younger nations don’t have stronger institutions and than the US. So there has to be both an individual and organizational component. This next comment is completely unbaked and probably terribly phrased, so please read it gently: in addition to the rest of the comments, I believe there is also (and I understand this is a terrible analogy) a “standby passive observer” mechanism mentality similar to how Hitler came to power. Conceptually, people that get hired externally should maybe be >50% of any large organization maybe. Those employees need to see repeated instances of malicious political acts go by (“hey aren’t we going to do something here”) and learn that sort of complicit passivity. That’s probably a terrible analogy, but notice that there seems to be nothing the three or four people in this threat that worked at Intel could do to alter the company’s direction (obviously) but more importantly there’s also a tone of dread and finality in their words, and they seem to have all chosen to have left. So, it seems, like nation building, a complicated problem to understand and solve.
viburnum 6y ago
This is why extremely steep marginal takes rates improve economic efficiency. If you can’t get rich by playing office politics you might as well enjoy making a good product.
- alisonkisk 6y ago
  What is "extremely steep marginal takes rates" ? Are you saying that low profit enterprises create more value? The thesis is attractive but also makes me wonder about Apple, high profit and also highly creative.
  - jdlshore 6y ago
    I think they meant 'tax rates'
- AnthonyMouse 6y ago
  > If you can’t get rich by playing office politics you might as well enjoy making a good product. It seems to me this would go the other way. Making a good product (in the sense that it's successful in the market) is what you want a company to do, but that's the thing mostly aligned with the profit incentive. If profits are taxed heavily then spending resources on making a better product so that more people buy it doesn't make you a lot more money, but spending resources on office politics brings non-monetary personal benefits like status and control, so managers would have a greater relative incentive to do those things. See e.g. Soviet Union. One of the biggest problems today is actually that the tax code provides incentives for corporations to retain profits within the organization rather than paying them out to shareholders to invest in something else, which results in inefficient corporate bloating.
  - andrewjl 6y ago
    Corporate tax rates can be lower, ideally at 0, but I doubt our current system incentivizes corporations retaining profits. On the contrary, recently many needed to be bailed out because they paid out too much to shareholders instead of saving enough for a rainy day. Making a better product also doesn't necessarily lead to profits. That's an oversimplified perspective. There's a far greater correlation between monopoly power and profit. In some cases this monopoly status comes from truly groundbreaking work. Not in all cases though.
djmips 6y ago
I agree with you and a lot of the things people who are responding are saying but the one thing that keeps popping in my head is that Apple who is disrupting in this case isn't exactly the lightweight scrappy contender as put forth in the parables and anecdotes. If the hypothesis is true for Intel why is giant Apple not suffering from the same mercenary middle management / toxic political BS?
- rossdavidh 6y ago
  I'm sure they have it, but it occurs to me that they did go through a near-death experience that might have caused some of the worst baggage to abandon ship, and for a while afterwards they probably knew that it was possible for even a company as big as Apple to go under. Now that it's been a while, it wouldn't totally shock me if they ended up drifting Intel's way eventually.
- bobthepanda 6y ago
  Apple historically has concentrated leadership to a T (see: the Steve Jobs mythos) I don't recall hearing anything about Intel being nearly as centralized. Steve Jobs apparently demolished internal units, with the following outcome: > As was the case with Jobs before him, CEO Tim Cook occupies the only position on the organizational chart where the design, engineering, operations, marketing, and retail of any of Apple’s main products meet. In effect, besides the CEO, the company operates with no conventional general managers: people who control an entire process from product development through sales and are judged according to a P&L statement. https://hbr.org/2020/11/how-apple-is-organized-for-innovation https://hbr.org/2020/11/how-apple-is-organized-for-innovatio...
- BurningFrog 6y ago
  Apple probably has similar problems, but this particular sub-organization is healthy for now. Maybe because it's newer and hasn't rotted yet.
- jack_riminton 6y ago
  Explained somewhat by the nature of the innovators dilemma and the products they're making: - x86 chips for PC were Intel's cash cow so doing anything to disrupt that revenue stream would be fought against - Apple's cash cow is the phone itself so they don't particularly have any dogmatic loyalty to one type of chip as long as the phone sells Now if there were a technology to come up agains the iPhone (glasses anyone?) they'd probably face the same conundrum; disrupt themselves or be disrupted?
wnevets 6y ago
>the greater opportunity there is for a manager to take wealth instead of make it Much like countries and empires. Once growth largely stops being the easiest way to capture wealth "entrepreneurs" start eating away from the inside.
francilien 6y ago
Reminds me of this article I just read. In a totally different domain, but if there is so much wealth, it is easier to just a part of it, instead of creating new wealth. https://pedestrianobservations.com/2020/11/13/surplus-extraction/ https://pedestrianobservations.com/2020/11/13/surplus-extrac...
roland00 6y ago
In sum humans do not always optimize towards one variable like success / fitness. Instead they optimize to many things like money, prestige, power, security, and so on. Much like you can't describe health as a single thing, when you collapse your insight to a single variable you miss everything in your simulation of how reality works. This applies to an individual level but especially applies towards a cooperative level with multiple individuals. When we cooperate (or just act in ambiguous situations) sometimes trying to collapse your actions to "mental shortcuts" aka Heuristics in Judgment and Decision-Making to borrow some thinking fast and slow language further reduces insight.
zooweemama 6y ago
"When you’re scrappy and broke, the only path to success is to make the company successful. When the company is rich and multitudinous, an individual can gain more from politics and turf wars rather than actually trying to push an already high enterprise value higher." Extremely well said, and having worked at two (initially) successful behemoths so far, I couldn't agree more.
- a9h74j 6y ago
  If there is some Pareto-like distribution of who is creating new value, all of those others must be working at something.
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sanderjd 6y ago
This seems true, but I guess I also have more empathy for decision-makers: to me it seems like it is far from obvious who should take on which projects. Pretty much by definition, the organization is structured so that its current projects have sensible homes, but when a totally new project comes up, it is unlikely to fit perfectly anywhere in that structure. If it did, it wouldn't be totally new! None of the options for dealing with this seem great. I've seen "internal incubator" type things which are designed to come up with new ideas, but honestly I'm not a fan of these. The structure incentivizes prototyping new "left field" ideas, but those ideas are likely not to gain any traction, and if they do, it is likely to be a mess to transition them into real projects within the more normal operations of the organization. And it does nothing for projects that are clearly important from inception, even if new; the "left field" incubator is not the right place to put something that isn't a crazy idea being tested but something known to be important.
- izacus 6y ago
  The problem I've observed is also that (for performance / reward purposes), managers lie as hell when it comes to their team performance. The bigger the company, the less actual signal is received by upper managers because everyone doctors the hell out of this numbers. It might be impossible to even KNOW who the best team in your company is.
  - sanderjd 6y ago
    Yes. In fact, I would argue it should not be possible to have this "the best team" - if teams in different parts of the org are directly comparable, then they must be doing the same exact thing, and why do you have multiple teams scattered around doing identical things? That is, a well structured org will have teams working on Thing A and Thing B. If a brand new Thing C comes along, it isn't either Thing A or Thing B, and you have no real information on how good either team will be at Thing C, all you can know is how good they are at Thing A and Thing B respectively.
    - a9h74j 6y ago
      At one time IBM had the resources to assign the same major challenge to two internal organizations.
dmix 6y ago
As I've linked to many times on HN: The Iron Law of Bureaucracy > Pournelle's Iron Law of Bureaucracy states that in any bureaucratic organization there will be two kinds of people": > First, there will be those who are devoted to the goals of the organization. Examples are dedicated classroom teachers in an educational bureaucracy, many of the engineers and launch technicians and scientists at NASA, even some agricultural scientists and advisors in the former Soviet Union collective farming administration. > Secondly, there will be those dedicated to the organization itself. Examples are many of the administrators in the education system, many professors of education, many teachers union officials, much of the NASA headquarters staff, etc. > The Iron Law states that in every case the second group will gain and keep control of the organization. It will write the rules, and control promotions within the organization. https://www.jerrypournelle.com/reports/jerryp/iron.html https://www.jerrypournelle.com/reports/jerryp/iron.html This (and other organizational failures and technological innovations) is why there will always be startups and small businesses eventually where there was once a big entrenched business or two (or sometimes three). There is also, of course, whole new industries and niches to be created out of nothing, value and wealth is never a finite pile. It's mostly a matter of human effort to find and break out these new areas. Sometimes just reinventing things as the old talent grows old and dies off, providing value in learning history.
- galaxyLogic 6y ago
  That sounds like an ironclad law. But is there empirical evidence for it? And a rational explanation behind it? I mean it's very strict as a rule: "in EVERY case the second group ... ". Strong claims like that require strong evidence and a theory of WHY that would (always) be the outcome. I'm thinking of society as large. That is an organization too. Are we doomed by bureaucracy?
  - dmix 6y ago
    I don’t really believe you could do such a thing empirically. I mean it just depends on scale as you indicated. I have never been a fan of ‘social’ sciences either. Just like Christensen’s Dilemma books are mostly just anecdotes combined with patterns in history. As many such business books are. But in my short time on this planet I’ve seen it in countless forms where I strongly believe it deserves such a title as “iron law”.
khendron 6y ago
I have a similar theory as to why rapidly growing companies become toxic environments (of which politics and turf wars are a symptom). When a company is small and has a low profile, its employees are in it for the company. They believe in the product or service that the company is creating, and but into its mission. When the company becomes successful and starts to grow, it starts to attract people who don't really care about the company and its mission—they are in it only for themselves. They only want to improve their lot, and are willing to play politics and backstab as required to get ahead.. If the company is only growing slowly, they can weed these types out during the interview process. But if they are growing quickly, they don't have time to interview properly and slowly and surely the company is transformed from a cooperative, mission-driven organization to one where employees are fighting against themselves. Unfortunately these politically minded types are the ones who quickly rise up the ranks, and once most of the top areas of the company are populated by assholes, there is no cure.
- burntoutfire 6y ago
  > When a company is small and has a low profile, its employees are in it for the company. They believe in the product or service that the company is creating, and but into its mission. In the history of the world, 99% of people has been "in it" for the salary. Who gives a rat's ass about the company or the product?
  - cutemonster 6y ago
    I think just avoiding the people "willing to play politics and backstab" can be a big improvement (for employee happiness and the bottom line / shareholders)
Groxx 6y ago
I suspect some of it is also driven by 'impact-based rewards', i.e. valuable projects get the team paid more. It means there's immense incentive for teams to monopolize skill and reduce other teams' value so they get picked. It also encourages posturing as strongly as possible, rather than accurately, since it's all based on perception - it's not like you can prove you'll do a better job than another team. To make it worse, if a highly valuable project seems like it might fail, the company will likely throw more resources at it - the risk to the team for getting in over their head is relatively low (and still looks great on a résumé), compared to the risk to the company.
generix00 6y ago
Backstabbing intertribal warfare is a bold new idea.
ineedasername 6y ago
the greater opportunity there is for a manager to take wealth instead of make it And what I view as completely irrational is the fact that in so many cases, the self-interested option is actually to work together and do something meaningful that advances you far more than chasing a quarterly metric.
scythe 6y ago
Some institutions do persist for a very long time. The Japanese monarchy, the Catholic Church, and the old universities at Oxford, Bologne etc, are particularly prominent examples.
bamboozled 6y ago
Seen and been subjected to this many many times. Startup going well, productive team and people to work with. Some guy who sucks with years of sucking experience joins to “manage” the company/team/department into the ground. I work for a not for profit now and we get paid less, very few people suck.
NalNezumi 6y ago
Essentially what Steve Jobs said about product vs sales & marketing people and Xerox, but more regional/department version. https://youtu.be/P4VBqTViEx4 https://youtu.be/P4VBqTViEx4
octoberfranklin 6y ago
Absolutely my experience. However the small companies almost always have VC investors, which brings negative effects which are approximately as awful (just in totally different ways). If you can find a small self-funded company that isn't gonna get squashed next time Masayoshi Son sneezes, it'll be the best job you've ever had.
ashtonkem 6y ago
I agree, and I'll add more to it. In a very small company, there simply isn't enough space for any individual team or segment to diverge significantly from the overall success of the company. When your company is very large, often the needs of various sub-groups might not be in alignment with overall company success, even if they're still trying to make money for the company. A great example comes from this article. The group in charge of the Pentium product line would not be thrilled to see the Celerons launched, since that would cannibalize their sales. Obviously for long term success of Intel this was the right move, but from the perspective of the Pentium team this might be a horrible idea.
ternaryoperator 6y ago
What you're saying might/might not be true in general, but it is not relevant to Intel. Intel has for decades had internal teams compete. It's a purposeful choice that they stuck with despite despite the numerous times it has failed them, the blood on the floor, and the departure of engineers they wanted to keep.
keeganpoppen 6y ago
holy cow this is so, so apt. i am stealing this explanation for the rest of forever. this is exactly why this happens... i wonder how to structure organizations / incentives to alleviate this.

systemvoltage 6y ago

You put it so well, having worked in both large and small companies - I can attest to this theory. An exception might be SpaceX where you have a strong dictator at the top and any annoyances of tribal war get direct authoritarian spanking.

PakG1 6y ago
Is SpaceX already that big to be in the class of overweight titans like Intel?
- systemvoltage 6y ago
  You could imagine the division responsible for mobile chip design to be of similar size to a mid-sized company like SpaceX. The optics are the same. You're right Intel is massive - the logistics department at Intel doesn't have any friction with the teams tasked with mobile chip design.
- manquer 6y ago
  perhaps not in absolute terms, however In the launch industry they are almost as massive if not bigger . spacex also employees 8,000+ people. That is a scale large enough for it to have similar problems of intel size companies.
paganel 6y ago
> An exception might be SpaceX where you have a strong dictator at the top I think a similar thing is happening at Amazon (the strong dictator stuff, I mean), and it's my hunch that Google has started following Intel's trajectory, they just haven't realised it just yet.
- haramboy 6y ago
  Similarly in US politics. And before we get emotional, how is it different from those examples?
  - fsloth 6y ago
    A company and a sovereign state are completely different things. Both have politics since they are structures made of humans. But they are completely different. A company is a legal entity functioning within the framework of the legislation of a state, to start with.
    - JAlexoid 6y ago
      Only the government can use force openly on you with complete impunity.
    - goatinaboat 6y ago
      A company and a sovereign state are completely different things. It depends on the level you look at. For example the political skills of a manager to advance themselves at the expense of the organisation and their subordinates is identical whether at Raytheon or the DoD (to use an American example).
  - goatinaboat 6y ago
    All countries where there is a class of people who go into politics as their only career. The UK is riddled with them.
    - rleigh 6y ago
ckemere 6y ago
Despite their size, I think they're still in the startup phase where they have a large number of starry-eyed (pun intended) folks coming in because of the mission. That really is Musk's secret - you can get a lot done churning through people.

guscost 6y ago

Not just attracts - rewards and cultivates, too. People already working somewhere don’t have immutable personalities. If an employer is a bad influence on its employees, problems will manifest not only with new hires.

mathattack 6y ago

It’s time horizons too. The time horizon of creating the next great thing can be 3-5 years. An office politician can spend a lot of time grabbing value rather than creating it in that time span. This is one reason to be suspicious of senior folks who job hop too much.

VHRanger 6y ago

That's more dependent on a firm's monopoly power than scale or wealth. If you're in a competitive market you're forced to innovate. If you're a monopolist you can just sit there and extract wealth. Which Intel was for a while. By the way, your little theory has support and a name, it's the resource curse in political economics.

dash2 6y ago
I think scale might matter too. Companies are partly public goods problems. Each individual's hard work benefits the whole company. As a result they will undersupply hard work. If the company is size N, they only share 1/N of the total benefit they provide. So, the public goods problem bites harder when companies get big - even holding the level of competition in the market constant.
- robocat 6y ago
  > If the company is size N, they only share 1/N The graph of the distribution for value per person must be wierd, and definitely not flat. Maybe based on a power law, but I am unsure how to model the people that provide negative value, for example bad managers.
  - pclmulqdq 6y ago
    Supposedly, in knowledge work like programming, the distribution follows a pareto distribution: for n people, sqrt(n) produce half the productive output.
  - dash2 6y ago
    Well, the question is how much of the output they get :-) Though actually note that the classic Mancur Olson result is "the exploitation of the strong by the weak". That is, the person who has the largest share of output contributes disproportionately much to the public good. Simple proof: write individual i's marginal benefit from the company's total effort X as s_i f(X) - x_i where s_i is i's share of the output f(X), and x_i is i's own effort. Taking everyone else's effort as given, i will equate marginal benefit of own effort to marginal cost, so that total effort solves s_i f'(X) = 1 equivalently f'(X) = 1/s_i Now suppose the person with the largest share satisfies the above. Then everyone with a smaller share must have f'(X) < 1/s_i and therefore, if they are contributing more than the minimum possible, they have an incentive to reduce their contribution. So, this extreme version has that only the largest "shareholder" does any work. (A more realistic model has a convex cost of effort, so smaller shareholders do something, but they still contribute less than their output share.)

switch11 6y ago

that's a very astute observation having worked at all three of A Trillion Dollar corporation A smaller company that grew quite a bit and sold for $5 billion+ A start up now * People optimize for what will make them rich/wealthy In larger companies, the ENTIRE function of middle management is to extract wealth and not create it In some ways it's a miracle Microsoft managed to get Satya Nadella as CEO. Normally the people who rise up the ranks are the politically astute

jodrellblank 6y ago
What is it that makes you think Satya Nadella is not politically astute?
sjansen 6y ago
> Normally the people who rise up the ranks are the politically astute Don't discount Nadella's political astuteness. I think it would be more accurate to say he is not merely politically astute, but instead able to combine his skill at internal politics with customer empathy and technical intelligence.
- texasbigdata 6y ago
  The conversation in Satyas own book of the trip to try to recruit some HP exec with Balmer where Satya pushed to take over some division and Balmer reluctantly agreed on the flight down to SF but told Satya he better be able to execute and quickly or he should work on his parachute skills, alone is hilarious when viewed through the lens you describe.
  - sizt 6y ago
    Balmer is not an intelligent person.
  - Rzor 6y ago
    I just read that part of the book[0]. Actually, Satya says that Ballmer offered him the position because MS had to answer to AWS. >[...] Steve had invested in it because [search][1] would require the company to compete in a sector beyond Windows and Office and build great technology—which he saw as the future of our industry. There was tremendous pressure for Microsoft to answer Amazon’s growing cloud business. This was the business he was inviting me to join. >“You should think about it, though,” Steve added. “This might be your last job at Microsoft, because if you fail there is no parachute. You may just crash with it.” I wondered at the time whether he meant it as a grim bit of humor or as a perfectly straightforward warning. I’m still not quite sure which it was. But yeah, funny, though. [0] The book is Hit Refresh, if anyone is curious. [1] It was Bing: >There was no mention of the cloud in that year’s shareholder letter, but, to his credit, Steve had a game plan and a wider view of the playing field. Always a bold, courageous, and famously enthusiastic leader, Steve called me one day to say he had an idea. He wanted me to become head of engineering for the online search and advertising business that would later be relaunched as Bing, one of Microsoft’s first businesses born in the cloud.

rconti 6y ago

I was thinking precisely this as I read parent's comment. These are managers/teams fighting in zero-sum game (or something they THINK is a zero-sum game) for a bigger share of stock bonuses of the existing extremely valuable company. Take that win and that bigger chunk of a massively valuable company, and in a way you don't really care what happens with the phone chip market; by the time it really pays off big, in 6 or 8 years, you might be somewhere else anyway. Whereas, in a smaller company with a smaller pie to divide amongst folks, the growth of the pie is the most important thing.

jodrellblank 6y ago

> the greater opportunity there is for a manager to take wealth Pieter Hintjens (creator of ZeroMQ) wrote a lot about this, and how organizations from big companies to small charities to software projects ought to design their internal structures of roles, titles, voting, auditing, to defend themselves against this kind of attack. Particularly if there's any kind of treasury, an opportunist will become tempted to take that role, but any kind of credit will attract people who want to take the credit without doing the work, power structures will attract people who want the power, and programmers who "just want to code" and avoid politics will find themselves at the bottom of a dysfunctional infected organisation structure with no power, no credit, and being instructed by distorted requests. IIRC he tried to design the ZeroMQ organisation so that there wasn't any way for one person to insert themselves in a key point. I'm not sure where on his blog I was reading that, but it's related to his writings about psycopaths[1] as the opportunists, and might be part of his book Social Architecture[2] [1] http://hintjens.com/blog:_psychopaths http://hintjens.com/blog:_psychopaths [2] http://hintjens.com/books http://hintjens.com/books

phkahler 6y ago
That sounds very interesting. Has there been any update on how successful or not his ideas are in practice?
- hitekker 6y ago
  They're unsuccessful. His book on Psychopathy was panned on Reddit, as well as on Goodreads: https://www.reddit.com/r/IAmA/comments/4c27ss/im_pieter_hintjens_and_im_here_to_discuss/ https://www.reddit.com/r/IAmA/comments/4c27ss/im_pieter_hint... Likewise, the wikipedia article for Social Architecture has been listed "not notable" for the past four years, and hasn't seen any meaningful edits since 2016. https://en.wikipedia.org/wiki/Social_architecture https://en.wikipedia.org/wiki/Social_architecture With respect to the author, I'm not surprised. Nerds like ourselves enjoy "discovering" ideas, slapping pretentious labels on them, and then evangelizing them to the whole world... without checking if other people know more about those ideas than we do.

kofejnik 6y ago

Pournelle's Iron Law of Bureaucracy states that in any bureaucratic organization there will be two kinds of people: First, there will be those who are devoted to the goals of the organization. Examples are dedicated classroom teachers in an educational bureaucracy, many of the engineers and launch technicians and scientists at NASA, even some agricultural scientists and advisors in the former Soviet Union collective farming administration. Secondly, there will be those dedicated to the organization itself. Examples are many of the administrators in the education system, many professors of education, many teachers union officials, much of the NASA headquarters staff, etc. The Iron Law states that in every case the second group will gain and keep control of the organization. It will write the rules, and control promotions within the organization.

alisonkisk 6y ago
That's an arvitrt judgment. Workers can be lazy and bad that their jobs, and leaders can enable workers to perform better.

adrianmonk 6y ago

You can include wealthy nations in that list of entities. It's not just the leaders but also the individual workers. This is not a slam against people from wealthy nations. I am one of them. I just think it's a danger to be aware of.

ben_w 6y ago

I’ve been thinking similar thoughts about politics. Normal countries can turn into superpowers, and then it looks (from my non-politically astute eyes) as if politicians fight for power over the nation at the expense of the nation itself, and in so doing turn the superpower back into a normal nation.

texasbigdata 6y ago
An additional set of guesses to add on: some individuals are temperamentally better at the extraction than production, prefer it, are more able to exercise deceit, and have less regret or self shame.
- alisonkisk 6y ago
  That's obvious but doesn't explain why some organizations are vulnerable to it while others aren't.
  - texasbigdata 6y ago
    Wasn’t meaning to be cheeky. Have been thinking about this for a few years and those are observations that took a while. There’s analogies to building institutions in developing countries. See the constitution in the Ukraine (I think) or South Africa. Ginsberg commented publicly and Brayer agreed with (at a talk I attended) from a “source code” perspective those constitutions are superior to the American one. Sort of v2 efforts where you can adopt best practices. Yet most people would agree those younger nations don’t have stronger institutions and than the US. So there has to be both an individual and organizational component. This next comment is completely unbaked and probably terribly phrased, so please read it gently: in addition to the rest of the comments, I believe there is also (and I understand this is a terrible analogy) a “standby passive observer” mechanism mentality similar to how Hitler came to power. Conceptually, people that get hired externally should maybe be >50% of any large organization maybe. Those employees need to see repeated instances of malicious political acts go by (“hey aren’t we going to do something here”) and learn that sort of complicit passivity. That’s probably a terrible analogy, but notice that there seems to be nothing the three or four people in this threat that worked at Intel could do to alter the company’s direction (obviously) but more importantly there’s also a tone of dread and finality in their words, and they seem to have all chosen to have left. So, it seems, like nation building, a complicated problem to understand and solve.

viburnum 6y ago

This is why extremely steep marginal takes rates improve economic efficiency. If you can’t get rich by playing office politics you might as well enjoy making a good product.

alisonkisk 6y ago
What is "extremely steep marginal takes rates" ? Are you saying that low profit enterprises create more value? The thesis is attractive but also makes me wonder about Apple, high profit and also highly creative.
- jdlshore 6y ago
  I think they meant 'tax rates'
AnthonyMouse 6y ago
> If you can’t get rich by playing office politics you might as well enjoy making a good product. It seems to me this would go the other way. Making a good product (in the sense that it's successful in the market) is what you want a company to do, but that's the thing mostly aligned with the profit incentive. If profits are taxed heavily then spending resources on making a better product so that more people buy it doesn't make you a lot more money, but spending resources on office politics brings non-monetary personal benefits like status and control, so managers would have a greater relative incentive to do those things. See e.g. Soviet Union. One of the biggest problems today is actually that the tax code provides incentives for corporations to retain profits within the organization rather than paying them out to shareholders to invest in something else, which results in inefficient corporate bloating.
- andrewjl 6y ago
  Corporate tax rates can be lower, ideally at 0, but I doubt our current system incentivizes corporations retaining profits. On the contrary, recently many needed to be bailed out because they paid out too much to shareholders instead of saving enough for a rainy day. Making a better product also doesn't necessarily lead to profits. That's an oversimplified perspective. There's a far greater correlation between monopoly power and profit. In some cases this monopoly status comes from truly groundbreaking work. Not in all cases though.

djmips 6y ago

I agree with you and a lot of the things people who are responding are saying but the one thing that keeps popping in my head is that Apple who is disrupting in this case isn't exactly the lightweight scrappy contender as put forth in the parables and anecdotes. If the hypothesis is true for Intel why is giant Apple not suffering from the same mercenary middle management / toxic political BS?

rossdavidh 6y ago
I'm sure they have it, but it occurs to me that they did go through a near-death experience that might have caused some of the worst baggage to abandon ship, and for a while afterwards they probably knew that it was possible for even a company as big as Apple to go under. Now that it's been a while, it wouldn't totally shock me if they ended up drifting Intel's way eventually.
bobthepanda 6y ago
Apple historically has concentrated leadership to a T (see: the Steve Jobs mythos) I don't recall hearing anything about Intel being nearly as centralized. Steve Jobs apparently demolished internal units, with the following outcome: > As was the case with Jobs before him, CEO Tim Cook occupies the only position on the organizational chart where the design, engineering, operations, marketing, and retail of any of Apple’s main products meet. In effect, besides the CEO, the company operates with no conventional general managers: people who control an entire process from product development through sales and are judged according to a P&L statement. https://hbr.org/2020/11/how-apple-is-organized-for-innovation https://hbr.org/2020/11/how-apple-is-organized-for-innovatio...
BurningFrog 6y ago
Apple probably has similar problems, but this particular sub-organization is healthy for now. Maybe because it's newer and hasn't rotted yet.
jack_riminton 6y ago
Explained somewhat by the nature of the innovators dilemma and the products they're making: - x86 chips for PC were Intel's cash cow so doing anything to disrupt that revenue stream would be fought against - Apple's cash cow is the phone itself so they don't particularly have any dogmatic loyalty to one type of chip as long as the phone sells Now if there were a technology to come up agains the iPhone (glasses anyone?) they'd probably face the same conundrum; disrupt themselves or be disrupted?

wnevets 6y ago

>the greater opportunity there is for a manager to take wealth instead of make it Much like countries and empires. Once growth largely stops being the easiest way to capture wealth "entrepreneurs" start eating away from the inside.

francilien 6y ago

Reminds me of this article I just read. In a totally different domain, but if there is so much wealth, it is easier to just a part of it, instead of creating new wealth. https://pedestrianobservations.com/2020/11/13/surplus-extraction/ https://pedestrianobservations.com/2020/11/13/surplus-extrac...

roland00 6y ago

In sum humans do not always optimize towards one variable like success / fitness. Instead they optimize to many things like money, prestige, power, security, and so on. Much like you can't describe health as a single thing, when you collapse your insight to a single variable you miss everything in your simulation of how reality works. This applies to an individual level but especially applies towards a cooperative level with multiple individuals. When we cooperate (or just act in ambiguous situations) sometimes trying to collapse your actions to "mental shortcuts" aka Heuristics in Judgment and Decision-Making to borrow some thinking fast and slow language further reduces insight.

zooweemama 6y ago

"When you’re scrappy and broke, the only path to success is to make the company successful. When the company is rich and multitudinous, an individual can gain more from politics and turf wars rather than actually trying to push an already high enterprise value higher." Extremely well said, and having worked at two (initially) successful behemoths so far, I couldn't agree more.

a9h74j 6y ago
If there is some Pareto-like distribution of who is creating new value, all of those others must be working at something.

deleted 6y ago

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sanderjd 6y ago

This seems true, but I guess I also have more empathy for decision-makers: to me it seems like it is far from obvious who should take on which projects. Pretty much by definition, the organization is structured so that its current projects have sensible homes, but when a totally new project comes up, it is unlikely to fit perfectly anywhere in that structure. If it did, it wouldn't be totally new! None of the options for dealing with this seem great. I've seen "internal incubator" type things which are designed to come up with new ideas, but honestly I'm not a fan of these. The structure incentivizes prototyping new "left field" ideas, but those ideas are likely not to gain any traction, and if they do, it is likely to be a mess to transition them into real projects within the more normal operations of the organization. And it does nothing for projects that are clearly important from inception, even if new; the "left field" incubator is not the right place to put something that isn't a crazy idea being tested but something known to be important.

izacus 6y ago
The problem I've observed is also that (for performance / reward purposes), managers lie as hell when it comes to their team performance. The bigger the company, the less actual signal is received by upper managers because everyone doctors the hell out of this numbers. It might be impossible to even KNOW who the best team in your company is.
- sanderjd 6y ago
  Yes. In fact, I would argue it should not be possible to have this "the best team" - if teams in different parts of the org are directly comparable, then they must be doing the same exact thing, and why do you have multiple teams scattered around doing identical things? That is, a well structured org will have teams working on Thing A and Thing B. If a brand new Thing C comes along, it isn't either Thing A or Thing B, and you have no real information on how good either team will be at Thing C, all you can know is how good they are at Thing A and Thing B respectively.
  - a9h74j 6y ago
    At one time IBM had the resources to assign the same major challenge to two internal organizations.

dmix 6y ago

As I've linked to many times on HN: The Iron Law of Bureaucracy > Pournelle's Iron Law of Bureaucracy states that in any bureaucratic organization there will be two kinds of people": > First, there will be those who are devoted to the goals of the organization. Examples are dedicated classroom teachers in an educational bureaucracy, many of the engineers and launch technicians and scientists at NASA, even some agricultural scientists and advisors in the former Soviet Union collective farming administration. > Secondly, there will be those dedicated to the organization itself. Examples are many of the administrators in the education system, many professors of education, many teachers union officials, much of the NASA headquarters staff, etc. > The Iron Law states that in every case the second group will gain and keep control of the organization. It will write the rules, and control promotions within the organization. https://www.jerrypournelle.com/reports/jerryp/iron.html https://www.jerrypournelle.com/reports/jerryp/iron.html This (and other organizational failures and technological innovations) is why there will always be startups and small businesses eventually where there was once a big entrenched business or two (or sometimes three). There is also, of course, whole new industries and niches to be created out of nothing, value and wealth is never a finite pile. It's mostly a matter of human effort to find and break out these new areas. Sometimes just reinventing things as the old talent grows old and dies off, providing value in learning history.

galaxyLogic 6y ago
That sounds like an ironclad law. But is there empirical evidence for it? And a rational explanation behind it? I mean it's very strict as a rule: "in EVERY case the second group ... ". Strong claims like that require strong evidence and a theory of WHY that would (always) be the outcome. I'm thinking of society as large. That is an organization too. Are we doomed by bureaucracy?
- dmix 6y ago
  I don’t really believe you could do such a thing empirically. I mean it just depends on scale as you indicated. I have never been a fan of ‘social’ sciences either. Just like Christensen’s Dilemma books are mostly just anecdotes combined with patterns in history. As many such business books are. But in my short time on this planet I’ve seen it in countless forms where I strongly believe it deserves such a title as “iron law”.

khendron 6y ago

I have a similar theory as to why rapidly growing companies become toxic environments (of which politics and turf wars are a symptom). When a company is small and has a low profile, its employees are in it for the company. They believe in the product or service that the company is creating, and but into its mission. When the company becomes successful and starts to grow, it starts to attract people who don't really care about the company and its mission—they are in it only for themselves. They only want to improve their lot, and are willing to play politics and backstab as required to get ahead.. If the company is only growing slowly, they can weed these types out during the interview process. But if they are growing quickly, they don't have time to interview properly and slowly and surely the company is transformed from a cooperative, mission-driven organization to one where employees are fighting against themselves. Unfortunately these politically minded types are the ones who quickly rise up the ranks, and once most of the top areas of the company are populated by assholes, there is no cure.

burntoutfire 6y ago
> When a company is small and has a low profile, its employees are in it for the company. They believe in the product or service that the company is creating, and but into its mission. In the history of the world, 99% of people has been "in it" for the salary. Who gives a rat's ass about the company or the product?
- cutemonster 6y ago
  I think just avoiding the people "willing to play politics and backstab" can be a big improvement (for employee happiness and the bottom line / shareholders)

Groxx 6y ago

I suspect some of it is also driven by 'impact-based rewards', i.e. valuable projects get the team paid more. It means there's immense incentive for teams to monopolize skill and reduce other teams' value so they get picked. It also encourages posturing as strongly as possible, rather than accurately, since it's all based on perception - it's not like you can prove you'll do a better job than another team. To make it worse, if a highly valuable project seems like it might fail, the company will likely throw more resources at it - the risk to the team for getting in over their head is relatively low (and still looks great on a résumé), compared to the risk to the company.

generix00 6y ago

Backstabbing intertribal warfare is a bold new idea.

ineedasername 6y ago

the greater opportunity there is for a manager to take wealth instead of make it And what I view as completely irrational is the fact that in so many cases, the self-interested option is actually to work together and do something meaningful that advances you far more than chasing a quarterly metric.

scythe 6y ago

Some institutions do persist for a very long time. The Japanese monarchy, the Catholic Church, and the old universities at Oxford, Bologne etc, are particularly prominent examples.

bamboozled 6y ago

Seen and been subjected to this many many times. Startup going well, productive team and people to work with. Some guy who sucks with years of sucking experience joins to “manage” the company/team/department into the ground. I work for a not for profit now and we get paid less, very few people suck.

NalNezumi 6y ago

Essentially what Steve Jobs said about product vs sales & marketing people and Xerox, but more regional/department version. https://youtu.be/P4VBqTViEx4 https://youtu.be/P4VBqTViEx4

octoberfranklin 6y ago

Absolutely my experience. However the small companies almost always have VC investors, which brings negative effects which are approximately as awful (just in totally different ways). If you can find a small self-funded company that isn't gonna get squashed next time Masayoshi Son sneezes, it'll be the best job you've ever had.

ashtonkem 6y ago

I agree, and I'll add more to it. In a very small company, there simply isn't enough space for any individual team or segment to diverge significantly from the overall success of the company. When your company is very large, often the needs of various sub-groups might not be in alignment with overall company success, even if they're still trying to make money for the company. A great example comes from this article. The group in charge of the Pentium product line would not be thrilled to see the Celerons launched, since that would cannibalize their sales. Obviously for long term success of Intel this was the right move, but from the perspective of the Pentium team this might be a horrible idea.

ternaryoperator 6y ago

What you're saying might/might not be true in general, but it is not relevant to Intel. Intel has for decades had internal teams compete. It's a purposeful choice that they stuck with despite despite the numerous times it has failed them, the blood on the floor, and the departure of engineers they wanted to keep.

keeganpoppen 6y ago

holy cow this is so, so apt. i am stealing this explanation for the rest of forever. this is exactly why this happens... i wonder how to structure organizations / incentives to alleviate this.