The advice I give to startup CEOs, regarding their business, is exactly the same advice that I would give to every citizen regarding their government: "Take, f

The advice I give to startup CEOs, regarding their business, is exactly the same advice that I would give to every citizen regarding their government: "Take, for instance, money. A small team of highly ethical individuals can generally trust one another to safeguard money in an appropriate way. Many small churches and family businesses are run this way, with loose controls over who can deposit or spend. However, as a company grows, the chance you'll hire an unethical individual also grows. At a certain scale it is almost certain that a worker will steal some money, if they have the chance to do so. So a company must impose rules about handling money, and there needs to be a process for paying bills, with someone authorized to write checks and use the company credit cards. This is the beginning of your financial bureaucracy, and the tight limit on who holds the authority to spend is the beginning of hierarchy in this area." "Is this a bad thing? Again, you'll confuse yourself if you think about this in terms of good or bad. Just focus on your goals. What strengths do you want to build into your organization?" "Nowadays, there is a widespread idea that bureaucracy makes an organization rigid. But consider the ways that a well-designed bureaucracy for money control can make your organization more flexible. If you decide to keep your money control bureaucracy small then you'll also need to keep your purchasing process simple, perhaps by centralizing all purchasing decisions in the hands of the CEO or CFO. That one individual then becomes a choke point that limits progress – nothing can get done until they find time to pay some bills and buy some necessary materials or services. And there is an obvious limit on how much the company can grow when the authority to pay a bill is so limited. But even when the money handling bureaucracy grows to three or four people, that’s still not enough to oversee complex spending patterns, so your company will still be forced to follow simple and inflexible rules. By contrast, what if you wanted to decentralize the power to make purchases? What if you wanted to empower each team with the ability to make whatever purchases they felt they needed, up to some reasonable limit? That would make your organization much more flexible, but it also makes it more difficult to track the money, and therefore it requires a larger bureaucracy for tracking each dollar. My point is, the larger bureaucracy can actually help enable some kinds of decentralized decision making, and thus improve the agility of the organization. A growing bureaucracy does not automatically equal growing inflexibility, rather, the whole point is to try to maintain flexibility at scale." An excerpt from: "Don't make a fetish of having flat organization" https://demodexio.substack.com/p/dont-make-a-fetish-of-having-a-flat https://demodexio.substack.com/p/dont-make-a-fetish-of-havin...