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Been all of an engineer, a manager, and a founder/CEO, and I enjoy analyzing organizational dysfunction. The difference between an engineer and a manager's per

Been all of an engineer, a manager, and a founder/CEO, and I enjoy analyzing organizational dysfunction. The difference between an engineer and a manager's perspective usually comes down to their job description. An engineer is hired to get the engineering right; the reason the company pays them is for their ability to marry reality to organizational goals. The reason the company hires a manager is to set those organizational goals and ensure that everybody is marching toward them. This split is explicit for a reason: it ensures that when disagreements arise, they are explicitly negotiated. Most people are bad at making complex tradeoffs, and when they have to do so, their execution velocity suffers. Indeed, the job description for someone who is hired to make complex tradeoffs is called "executive", and they purposefully have to do no real work so that their decision-making functions only in terms of cost estimates that management bubbles up, not the personal pain that will result from those decisions. Dysfunction arises from a few major sources: 1. There's a power imbalance between management and engineering. An engineer usually only has one project; if it fails, it often means their job, even if the outcome reality dictates is that it should fail. That gives them a strong incentive to send good news up the chain even if the project is going to fail. Good management gets around this by never penalizing bad news or good-faith project failure, but good management is actually really counterintuitive, because your natural reaction is to react to negative news with negative emotions. 2. Information is lost with every explicit communication up the chain. The information an engineer provides to management is a summary of the actual state of reality; if they passed along everything, it'd require that management become an engineer. Likewise recursively along the management chain. It's not always possible to predict which information is critical to an executive's decision, and so sometimes this gets lost as the management chain plays telephone. 3. Executives and policy-makers, by definition, are the least reality-informed people in the system, but they have the final say on all the decisions. They naturally tend to overweight the things that they are informed on, like "Will we lose the contract?" or "Will we miss earnings this quarter?" All that said, the fact that most companies have a corporate hierarchy and they largely outcompete employee-owned or founder-owned cooperatives in the marketplace tends to suggest that even with the pitfalls, this is a more efficient system. The velocity penalty from having to both make the complex decisions and execute on them outweighs all the information loss. I experienced this with my startup: the failure mode was that I'd emotionally second-guess my executive decisions, which meant that I executed slowly on them, which meant that I didn't get enough iterations or enough feedback from the market to find product/market fit. This is also why startups that do succeed tend to be ones where the idea is obvious (to the founder at least, but not necessarily to the general public). They don't need to spend much time on complex positioning decisions, and can spend that time executing, and then eventually grow the company within the niche they know well.

kmacdough 2y ago
> All that said, the fact that most companies have a corporate hierarchy and they largely outcompete employee-owned or founder-owned cooperatives in the marketplace tends to suggest that even with the pitfalls, this is a more efficient system. This conclusion seems nonsensical. The assumption that what's popular in thearket is popular because it's effective has only limited basis in reality. Heirarchical structures appear because power is naturally consolidating and most people have an extreme unwillingness to release power even when presented with evidence that it would improve their quality of life. It is true that employee owned companies are less effective at extracting wealth from the economy, but in my experience working for both traditional and employee owned companies, the reason is employees care more deeply about the cause. They tend to be much more efficient at providing value to the customer and paying employees better. The only people who lose out are the executives themselves which is why employee owned companies only exist when run by leaders with passion for creating value over collecting money. And that's just a rare breed.
- nostrademons 2y ago
  You've touched on the reason why hierarchical corporations outcompete employee-owned-cooperatives: > Hierarchical structures appear because power is naturally consolidating and most people have an extreme unwillingness to release power even when presented with evidence that it would improve their quality of life. Yes, and that is a fact of human nature. Moreover, many people are happy to work in a power structure if it means that they get more money to have more power over their own life than they otherwise would. The employees are all consenting actors here too: they have the option of quitting and going to an employee-owned cooperative, but most do not, because they make a lot more money in the corporate giant. (If they did all go to the employee-owned cooperative, it would drive down wages even further, since there is a finite amount of dollars coming into their market but that would be split across more employees.) Remember the yardstick here. Capitalism optimizes for quantity of dollars transacted. The only quality that counts is the baseline quality needed to make the transaction happen. It's probably true that people who care about the cause deliver better service - but most customers don't care enough about the service or the cause for this to translate into more dollars. As an employee and customer, you're also free to set your own value system. And most people are happier in work that is mission- & values-aligned; my wife has certainly made that tradeoff, and at various times in my life, I have too. But there's a financial penalty for it, because lots of people want to work in places that are mission-aligned but there's only a limited amount of dollars flowing into that work, so competition for those positions drives down wages.

kmacdough 2y ago

> All that said, the fact that most companies have a corporate hierarchy and they largely outcompete employee-owned or founder-owned cooperatives in the marketplace tends to suggest that even with the pitfalls, this is a more efficient system. This conclusion seems nonsensical. The assumption that what's popular in thearket is popular because it's effective has only limited basis in reality. Heirarchical structures appear because power is naturally consolidating and most people have an extreme unwillingness to release power even when presented with evidence that it would improve their quality of life. It is true that employee owned companies are less effective at extracting wealth from the economy, but in my experience working for both traditional and employee owned companies, the reason is employees care more deeply about the cause. They tend to be much more efficient at providing value to the customer and paying employees better. The only people who lose out are the executives themselves which is why employee owned companies only exist when run by leaders with passion for creating value over collecting money. And that's just a rare breed.

nostrademons 2y ago
You've touched on the reason why hierarchical corporations outcompete employee-owned-cooperatives: > Hierarchical structures appear because power is naturally consolidating and most people have an extreme unwillingness to release power even when presented with evidence that it would improve their quality of life. Yes, and that is a fact of human nature. Moreover, many people are happy to work in a power structure if it means that they get more money to have more power over their own life than they otherwise would. The employees are all consenting actors here too: they have the option of quitting and going to an employee-owned cooperative, but most do not, because they make a lot more money in the corporate giant. (If they did all go to the employee-owned cooperative, it would drive down wages even further, since there is a finite amount of dollars coming into their market but that would be split across more employees.) Remember the yardstick here. Capitalism optimizes for quantity of dollars transacted. The only quality that counts is the baseline quality needed to make the transaction happen. It's probably true that people who care about the cause deliver better service - but most customers don't care enough about the service or the cause for this to translate into more dollars. As an employee and customer, you're also free to set your own value system. And most people are happier in work that is mission- & values-aligned; my wife has certainly made that tradeoff, and at various times in my life, I have too. But there's a financial penalty for it, because lots of people want to work in places that are mission-aligned but there's only a limited amount of dollars flowing into that work, so competition for those positions drives down wages.