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I’m no fan of large organizations. They’re too bureaucratic, too unresponsive and too resistant to change, plus they tend to attract employees who are comfortable in that environment, which makes things even worse.
I saw this at Citigroup. Every January or February, senior management would roll out a corporate initiative designed to bring a renewed sense of urgency to the organization. It would be kicked off at “town halls,” and was followed by department staff meetings. We’d all receive the relevant materials, often a tree’s worth of paper that we were meant to study.
When I first arrived at Citi, I thought that—as a good employee—I ought to figure out how the new initiatives should be reflected in how I did my job. Longtime employees seemed bemused by such notions. Sure enough, within weeks, the new initiative was forgotten, and it was back to business as usual.
Decades ago, I remember a conference speaker observing that, when it came to organization size, Jesus had it right, limiting himself to 12 apostles. But of course, one of the 12 betrayed him, so maybe 12 is at least one too many.
Indeed, perhaps the optimum number of employees is one. I love working for myself. Even now, with my terminal diagnosis, I put in way too many hours, or so Elaine keeps telling me. But I’m passionate about what I do and, if I didn’t do it, who would? That’s the beauty and bane of being a one-man band.
This line of thought was inspired by reading comments posted to HumbleDollar’s Forum. With some regularity, readers decry how awful health-insurance companies are, or how inefficient the federal government is, or the ineptness of certain corporations.
As I read these comments, I wonder whether I’m seeing some political bias. Are some folks more inclined to denigrate government agencies, while others save their criticism for the private sector?
A digression: It’ll be interesting to watch the Trump administration’s efforts to improve government efficiency. If I had to guess, there will be massive but passive institutional resistance and, when the dust settles, the bureaucrats will still reign supreme.
To my mind, all organizations of any significant size are pretty much doomed to inefficiency. Am I wrong? Which companies continue to impress you with their ability to innovate and deliver good customer service, despite their burgeoning size?
Just came across this: The 2024 KPMG US Customer Experience Excellence Report The top 10 list includes a few of the names mentioned in the comments.
When I teach Clayton Christensen’s theory of disruptive innovation in my 200-level business class, I use Apple as an example of a company that has long ceased to be innovative. Since the iPhone 1 in 2008, Apple and Samsung have been pretty much in lockstep as sustaining innovators: just adding an availble upgrade to their current product.
Where Apple truly, and in my mind solely, shines is in glorious marketing. As for customer service, Apple brings a truly rigid regime to their software that some love because “it just works” and others (like me) hate because it only works the way Apple tells you they want it to work.
Clayton Christensen will tell you that Apple is doomed to fail as it will be out-innovated by a disruptor. It hasn’t happened yet, and it’s hard to see how it will happen, but that’s how disruptive innovation works.
Clayton Christensen also argues that it is not the people in an organization who are the problem (say the ones at Citi), but the institutional procedures and processes that are the problem. How money gets allocated and how people are rewarded is the real issue.
Often the only way to break free of these procedures and processes is to set up a new company.
Costco was a disruptive innovation as compared to Sears (remember Sears?).
Intel was about to get killed, talked to Clayton Christensen, and set up the Celeron processor division doing things completely differently to the rest of Intel. The Intel you see today is the Celeron division.
Clayton Christensen’s Innovators Dilemma book is an amazing read if you’ve not had chance.
My favorite phone is Google Pixel and processors Pentium and Core i7 (not a fan of Celeron).
Interesting thoughts about Apple. I can’t think of any other competitive product that has lines of customers waiting to get the latest product when it’s released.
I have Costco, Sam’s and BJ’s in my town. Sam’s is always busier than the others. I’ve had memberships at all three, but stick with Costco so that I don’t have to relearn a floor layout.
Never had any business dealings with Citi, other than my neighbor’s father was a Citi VP.
Clayton’s book sounds like it would be interesting to read to see how things have turned out when he first wrote it and compared to now. Wonder what his thoughts would be about AI? Short life he had.
I have to imagine the hiring process at Costco places a heavy weighting on people skills. I’ve been to maybe 6 locations across the USA and am always impressed by the staff in being polite, helpful and professional.
Sears cut its own throat in the late 70’s, early 80’s when it decided to “save money” by letting the senior sales personnel go in favor of lower cost new hires that they did not train well or at all. That, and they seemed to sorely lack in innovation or just keeping up with the times. Very sad.
Jonathan, just one named APPLE, 3.7 Trillion and counting. The main reason I changed from a PC to an Apple Mac, you can talk candidly with people at the Apple Store, or at Corporate helping you solve those everyday mysteries. A couple other favs, Costco, Nordstrom, and even Amazon, they all are good listeners and provide real customer service.
i’ve never been one to complain about usps. i’ve lived a long way from town for 50 yrs now, and am always amazed at how well today’s pony express works.
i wonder if there might/must be more energy bein’ burned up by various companies delivering boxes of stuff from amazon…
i’ve said that we’re not really growin’ trees for lumber, we’re growing boxes!
Think of inefficiency as simply the cost of doing business at large scale. In some industries, scale is a prerequisite to existing. Think retail banking (like Citi Group, Wells Fargo, etc), steel making, federal and state government, military, etc etc. Even though technology continues to make inroads into all of these in terms of improving productivity, at this stage there isn’t a clear way for technology to replace people in these industries entirely. As long as that’s the case, there will be inefficiency.
Why? Because large organizations are actually a miracle of productivity and efficiency. They’re able to generate outstanding results using only the average inputs of average people.
Many large organizations deliver truly outstanding results. IBM, Apple, Amazon, Walmart, CostCo, Intel, Ford. These behemoths continue to innovate and generate huge revenues and decent or better profits. Sure, plenty of money is lost to inefficiency in all of them. Yet they consistently deliver.
Intel, ibm, ford?
Citibank was famous among NYC tech workers as being the most screwed-up bank. It was a paradise for useless and/or conniving employees, and the managers were all empire builders – the more people you have in your department, the more important you are, and they don’t have to actually do anything.
I seem to remember reading, a long time ago, that any meeting of more than seven people would have trouble making decisions.
I worked for a large corporation. In general the workers were efficient, most problems were decisions coming from senior management.
I have no complaints with Medicare. My two experiences with Social Security were excellent, but I understand they have since been starved of staff.
Yes – many social security offices have recently been closed
For any fellow Texans, I’ll start with HEB grocery stores. Great staff, great customer service, and really came through for us during the pandemic.
Charles Schwab. I’ve been with them, and Vanguard, for years. I love Vanguard’s history, especially as to John Bogle, and philosophy, but their customer service pales in comparison to Schwab’s. You can call Schwab 24/7 and, in short order, get a rep on the line whose desire is not to brush you off or direct you to a different dept., but to actually help you.
As others have mentioned, I’ve likewise had good experiences with Medicare. A very nice consolation prize for turning 65!
And ditto on Costco.
+1 for Schwab! This past year I had a very technical question about Form 5498, and the gentleman on chat was able to answer it on-the-fly, quickly and accurately! I was very impressed.
Costco.
Costco apparent efficiency amazes me. Several of my tax clients who worked there liked there job and were well paid. Lots of value for us customers, and the fastest checkout lanes anywhere.
I bought a pair of hearing aids there just yesterday at 1/4 of the price my ENT doctor was charging. And with a 6 month moneyback guarantee to boot.
Don’t be shy about asking for follow-up assistance, either. They might continue to impress you.
Think about ant colonies. Each little ant is tiny and lives a short while, yet the colony lasts generations. In the Sonoran Desert each colony has a mighty entry hole, built over time, way larger than what any line of ants needs. Meanwhile the solitary kangaroo rat has a burrow with several small obscured openings so he can dive in and out, dodging predators.
Similarly, despite the amazing accomplishments of a few stellar individuals, nothing as complex and enduring as human society can be done within the contours and time of a single person’s working life. It requires collective action.
I suggest Mancur Olson’s Logic of Collective Action as a good bedtime read. Or watch the 4-minute video version on YouTube. I would also recommend the life of S. David Freeman as a visionary manager. Not all of his efforts were successful, though many were. (his NYTimes obit is a good summary.) Eric Abrahamson on Management Fashion is a good description of faddish company initiatives.
As an emerita professor of public management, I am solidly in the camp recognizing the essential nature of collective action, which requires an organization to create roles (“positions”) chopping the organization’s work into pieces. In the typical US organization, each is an approximately 2,080 hour-sized annual effort, allocated to a median person of median motivation. These pieces change with new technologies, laws, and the zeitgeist of the time, plus externalities like war or pestilence. There is no such thing as an organization made only of the “best of the best” though I suppose if one were very ingenious and able to draw solely from the top 0.5% worldwide, one could come close for a while before even those people become less amazing. (see Aldous Huxley’s description of the Island of the Alphas in Brave New World on how he imagined that turning out.)
Once an above average person (half of us are) occupies a collection of job duties designed for the capacities of an average or even slightly below average person (half of us are), they can become restive. How organizations deal with that restiveness is the fodder of hundreds of management theories and books. Many people adjust to these constraints. A smaller number of bad actors thrive within them. Some overachievers are internally driven and excel despite them. Some exit to go it alone.
As a youngster I read Kurt Vonnegut’s 1955 piece, Deer in the Works. Sixty-nine years later, it’s still a great read.
Jonathan, thanks for an interesting topic. To my mind, all human endeavors – small, medium, or large – are doomed to some level of inefficiency. To some degree, large organizations have more opportunities for inefficiency. It’s often because they do more things, and harder things. I saw this frequently in my 40+ years in the Aerospace & Defense industry. Every new administration and Congress brought new priorities and budget direction. Imagine your boss changing your job description and goals, and redirecting needed resources frequently. It would be difficult to be mildly successful, much less efficient.
I have seen a few examples where large corporations can lead meaningful change. In 1985, a senior manager at GE Aerospace was found to be mis-charging an Air Force contract. The government response was severe, to the individual and employee. GE instituted a yearly ethics training program that was approved by the government as part of the settlement. The program continues to this day and has become a model in the industry. As an employee I participated in yearly training, and as a manager led many sessions. It has worked very well and it made me proud to see how seriously my employees and coworkers took their responsibilities. I think the key was a consistent message, regular training, and ethical leadership. There were always a few bad apples, but the organization responded honestly and promptly when a violation was discovered.
A company or government agency is not an entity, but a collection of individuals. Some are creative workers, others followers. Some with initiative others 9-5 and I’m out of here – usually the ones who complain they are getting nowhere.
I worked for six different CEOs, each set their own tone which worked throughout the organization changing behavior, but temporarily. But in the end, nothing much changed. What is important is the main focus of the organization, not the next pep rally or quality or cost cutting initiative.
Government is little different except less individual accountability. All the nonsense about unelected bureaucrats making decisions and writing regulations is just that, nonsense. We need bureaucrats – managers.
Imagine if Americans were asked to vote for each department head.
The real irony is someone like Elon Musk railing against “unelected bureaucrats”.
I spent my career in IT. 14 years with a major airline, 27 years with a large local govt and 5 years with a startup consulting and software services company. The local govt had its issues but was no worse than the airline. My main customer working for the startup company was one of the largest computer companies in the world. Amazingly, they were as bureaucratic as the govt and airline.
I was the 90th person hired by the consulting company. It was exciting in our early days as the CEO and management were plugged into everything we were doing. When we reached 400 people in 3 offices it was different. Inefficiencies had crept in and we had more than a few people not carrying their weight.
By that time, I was a SrVP responsible for a large portion of our revenue. Our division knew how to make money and to grow the business, but there was a disconnect with our idealistic CEO, and other lines of business that were not profitable. Out of frustration, I left and 6 months later our venture capital company replaced the CEO. The company eventually went public but was soon sold to a financial services company. This startup would make a great case study of how a startup company with a lot of promise blew their chances.
Amazon is a big company that I still have positive vibes towards. And I am no fan of big companies/organiztions/governments. I worked at AWS for a little over year. The Amazon Leadership Principals are the one set of corporate goals that are not forgettable HR mubo-jumbo. It changes your thinking. Some people have been known to have to turn it off at home (“Now dear, don’t you think we should ‘disagree and commit’ on this issue”?).
I’ve heard from people more recently that the culture has moved from “Day One” to “Day Two”. There is (or at least was) cutomer obsession, top to bottom. No new project got started without a “PR/FAQ” (Press Release/Freuquently Asked Questions) document that allowed the whole project to “Work Backwards” (starting with the customer experience, not the corporate goals).
I learend a lot there in a short time. The place is (was) filled with truly amazing people. I’m still a very satisfied customer. I’m holding the Amazon stock I got while there (one of two individual stocks I own).
From my perspective, Amazon continues to succeed in customer service on a level I find wondrous given its size, and I’m a regular customer and shareholder. Yet the company’s documented abuses of its workforce and the behavior of its founder speak to a certain absence of moral core.
Large organizations delivering decent service and value propositions might include Amazon, Microsoft, Netflix, Visa, Walmart and many of the financial organizations which is reflected in their rising share prices. Used to be Southwest. These all have huge employee issues to manage which they won’t always get right.
The list of organizations delivering less than ideal service is far larger – Boeing, GE under Immelt, a lot of airlines, much of retail, Google, Meta a couple years ago, most TV networks, Disney recently, maybe half of fast food chains, and a lot of the social media platforms.
This year we have been in contact with employees of Social Security and they have been professional and kind. So far, our Medicare is working as it should also. I hope I didn’t just jinx myself- LOL! Chris
Chris, when I was signing up for Medicare there was an issue with my account (likely a typo made by me when I created my account many years ago). I made an appointment at the local SSA office and the woman I worked with was very professional, and discovered and fixed the problem within about 10 minutes. She then processed and approved my Medicare application. I walked out after 20 minutes with my Medicare ID, ready to enroll in Medigap. When my wife signed up 6 months later via her online account, everything when smoothly.
Not doomed, but a steep uphill climb. It helps to have a strong and even charismatic leader coupled with smart and highly detail oriented senior management.
Think Apple under Steve Jobs around the time of the development and launch of the iPhone.
I remember from a management class that the instructor, who had spent most of his career managing hospitals, told of a theory that any change that staff perceives shows admin cares can boost morale. Thus the new initiatives that periodically roll out and cause the eye rolls among the veterans. I won’t bore you with my own anecdotes, but I keep up a steady dialogue with whoever will listen that the key to better quality within our organization is not trivial programs to improve short-term happiness, but rather an appeal to the higher motive of service.
My vote for an exception to the rule is Amazon. I try to shop local and support the folks I know, but I can’t ignore the amazing service Amazon provides. There’s a reason Bezos is a gazillionaire.
A couple of Japanese car makers also make the short list.
Although my services were related to sales, I was never a sales engineer with my former employer. But without fail, my former employer would roll out an announcement of a new sales initiative/emphasis for the new year. Then there would be utter confusion for 2 or 3 months on the part of sales people because no specific goals or measurements were released to go with the new initiatives. What this sometimes meant was that a sale in the early part of the year might result in reduced compensation to the salesperson because it did not conform to the not-yet-established sales initiative.
Despite that, sales continue to grow year-over-year. Company growth has continued internationally – both organically and by acquisition. Something about their system is working for the benefit of the company (and presumably for the consumer), but to an insider it sometimes looked like there was utter confusion in the C-Suite.