How Organizations Get Old...

Recognizing the Signs and Reversing the Decline of Organizational Aging

The Aging Process

The inevitable fate of every company is to age from sprightly upstart to sluggish giant—it's a tale as ancient as commerce itself.  Like people, companies often long for their golden age, grasping at their fading youth. Organizational aging slinks in silently; suddenly, they can’t leap as high or stretch as far. The magic of their prime has vanished.

No company intends to get old, but over time a raft of challenges chip away at their nimbleness and breed resistance to change.  Evolution and growth feel like too good a thing to question - even when the original magic is lost - because the sweet success of scale has finally been achieved.  

Now that startups can go from seed to listed in less than 15 years and under 1 CEO, there are many examples of startups that grow into behemoths and keep some of the magic alive - it has become possible to delay ‘aging’ so to speak.  And that’s because there are ways to prepare for the organizational aging process rather than accepting the inevitable. 

If we know exactly what ages, hopefully, we can reverse it with the company equivalent of supplements and healthy living. 

There is a complex interplay of factors—some obvious, others deeply concealed —that differentiates the sprightly unicorn from the sluggish corporate.

The Visible Signs

The usual suspects are easy to spot. Smaller companies thrive on flat hierarchies, quick decisions and free-flowing communication. In all startup beginnings, we all have fond memories of the days the entire team could fit into one conference room, gather around a single whiteboard, and hash out issues in real-time. Fast forward a few years, and suddenly you're navigating a labyrinth of middle managers and approvals before a seemingly simple decision can be made.

Communication channels that were once crystal clear become muddied —messages get lost, distorted, or arrive too late to be actionable. Brilliant ideas wither on the vine simply because they couldn't navigate the byzantine channels of a growing organization.

Then there's formalized processes. In the early days, my teams created tactics out of thin air and proudly celebrated results. But as we grew, so did the rulebook. What started as necessary guardrails soon became straitjackets, constraining the very adaptability that fueled our initial success.

Culture, too, plays its part in this aging process. The unified ethos that once propelled the company forward begins first, to fragment and then decay. Suddenly, you're not just managing a business; you're herding cats, each department with its own subculture and agenda. A far cry from the days of One Team, One Mission. 

The InVisible Signs

There are less obvious—but equally potent— aging forces at play.  These issues sit a layer or two below the obvious ones - they’re systemic.  Understanding them may expose some opportunities to help forever young in the best way possible. 

Risk Distribution vs. Risk Ownership

Take the responsibility for making risky decisions, for instance. In a lean operation, risk is like a hot potato—everyone knows who's holding it and decisions are made swiftly. Within startups, I’ve been able to change a company name, design a new campaign, or create and test a new product in a single afternoon meeting. We all understood the stakes and were willing to take calculated risks to stay ahead. 

Scale up, and suddenly the responsibility for risk spreads out across layers of management. Each manager with their own context and past experience - within and outside the organization - with different risk appetites.  Then group agreement becomes a necessary prerequisite for action - building that coalition takes time and effort.

Decision-risk is now fractured across a number of people because the stakes are higher, and rightfully so.

But if you’ve hired a strong team then small, autonomous teams can be trusted and empowered to operate with the speed and risk-ownership.  I like Amazon’s ‘Two-Pizza’ team concept - where teams are kept small enough that they can be fed with just two pizzas.  The same concept goes by many names - pods, squads, cells, clusters, workstreams etc.  The key characteristic is the autonomy to take action for the good of the organization without bureaucracy.  

To effectively operate, these teams need a feedback loop so that their progress, impact and results are transparent to the rest of the organization.  Open dashboards and data shared via internally-exposed APIs should make sharing information easy.  Spotify has ‘agile coaches’ who drive alignment across different squads.  If this approach is capped off with a robust quarterly review session that highlights wins and losses, you’re off to a great start.  

This consolidated approach is born out of encountering differences at different company stages.  At larger companies, I’ve built squads and improved dashboard visibility.  In smaller ones, it was necessary to pause and reflect in the quarterly review.  

The Tangled Web of Internal Dependencies

I've grappled with the growing complexity of internal dependencies in expanding operations. What once was a straightforward value chain becomes a knot of interconnected processes. As new departments are added or new levels are created a new touchpoint creates a new set of interdependencies that must be responsible, accountable, consulted or at least informed.  Fast forward a few years, and …you know the story.

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This complexity isn't just a matter of more people or processes; it's about the exponential increase in potential interactions and conflicts. As interdependencies grow, so do the potential for misunderstandings, conflicts, and cultural clashes between teams with different priorities or ways of working.

Interdependencies have an inverse relationship with innovation.  Chasing alignment across the board will slow down implementation of new ideas.  

Interdependencies can also create silos.  Silos form when there is unequal access to resources, data or status among a group of people.  As interdependencies grow, they foster an environment for silos to emerge and thrive.  In response to this complexity, teams or departments may start focusing inward, prioritizing their own goals and efficiency over collaboration with other parts of the organization.  Together, they can form a vicious cycle.

A strong culture paired with good tech tools can rescue an organization from being bogged down by interdependencies.  

Clear agreements about how to treat each other  - a “48-hour rule” for responses to messages is one such social contract.  Another great way is cross-functional rotations.  Nothing beats walking a mile in another woman’s shoes.  

Tech that automates as well as equalizes access to information (i.e. Business intelligence dashboards, Trello, Slack), champions meritocracy (a great performance management framework), and transparently shows resource allocation (well structured town halls) goes a long way in maintaining morale and keeping a team nimble.  I’m looking forward to seeing how deeper AI integrations into data generated from infrastructure, employee tools and customer interactions can mitigate the challenges of interdependencies.  

The Burden of Legacy

Legacy systems are another hidden culprit. I've seen companies handcuffed to outdated tech stacks, unable to adapt to market shifts because they're too invested in maintaining the status quo. It's like trying to win a Formula 1 race with a vintage car—nostalgic, but hardly efficient. 

In tougher environments, the sunk cost of equipment makes us clingy.  The desire to wring every last penny out of the tech before it croaks is strong, stronger if you’re fighting macro winds like currency devaluation common in emerging markets.  But the rate of change of technology development is quickening and we can no longer bank on the tech keeping pace with consumer demands.  The lightning speed of software applications is quickening the pace of changing consumer needs.  This in turn ripples out to all other hardware and infrastructure.  

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An established bank or telco will struggle to compete with a fintech or OTT player.  The core systems are necessary to give the entire ecosystem the foundation it needs, but those systems are often older than most of the employees, who are so deeply ingrained in their operations that even minor updates required months of planning and testing. Meanwhile, their nimble competitors regularly push out new features. 

The cost of maintaining this digital dinosaur wasn't just financial—it was strangling their ability to innovate and respond to customer needs. The irony is that these legacy systems, often implemented to standardize and streamline operations, become the very anchors that hold companies back in a rapidly evolving digital landscape. 

To solve this, companies could resolve to swap out a percentage of their legacy systems on an ongoing basis, say 20% per year.  This way, there’s an ongoing, and ingrained approach to preventing equipment aging to the point where it constrains innovation.  Companies can also migrate to partner systems whose job is to always have the best-in-class tech in play - the risk here is that the company no longer truly owns its data.  My favorite option is implementing APIs over legacy technology - it can be a bit tricky if your legacy systems tend to catch a cold but it’s a quicker fix.  

The Inertia of Success

Perhaps most insidious is the inertia of success. Nothing breeds complacency quite like a string of wins. Sharp, hungry teams grow fat and slow on their own triumphs, resistant to change because "this is how we've always done it." It's a dangerous mindset in markets that shift faster than you can release an inflation report. Industry leaders suffer from this even more acutely.  

Successful companies will stubbornly cling to their outdated practices because they have historically satisfied customers and generated revenue, even insisting that customers will remain loyal in the face of better options.  They couldn't fathom that their golden goose might stop laying eggs. By the time they realized the market had shifted beneath their feet, they had lost significant market share.  Anybody remember Nokia, Blockbuster and Yahoo? 

This complacency isn't just about technology; it permeates every aspect of an organization, from customer service to talent acquisition to product management. Success becomes a cognitive bias, filtering out warning signs and innovative ideas that don't fit the established narrative. 

Cultural Homogeneity vs. Fragmentation

Cultural fragmentation, too, plays its part. As teams expand and specialize, they develop their own microcosms, complete with unique jargon and priorities. Before you know it, your once-cohesive organization is a collection of silos, each speaking a different dialect of corporate-ese that only the leaders have a chance of understanding. 

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At Migo, we were conscious of the culture splintering across Lagos, Warsaw and San Francisco offices.  Each team or office can develop its own subculture, complete with inside jokes, specialized vocabulary, and distinct ways of approaching problems. While some degree of specialization is necessary, this fragmentation created invisible barriers to collaboration and innovation. Ideas that required cross-functional cooperation often died, not because they lacked merit, but because they got lost in translation between departments. Breaking down these silos became a major focus, requiring deliberate effort to create cross-functional teams and rotate employees between departments. 

Forever Young

So, how do we combat this organizational arthritis? It starts with a willingness to question everything, even—especially—the practices that brought you success.

Flatten that hierarchy. Streamline decision-making processes. Create cross-functional teams that break down silos and foster a culture of collaboration. Invest in systems that enhance agility rather than hinder it. And above all, cultivate a mindset of continuous improvement.

But what about the need for stability? While agility and rapid innovation are essential, particularly in fast-moving industries, some degree of bureaucracy can be beneficial, especially in large organizations. In heavily regulated industries like healthcare or finance, strict procedures and layers of approval are often necessary to ensure compliance with legal standards and to manage risks.

Balancing Agility with Control: The key is not to eliminate structure entirely but to find the right balance between maintaining control and enabling flexibility. In some cases, traditional hierarchies provide the stability needed to deliver consistent results, especially in environments where precision and reliability are critical.

When Traditional Practices Work: Additionally, in industries where safety and quality are paramount, such as aviation or pharmaceuticals, a more structured approach can help prevent errors and ensure that high standards are maintained. In these contexts, the challenge is to introduce agility within a framework that still respects the necessary constraints.

The battle against organizational aging is never truly won—it's a constant struggle against the forces of complacency and bureaucracy. But for those willing to stay vigilant, to continuously reinvent themselves, the rewards are a sustainable company that doesn’t lose its competitive edge. After all, it's not the strongest that survive, but the most adaptable.

Consider these questions: 

• How often do you hear “this is the way we have always done it” in response to a call to change? 

• How many people are required to make a go-no go decision on a value-adding change in your organization? 

• Do you have silos in your organization? 

As leaders, our challenge is to create organizations that grow without growing old. It's about building structures that bend without breaking, cultures that evolve without losing their core, and teams that maintain their hunger for success. 

The future belongs to those who can grow without growing old.  Will your organization be among them?



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