Be Big! Do Stupid Stuff!

How US corporations reliably screw themselves into torpor

Image credit: Views From The 6th

Many years ago I read a book on startups that was written by one of the first tech entrepreneurs. In the book he said the primary reason people were motivated to start tech companies was the fact they wanted to build organizations that weren’t as brain-dead stupid as large corporations.

Today, that observation is no longer true. The primary motivation of twenty-somethings is the belief they deserve to be multi-billionaires by the age of twenty-five. But large corporations are still far too often brain-dead stupid.

And by stupid I don’t mean their expensive and clever McKinsey & Co strategies for world domination, nor their product/market mix. I mean the internal processes that reliably chew up valuable time and demoralize employees.

The Finance group’s job is to account for spending and one way the dollars and cents flow out of a corporation is when employees travel and entertain for business purposes. Naturally it seems reasonable for the folk in Accounting to require employees to submit expense claims in order to be reimbursed. There are, however, two ways to look at this issue.

The first way is to assume that for the most part employees will behave with some measure of responsibility. In this case, the process of securing expense reimbursement should be as streamlined as possible so that employees can focus on doing their jobs rather than on doing administrative tasks.

The second way of looking at expense reimbursements is to assume that for the most part employees will try to game the system. In this case, the process of securing expense reimbursement should be as fine-grained as possible in order that Accounting can catch cheats and save the corporation precious dollars and cents. Of course, the hidden catch with this approach is that the expense reimbursement process will require an inordinate amount of employee time and send a very clear negative message to employees: we don’t trust you.

Not surprisingly, large corporations trend toward the latter approach. This is because it’s impossible to account for productivity on a balance sheet but it’s easy to count pennies spent on travel and entertainment.