People vs. Process

Why startups can and should substitute people in place of process.

Managers in any organization typically have two levers to pull to get anything done: 1) put a person in charge, or 2) implement a process that dictates how the thing will be done.

How Much Process

How much process an organization needs is a function of the talent in it. The higher the quality of talent, the lower amount of process necessary because the employee base is self-organizing and self-learning. Conversely, low quality of talent would mean more intervention necessary from management - more hand-holding.

Furthermore, process does not apply equally to all tasks. Some tasks are easier to apply a process for, e.g. such as having bands for compensation and then having a way for recruiters to navigate those bands while negotiating with potential hires. But other tasks are much harder to apply a process to, like being a CEO.

The Cost of Process

Applying process is almost like the mechanization of a human being. In the limit case, one can imagine various dystopias such as the Kafkaesque Bureaucracy. Therefore, there is a non-trivial cost to employee morale due to excessive process since it destroys employee agency and leads to labor alienation.

Equally worse is that bureaucracy is the antithesis of a healthy startup since it destroys velocity, the single most important variable for any compounding business. Therefore, the surest way to destroy your startup would be to implement too much process.

Indeed, it can even be worse. Process applied without care can mask deeper problems, such as hidden conflicts bubbling up in the organization. It is imperative that before process is applied, a deeper investigation into the underlying problem is investigated. Generally, it is wise to always begrudgingly introduce process.

People as an alternative to Process

In most organizations, we see an increase in process with increase in scale of organization. This is because two things happen simultaneously as an organization grows:

  1. workstreams become more predictable, so complexity of tasks reduce

  2. hiring bars must go down since headcounts must go up

This means that the effectiveness of process grows at the same time it is being more desired, which means process becomes a more effective lever for managers. No doubt there’s no way around this, and therefore let process by implemented by those who practice it.

But in smaller startups and other elite organizations, process can often be a bad idea. This is since the complexity of tasks are relatively high, and ideally your talent pool is strong too (otherwise you probably don’t have much of a shot of not dying anyway). Instead, managers should seek to hire elite talent and place them in charge while shunning process as much as possible.

Thanks to Jared Newman, Brian Schimpf, and Nabil Enayet for helping develop these ideas.