The development of Corporate Fat
In IT industry, staff’s fluctuation rate is extremely high nowdays. It is rare that a software developer stays at a company for more than 2 years: job hopping has the benefit that the employee sees different projects, approaches, cultures, etc. An avergae IT employee — considering <2 years of retention — usually jumps into a startup environment, then leaves the same (or almost the same) startup environment. Or jumps into a corporate environemnt, then leaves the same corporate environment. Therefore, it is unlikely that a randomly selected software developer sees a full startup-to-corporate transition, as it requires at least 5 years to be spent at the same company, considering that the startup company is on the track to become a big corporation.
As I have been working for the same company for 7 years now, which happens to be a big corp now, I had the chance to see how a small startup company started growing, and how it became a big fish in IT industry. Many of my software developer peers left the company during the transition, as they found less and less challenges over the years. Most of them went to small startup companies, usually for less salary. Couple of them started their own tech business, and they had to make their sacrifices for the funds, eg. selling a motorcycle, moving to a smaller apartment, or accepting to not have salary for a year, etc. My previous job was at a big investment bank where corporate environment was already settled at the time I arrived, so I knew where we are going, and I wanted to see how it evolves.
… or maybe I just did not have the balls to quit? who knows.
Seven years ago we started our journey with only 3 products, this was the company’s growth period. Effective teams, startup culture, nerf guns, healthy and constructive conflicts. Sometimes our disagreements were loud, but we could always reach consensus, and we could always commit to a goal. We had successful projects, and we often stayed at the office for a couple of drinks after work.
Seven years later we ended up with a large product portfolio — meaning 16 products -, but slowly the company has reached its highest potential: the point where it is no longer scalable. I would say, this is the company’s harvest period. Teams are not motivated, corporate politics, projects with no intent, fear of conflict, job security. The company has low potential on creating new products or features, and the cost of the maintenance of existing products are extremely high. Many employees find this transition a decadent process. I think this is just a natural lifecycle, which needs to happen, and happens at all companies at different lifecycle stages. From operational perspective, yes, it is hard to work for a company that produces output extremely slowly. On the other hand, the revenue is always high, you should not be worried about the next quarter’s funds as it is unlikely that the company goes bankrupt, and there are projects where you can still learn new things.
Lets see the growth of Corporate Fat in our case
Acquisitions and Mergers
The best way for a company to expand is to acquire other companies, or do mergers with the big players on the field. These legal operations bring plenty of benefits for the company that are visible short term: increasing revenue, more diverse culture, more diverse tech stack, etc. It was common that after an acquisition or a merger, the company announced that it is cutting on spending. Most of the times it meant that we are closing an office, which means that we had employees departing from the company. But this kind of rationalization in human resources always happened at high level only: a business function has to be moved from one region to another, and the original region is getting closed. The team that takes over the legacy project is likely to be assembled from an existing team, instead of hiring a new team. This is reasonable, as a new team would require a long wrap-up time period. After every merger or acquisition, the company becomes a little bit less stable, and more sensitive. No-one really knows how product teams would work together if they need to work together. No-one really knows if the transition of a function would go smooth in the new region, or it would be a big failure at high cost. This ambiguity blocks the management from firing low performer employees, as “this is not the best time to make that decision”, and this mindset remains with the company for so long.
At this stage, a couple of good talents are leaving (or they are thinking about their exit plans), as they do not find legacy projects challenging. Even if they are not allocated to a project/product that should be taken over, their original team has damages (other people got deployed elsewhere), which affects the backlog as well: a favourite project should be shut down, or new product initiatives appear on the horizon that they do not like. It was always interesting to see how software engineers get frustrated because they are not allowed to work on their favourite projects anymore. If you think about that, they get their salaries from their employer, so it makes sense that the employer has asks in exchange for the salary. But yeah, talented engineers are like that, so they leave. Good people leave, others stay. Corporate fat slightly grows.
Unification efforts
Once management sees that things are stabilized around the company after an acquisition or merger, they usually start to think about unifications at their level. Billing portals from different products should be combined, and there should be only one Billing portal. Profile portals from different products should be merged, and they should be owned by one team only, etc. There is no problem with the unification initiatives, most of the times they seem reasonable, and the end result is more cost effective.
However, it has a couple of drawbacks: in order to complete the unification efforts, development teams need to collaborate across different geo locations, different timezones, different cultures. This new environment freaks out those developers who got used to the startup methods. Instead of working on cool features with their friends, now they need to pick up the phone every day and talk with srangers about projects that will never impress end-users. This is the beginning of the second wave, when good talents are leaving again.
By this time, engineers and managers might already noticed that the number of valuable deliveries decreased significantly — as the rest of the organization is engaged with unification efforts, debranding, re-branding, localization and other stuff -, but some top level managers are still asking for visible results. It is high time for politicians to show up, or get hired. In such an environment, measurable results are becoming less and less relevant, and C-level managers are too busy to validate results (most probably they do not even have the proper metrics to validate, so they trust). From career development perspective, this is the best time to join a company. No-one cares about your results, but you get good bonuses if you show fake results. Other managers are too shy to play this game, so it is also easy to be under the spotlight at all times — you dont even have to fight for the visibility, or at least not yet. Big chunk of the Corporate fat grows during this period.
Corporate Communications #1 — trying to navigate back to the original track
A couple of years after the first mergers and acquisitions, C-level managers do not understand why the company got stuck and slowed down in product development. In math, if you evaluate “800+300”, you will get 1100. The same operation is not applicable after an acquisition. Although 800 employees + 300 employees are 1100 employees in total, 800 units of productivity + 300 units of productivity will only be around 650 units of productivity after an acquisition.
Most of the talented and ambitious managers are already left, so it is up to the Cheerleader managers to handle the situation. They decide to throw slogans to the tired and demotivated employees: “your product team is a company within the company”. We can agree with the intention: Cheerleader managers noticed that the company has become big, bureaucracy is spread across the organization, and they want to encourage product teams to make decisions locally. Although the intention is positive, it does not work as long as product teams need to spend 40% of their time over the phone, trying to convince strangers from a different regions to do things they do not want to do. On paper, every product team is a company within the company. In reality, they are just bricks in the wall.
The Fall of the Product Organization
Now that the company’s focus has been moved from feature development to cross-product architectural changes, Product organization has less power over the products and their backlogs. Product folks used to experiment with feature ideas, they used to do interviews with customers in order to better understand their needs, and they used to follow the trends to make sure they can better react to changes. Over the past few years, it was always up to the Vice Presidents (tech) and Engineering Directors to plan what the teams should do in the next quarter, and these tasks were always unification-related efforts.
Even though Product folks have become less powerful, it is hard to justify that the company no longer need them, so they can hardly be fired. Slowly they are becoming a part of the Corporate fat.
Corporate Communications #2 — trying to gain momentum again
The new message is “empowerment over consensus”. You can find the posters in the elevators, the reception area of the office building, you get emails from C-level management about this more frequently than you want to. The messages translates to something like this: “we acknowledge that we failed to take over the control, so we want you to make your decisions, and you dont need to ask for permissions, as we know you would only hit walls”.
Other slogans from Cheerleader managers would look like “Put clients first”, or “Everyting is possible”. If you see these posters on the walls in the office, and you have negative feelings about big corporates, prepare your CV and start looking around for the new career opportunity. If you enjoy the show, stay.
Rotating Cheerleaders
5 years can be considered a short period of time if we think about human’s lifetime. However, it is extremely long time if we think about a developing corporate culture. Assuming that a manager stays at the company for 2 years only (my observation is that this is the longest interval that someone can manage to survive by showing no or limited results), it is already the 3rd manager generation for a random team within the organization. When a manager joins a team, most probably he/she would spend all his/her time trying to understand how the team works, how the team fits into the organization, who are the stakeholders, etc. But this is only an ideal case. Most of the times, new managers would only show up in front of the team for the first time when they announce a new method, or they introduce a new tool. This is just how human nature works: you have seen something working good at your previous job, and you want to try that out in the new environment. If you have a hammer, everything seems to be a nail around you.
A couple of years later the manager disappears, a new manager gets hired, and he/she would bring his/her own standards into the organization. It is unlikely that any manager in a corporate environment would start questioning the legacy standards and methodologies, so the number of processes are always increasing. (From job security perspective, throwing away a legacy process that was brought in by a previous manager comes with a huge operational risk.) After 3–4 iterations (6–8 years), the overhead on the bureaucracy increases to a level where the team becomes ineffective. Even more talents leave the company, and the end result is pure Corporate fat that is self-supporting.
