Lieutenants are the limiting reagent

September 2023

The statement "this company lacks focus" confuses me. Don't companies hire more people in order to do more things? Shouldn’t the number of things the company can "focus" on expand as you hire?

Clearly that is the case: Google has 100 products more than any new startup could have. But if anything, 100 products seems too few; after all, they have 200k employees! For reference, Instagram launched with less than 13 people. If Google were as efficient as Instagram was, they "should have" 150x more products.

What accounts for that difference? Why don't big tech companies ship more?

My working hypothesis1 is that the limiting reagent inside of big tech companies is

Lieutenants: Effective people with agency who are motivated to ship.

Most people don’t realize it is their job to unblock themselves and that they don’t need permission to do it. You need people who act even when they hit “extraordinary blockers”.

[Update April 2024]. Here, Mark Zuckerberg reaches the same conclusion (emphasis mine):

[01:15:43] You asked before about what are the scarcest commodities but you asked about it in terms of dollars. I actually think for most companies, of this scale at least, it's focus.

You cross some threshold at some point with the nature of what you're doing. You're building multiple things. You're creating more value across them but you become more constrained on what you can direct to go well.

But I think in general, the organization's capacity is largely limited by what the CEO and the management team are able to oversee and manage. That's been a big focus for us. As Ben Horowitz says “keep the main thing, the main thing” and try to stay focused on your key priorities.

"Extraordinary" blockers are routine

Imagine the company wants to launch the product in India. The team soon discovers that India requires user data to be stored in Indian servers. But today all data is stored in the US. Suddenly, launching India is equivalent to migrating the infrastructure to be multi-region.

They discovered an “extraordinary blocker” which:

  • Seems out of scope for what the project is about
  • Is way bigger than their job description and current skills
  • Is unclear if it can be solved in time or at all

Sadly, most projects have an "extraordinary" blocker that transcend job descriptions. And few people see it as their job to transcend their job description.

Lieutenants per capita

If lieutenants are the bottleneck, what influences how many lieutenants you have in the first place? Much of it is context-specific:

  • Effectiveness varies over time and by domain. Style is important for a consumer product, less important for B2B SaaS.
  • Motivation changes over time. Somebody that starts motivated might grow disillusioned.

One pattern seems clear though, as companies grow, they have fewer lieutenants per capita:

  • Diffuse ownership: The more people, the more likely you think it is somebody else’s job to solve the extraordinary blocker.
  • Diffuse rewards: Why would you work on the extraordinary blocker? You’ll be equally compensated if you work on your nominal job.
  • Bureaucracy: My intuition is that bureaucracy slows things down but rarely prevents them from happening in the first place. But the more boring and unpleasant it is to get things done, the more likely that people that pride themselves in getting things done leave. So, bureaucracy drives the lieutenants away, which eventually prevents things from happening.

Misc observations

I don’t have a recipe to magically solve this problem. Instead, here are some related phenomena:

  • Team decay: Teams go from effective to not effective in a span of a few months. What happened? One or two lieutenants left and now everybody is constantly blocked.
  • Fixers and starters: I often ask people from other companies for inside stories. Surprisingly, a few particular names often come up repeatedly for multiple projects. It is also not uncommon to hear of "fixers": long-time employees that get sent to stuck projects.
  • New executives rarely become lieutenants: CEOs know the limiting reagent is "people I can delegate to". So, they hire people that seem to fit the bill: big name executives. But sadly, big name executives rarely translate into lieutenants. Consider the India project. Is the big executive going to read database code to set up an India database replica? No, they will complain that they "were not set up for success".


Thanks to Devon Zuegel, Jack Dent, and Lachy Groom for reading drafts and providing feedback. Thank you to Nadia Asparouhova for many conversations on the topic.


Footnotes

  1. “Lieutenants are the limiting reagent” is a subset of Nadia’s observations in Explaining tech's notion of talent scarcity. I chose the term “lieutenants” instead of “right hands” because “right hands” emphasizes the relationship to some executive, which I find less important, but the notion is the same.