Democracy Only Works for Startups

What is a democracy? What's so great about it? What's not great about it? When we think about the idea of a democracy most people think about our great country. After all it was a government by majority rule that gave us such a wonderful place to live and work. What about democracy in the workplace? Many companies operate this way and it can lead to some incredible success. My belief however about democracy in business is that it only works for startups.

When a company is first starting out it has only a few people. Usually that includes one or more founders and some key early hires. At this stage it's all hands on deck. Everyone must pitch in and everyone has input on how the company will be built. It's a fun time and these collaborative efforts are essential. Without democracy, things just don't get done. There is too much to do for one person or for everyone to work in a silo. Everyone works together to make decisions.

As the company grows the democracy begins to breakdown. More people mean more opinions. More opinions mean more time to make decisions and more chance of making the wrong ones. If you’re lucky you still come up with the right decision, but it may take you weeks longer to get there than it did a year earlier. The democracy is becoming counterproductive and starting to hinder growth, not facilitate it. Still, it's relatively early in the companies maturity cycle and at about 12-15 people things are still working ok.

Companies that make it past here must have some pretty talented and hard working people, that's great. Now it's time to hire more and start creating departments. The democracy is now implemented at the department level as well as the management level. Whoa, now things are really getting pushed back. More meetings are necessary just to go over everyone’s opinion. Meetings go longer and decisions are often postponed until another decision from another meeting can be made. Is democracy helping here or hindering?

At about 35+ people the democracy is totally breaking down. You can push through it and many companies at this stage do because democracy creates strong culture. When people at all levels give input, they feel like they are making an impact and this is one of the biggest contributors to job satisfaction. Don't want to lose that culture do you? Neither do I, it's critical. But wait, the democracy we've created is almost created a standstill. How do you balance the desire for killer culture and not get bogged down in the process? Good question, I deal with it every day and it should be the topic of yet another post.

Ok, now more than 50 people. Meetings are pretty much going on all hours of the day. Nobody is at their desk working. It's just one big decision making committee, or worse, a dozen committees all trying to make decisions so that another committee can make theirs. It just doesn't work. Management must step in and start leading. I don't suggest a dictatorship, but it’s up to management to get input quickly, analyze and make decisions, lest the inevitable paralysis.

Interestingly I think this theory also applies to government. When the country is small and trying to build all the pieces of the machine, democracy rules. But as a country grows and more and more people get to have a say, especially when it's combined with capitalism, problems arise. I personally think that's part of the challenge our own country is facing. Democracy w/ capitalism is failing and I'm not sure that time will heal it. There needs to be a change that facilitates growth, but that too is the topic of another post.

Comments

[Malcolm]

I follow your point, Jeff, but I have to clarify something you said about the US (it actually strengthens your point).

The United States is not (and never has been) a "democracy". This country was founded as a "federal republic". You could probably also call it a "democratic republic" or a "representative democracy" - but I'm not a political scientist. Majority rule has never been part of the way this country was set up - because it won't work.

The concept of "one vote per person" is a relatively new idea - really from the middle of the last century. If you can set aside the racial and sexual discriminations that were involved (for the purpose of this discussion - I'm not saying they were unimportant), the original idea the founding fathers had was that only people with that were productively contributing to the society were entitled to a vote. Remember, the Constitution does not guarantee a "right" to vote. Voting is a "privilege" that is to be granted and managed by the states.

You can see how this effectively applies to and supports your analogy. Hopefully all of our employees have valuable ideas and contributions to our company - but as you say - if they are all standing at once and shouting - nothing will get done. Think of your department heads as state governments.

And seriously consider if you really want to grant the "privilege" of voting to the guy that only comes in to collect his paycheck...

[jeffsolomon]

Malcolm; thanks for the insight. I actually feel somewhat obtuse when it comes to political know-how so I appreciate the perspective. For a long time I thought little about our government and where the country was headed, but over the past few years I’ve become pretty passionate about change, albeit my ignorance.

As for my company, just sharing this concept with my management team has already had an impact; hire smart people and let them run with it.