Everyone knows what debt is. If you are in or around the software development community you probably also know the term technical dept. For others:
Technical debt is a concept in programming that reflects the extra development work that arises when code that is easy to implement in the short run is used instead of applying the best overall solution.
Or as Ward Cunningham describes it:
“Shipping first-time code is like going into debt. A little debt speeds development so long as it is paid back promptly with a rewrite … The danger occurs when the debt is not repaid. Every minute spent on not-quite-right code counts as interest on that debt. Entire engineering organisations can be brought to a stand-still under the debt load of an unconsolidated implementation.”
But there is a third kind of debt: Organizational Debt. Here we pay interest on bad decisions of decisions that we put off. This, of course, has a strong impact on organisations.
Some definitions of Organizational Debt
In organizational debt is like technical debt but worse Steve Blank gives this definition:
Organizational debt is all the people/culture compromises made to “just get it done” in the early stages of a startup.
However, I think that organisational debt isn’t a startup thing. It is worse in other organisations since there is a large accumulation of bad decisions and decisions not taken. Besides that larger and/or older organisations tend to have more rules to work around.
That is why I like the shorter description offered by Scoot Belsky in Avoiding Organizational Debt:
Organisational debt is the accumulation of changes that leaders should have made but didn’t.
Another interesting description is given by Aaron Dignan in How to eliminate organizational debt
The interest companies pay when their structure and policies stay fixed and/or accumulate as the world changes.
This one really goes from the VUCA point. The ever changing world in which organizations have to adapt or are to be extinct.