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Comment by jacques_chester | Hacker News Reader

It's important to be mindful that the successful examples of flat / bossless organisations often discussed on HN are massively profitable.

What's missing from this picture? Statistics and case studies of flat/bossless organisations where money is very tight.

There is severe survivor bias at play. Massive profitability allows you to get away with just about anything.

People think that the market rewards virtue or merit; that profit is the reward for this or that method, strategy or culture. Not really. Market systems are agnostic to how a company is run. If you stumble on a gold mine, the market doesn't reward you because you flog your miners. It likewise doesn't reward you because you pamper your miners. It rewards you for having gold.

For every Valve and Github, there is a Microsoft or an Oracle.

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> There is severe survivor bias at play. Massive profitability allows you to get away with just about anything. ... For every Valve and Github, there is a Microsoft or an Oracle.

That's a very interesting point, because Microsoft used to be the darling of the business press.

In the 1990s, we saw all sorts of business books about Microsoft, which was held up as the example to follow for the digital economy. People even found praise for Microsoft's tendency to have multiple teams working on competing products. Better to have the competition inside the company, they said, so that the best product could face external competitors.

This was just cargo-cult management. Just because Microsoft did it that way doesn't mean that it results in success. Maybe, just maybe, Microsoft was successful despite those characteristics.

We humans are very good at rationalizing things, after the fact. We can come up with a reason for things that are actually random and uncorrelated with success.

>There is severe survivor bias at play. Massive profitability allows you to get away with just about anything.

I think you could extend this observation even further. Technology start-up culture has a habit of sh*ting on well established knowledge as being useless because founders of start-ups often lack these knowledge yet still manage to succeed. An example of this is the general disdain for business know-how in the form of say an MBA.

They fail to realize that the reason they're succeeding is not because traditional business know-how is useless but rather because innovation grants you advantages that often allows you to succeed without business know-how. However this advantage disappears once everyone catches up to the innovation then business acumen reasserts itself. We are currently in a golden age of innovation, but that won't last forever.

The metaphor I like to use is: It is like someone using a machine-gun and hitting every target then concludes that marksman skills are useless while ignoring the fact that they are only hitting their target because they are using a machine-gun.

I have another analogy I sometimes use. If you're floating down a Mississippi made of money, it seems like everything works. Navigate, don't navigate. Tight ship, loose ship. Expensive paddle boat or a few planks lashed together. Everything moves in the right direction. So long as you manage not to find the edges of a famously wide river, you will move swiftly and effortlessly.

When the river of cash begins to dry up, or if you started in a creek and stayed in a creek, things are a bit harder.

I think you could extend this observation even further. Business culture has a habit of sh*ting on new knowledge as being useless because businessmen often lack these knowledge yet still manage to succeed. An example of this is the general disdain for innovative approaches.

They fail to realize that the reason they're succeeding is not because traditional business know-how is useful but rather because crony capitalism allows you to succeed without innovation. However this advantage disappears once a market disrupter appears. We are currently in a golden age of innovation, but that won't last forever.

There is definitely a case to be made about old stodgy incumbents getting in the way of innovation. But my point isn't really about innovation disrupting the old but rather people throwing out the baby with the bath water when it comes to the relevance of business know-how.

While I agree well-established knowledge is useful (don't get me started about NoSQL, for one thing), I'm not seeing any disdain for business know-how. What I'm seeing is the well-founded belief that you get business know-how from being in business, not from sitting in a classroom and coming out with a piece of paper.

I agree that experience from doing does trump book knowledge. But it would also be a mistake to discard the basic foundation that book knowledge grants you. Lots of rookie mistakes can be avoided by having some foundational knowledge.

Maybe. It depends on what you consider "foundational".

The Lean Manufacturing people, for example, have very different foundations than traditional American MBAs. Not opposite, really; more orthogonal. For example, MBAs focus on cost reduction and profit increase; in the Lean world you focus on reducing waste and increasing customer value. This leads to different accounting systems, different management structures, different outcomes.

Reading about the history of Toyota, where Lean ideas were developed, I suspect it's not accidental that they were both physically and culturally very distant from American business thinking. And that the background of Toyotas leaders was in engineering, not commerce.

Often when you ignore received wisdom, you are just forced to relearn it. But sometimes, you end up somewhere that nobody's been before.

An example of this is the general disdain for business know-how in the form of say an MBA

Our issue isn't with business skills and the people who have them. Those skills are really fucking important.

It's the entitlement that seems to come with elite MBAs that is irritating. They tend to think they know more than they do.

Also, as one who has talked with people looking to be business co-founders, there's a lot of "49er syndrome" (4s who think they're 9s). Look, man, I'm a Tech 8. I might work with a Biz 7+. Biz 6? Probably not. Biz 7 means that after a week of legwork, you're already deciding among term sheets. Biz 8 means you can get a half-hour conversation with anyone, except perhaps a head of state where it might be hit or miss. A typical top-5 MBA graduate is only a Biz 5 or 6; not unimpressive, but not what I'm looking for if I'm going to deal with the stress of a startup.

Absolutely correct. In essence, everyone simply looks at the winners and then redefines the 'path to success' to be 'the path they took'. That sounds ridiculous but it's what many arguments boil down to.

There are some excellent resources out there for people to understand more about this. There's an article on Survivorship bias [1] and I was recently at a talk by Duncan Watts on the 'The Myth of Common Sense', which considers questions such as 'Why is the Mona Lisa the most famous painting in the world?'. I found a video of one of his earlier talks [2].

[1] http://youarenotsosmart.com/2013/05/23/survivorship-bias/

[2] http://www.youtube.com/watch?v=EF8tdXwa-AE

> In essence, everyone simply looks at the winners and then redefines the 'path to success' to be 'the path they took'.

The classic example is Jim Collins' bestselling business book, Good to Great. The book claimed that certain characteristics of successful companies made them Great.

Inconveniently for Collins, after the book came out, these very same companies underperformed and went from Great to Good.

Of course, he did the statistics backwards. He started with the successful companies and looked for common traits. He should've started with the traits and evaluated how companies with-and-without those traits performed.

> Of course, he did the statistics backwards. He started with the successful companies and looked for common traits. He should've started with the traits and evaluated how companies with-and-without those traits performed.

I don't know if this would give useful insight, and furthermore it's possible someone has already looked into it, but this way of posing the difference sounds like it might be related to the field of research into "one-class machine learning". The usual setup for classification in ML is that you have examples from all the classes. In a positive/negative two-class setting you need both positive and negative examples. But what if you really have a one-class dataset, e.g. just a list of failures and their characteristics? Can you (in a predictively reliable way) generalize anything from that, and predict solely from that class of positive examples whether future cases presented to the classifier are like those? There's quite a bit of work looking into that. (Unfortunately, I don't know much about it.)

> Absolutely correct. In essence, everyone simply looks at the winners and then redefines the 'path to success' to be 'the path they took'. That sounds ridiculous but it's what many arguments boil down to.

Honestly, I think its more often worse than that, in that what is actually presented as a path to success is an self-justifying mythology that has been created by those who have succeeded in the current system to explain their success, rather than teh actual path they've taken.

"Success hides failure" comes to mind here. A company can do 9 things right and one thing wrong, but if they're a hugely successful company, then outsiders will assume that all ten things should be emulated. People will also latch onto anything with novelty value (like structurelessness) as being a prime differentiator vs. the competition, so it will get a disproportionate amount of attention even if it's one of the wrong things the company does.

Bob Martin wrote about a variant on this point a while ago:

> I'm sorry for your impending failures. I'm sorry that you're going slow and just don't know it yet. And I'm very sorry that when you finally brute-force your way to some modicum of success that you will credit your bad behavior, and recommend it to others. God help us all, because you won't.

http://blog.8thlight.com/uncle-bob/2013/03/05/TheStartUpTrap...

This is also wrapped up with the notion of cargo-culting, which is common in tech. If you examine a successful company or team to try and work out why they're successful, you tend to focus on the most obvious factors: Their structure (or lack of it) and the tools and processes they use. But there is no way to know which if any of these factors are key to their success, or incidental, and getting a different team to use the same structure, or to apply the same tools and processes may produce a very different result.

Discussions about software development methodologies, programming languages and frameworks often fall into this trap. A developer will advocate a particular approach based on anecdotal experience where it has been effective for a different company or team. A mass of these anecdotes, strongly influenced by survivor bias, becomes the macro dev culture in which different ideological "movements" rise and fall. But there's very little attempt to thoroughly and scientifically research the effect of varying factors independent of others with the mainstream.

The best parable of this I've seen was "Meditation Driven Development":

http://www.ckwop.me.uk/Meditation-driven-development.html

Great comment.

Executives are machine-builders. Some areas of tech are starting to look like rock-band territory: great idea, cool team, right buzz, catch the wave at the right time, execution intelligence -> profit. How you execute? Not so much.

When the market settles, and you're doing something everybody else is doing that has an established value proposition and distribution channel? The game changes. Or even when you're the 10th successful entrant into a field the game changes. Then you're looking at building the most efficient machine you can.

Companies make a ton of mistakes trying to continue to eliminate inefficiencies from organizational structure, but that doesn't mean there's none to be found.

I fear that survivor bias is teaching the wrong lesson to an entire generation of business leaders. But hell, should make for some great case studies over the next 10-20 years if nothing else.

This is interesting. HN tends to sneer at people who formally study business, but comments like these seem to indicate that we actually do desire case study analyses and rigorous academic inquiry into the successes and failures of businesses - the sorts of activities that go into an MBA.

Exactly right. Even Google, while not being a flat/bossless organisation, is an example of a company with a product that makes such gobsmacking amounts of money, that they have plenty of spare to throw at amazing luxury for their people, at "20%" time, etc.

Having a product that brings you so much money lets you spend enormous amounts on trying (and sometimes failing) at new things, whether it be R&D, new organisation types, etc. But it's important to remember that the vast, vast majority of companies are not in this situation, and, while profitable, are not so massively profitable that they can afford such things.

Is 20% time still a thing or did it die with Google Labs?

> Massive profitability allows you to get away with just about anything.

> [...]

> For every Valve and Github, there is a Microsoft or an Oracle.

You are absolutely correct that a company that has stumbled on a gold mine can survive problems in its structure that would have been fatal if money were tighter.

However, it goes both ways. Some large, old companies have byzantine corporate hierarchies that would make Kafka blush. Yet money keeps flowing in, and props up this excessive architecture.

Streams of money flowing in can allow for out of the norm flat structures, but they can just as well prop up redundant hierarchies, TPS reports etc.

I agree. That's the point I was trying to make: the presence of massive profits is not an objective, meritorious endorsement of any system of organising your company. It merely ensures its continued existence.

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