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Management Debt & How We’re Avoiding It

January 13, 2021   By Jim Cuene

How we're working to avoid management debt while creating our venture

I learned the term “management debt” from Ben Horowitz, but I only genuinely understood it when I realized I was responsible for a small mountain of it. As we’re building Fahren, I’m extra sensitive to the downstream effects of pushing out decisions or avoiding them. We’re young, we’re growing, and we’re “leaving the garage” so to speak, and now is the time to be mindful of how we’re borrowing against future efficiency and focus. 

One of the areas we’re working on is building consistent approaches to key work (e.g. How we explain our business, how we start projects, how we set up our tools). I’ve had a love hate relationship with “process”. On one hand, I like the sense of control and focus that comes when a process is well understood and everyone commits to it. On the other had, it’s a lot of work to get everyone bought in and on board. It requires patience, empathy, clear communications, and deliberate decision making. Getting a process into the groove requires  time and a strong execution focus. 

Creativity and collaboration are often at odds with a strong process orientation, especially when you’re trying to accelerate growth or develop new offerings or explore new ways to deliver an experience. The tension is compounded when you’re trying to build a culture that prioritizes that same collaborative and creative instinct. And, it’s compounded again when your business is still emerging and you need to be responsive to changes in the market and your operations. 

So, it’s easy to delay decisions and have a too-light touch when it comes to getting adherence to agreed upon processes. But the cost of that flexibility in the early days will emerge later, when the business gets bigger or there are more iterations of processes. If everyone is executing common processes their own ways, it can lead to confusion. 

In the future, getting consistency will cost even more – time, lost opportunities, lost focus, internal frustration – but it’s often hard to see that. It’s like putting a couple meals on a credit card. They don’t seem like big expenses, but doing that a couple times a week for a few months, with compounding interest, generates real debt. 

As founders/owners and practice leaders, we will need to be active managers. It will require focus and diligence. And, at times, it will take courage to ensure adherence to a common set of steps sooner vs. later to ensure we’re not racking up debt down the road.  Conversely, we’ll have to be careful to not try to over-engineer everything, or get locked up on making choices out of concern for the downstream impact. A strong understanding of managerial debt could create paralysis (as we take too much time and energy to understand the impact of a choice) or a tendency to be too conservative.

We don’t have this figured out yet, but we’re working on finding the right balance between creative problem solving and common ways of working. I’m convinced now is the right time to have a shared understanding of the debt we might create without this common approach, and a plan for avoiding it by being conscious of managing it together. It will require an investment of time, management focus, and over-communication. But we’ll also need but also a shared commitment to avoid over-steering and rigidity. 

Co-Founder and CEO

Jim has over 20 years of digital brand building experience. From running a start up digital agency to leading digital strategies for global brands at Ameriprise and General Mills, he’s been at the front of digital marketing his whole career. He loves the web and the opportunities it is creating for people and businesses to actually make the world better. Jim has an entrepreneurial mindset, the ability to see how the dots will connect in the future, and the knowledge & experience to put plans and teams in place to get results now.

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