Organizational Drag

I once worked for a large, well-established multinational Canadian bank that was older than Canada itself (by 36 years).  I have also worked at a small bank that only operated in one country (by balance sheet size definition it was less than 1/30^th the size of the multinational bank).  While there’s so many interesting comparisons I learnt from those two very different experiences, the one I want to talk about here is “Organizational Drag”.

I know what you’re thinking, ‘what pray tell is this new corporate jargon you’re throwing at me?’.  By definition: organizational drag refers to invisible institutional friction that unnecessarily wastes time and effort.  By practice: it’s needless bureaucracy, excessive meetings, indecision, and inefficient processes that slows teams down and drains employee energy.  

For me, organizational drag, encapsulates something which I have spent a lot of my profession career thinking about into nice corporate lingo, i.e., is there a way we can be doing things better, faster, smarter?  I have been lucky to have some amazing bosses in my career who encouraged me to challenge the status quo and to constantly look for process efficiencies whether it’s something simple like trying to run a better meeting, or more substantive like redesigning processes to reduce the number of procedures and data sources.  I joke that my toxic trait is that I can’t look at anything without critically thinking “could this be done faster, smarter, or better”. 

So if you had to guess, would you think organizational drag would be higher at a large multinational corporation or a small one? 

You’d be correct that there was a lot of organizational drag at the large multinational, longstanding bank.  But if you, like me, thought the small bank would be more agile, more efficient, and more focused on resourcefulness, you’d be wrong – at least in my experience.  To my surprise, the small bank had much more organizational drag than the large one.  I don’t know if it was a function of the corporate culture, or if its small size was actually what held it back.  (It’s the idea that it’s harder to score points in the big leagues then it is in house-league so you have to try much harder when you’re competing against the big boys and get a bit complacent when you’re just having a pick-up game for a bit of fun.) 

I’m inclined to think it was the culture but chicken and egg, which comes first?  Corporate culture causes people to act a certain way, or its small size – and by virtue limited reputation – attracted a certain type of employee (perhaps less experienced or less ambitious) and they lacked the ingenuity to be critical of existing practices and processes - present company excluded of course!   Or was it something else entirely and I shouldn’t be trying to pigeon-hole based on such a small sample size of my limited personal experience? 

What this boils down to, is that no matter your size, you are likely not immune to organizational drag – unless you are a company in its infancy – there are likely legacy inefficiencies that have crept into workflows as requirements evolve over time, and work demands rarely allow one to holistically review the process front-to-back each time (quite frankly that would be inefficient if you did do full redesigns every single time and I certainly wouldn’t advocate for it). 

Irrespective, I think it highlights that no matter the organization, we should all be encouraged to identify and reduce organizational drag.  I first heard this term (thanks Harvard Business Review podcast) when I was working at the small bank and I tried to introduce it into the lexicon there.  Unfortunately, it never took but the more people start talking about it, the more it will become mainstream and eventually a key performance indicator.  One of my favourite interview questions is to ask a candidate about a process improvement they have implemented in a past role (how did they identify, how did they improve it, what was the outcome). 

Organizational drag may not show up directly in key performance indicators that shareholders look at, but it shows up indirectly in wasted time, restricted agility, productivity, turnover, and as such incurs indirect costs.  As much as we’re required to identify and mitigate operational risk, organizational drag should be the next hot topic for banks – especially those that want to remain competitive for shareholders relative to fintechs, else I think there’s the risk that banks will lose good talent (because people like me, who see something flawed and want to fix it, don’t do well in organizations and working for managers that don’t let them run with it). 

If you’re earlier in your career (or maybe even going through a phase of feeling disenfranchised) you might be thinking, ‘why should I care’ or maybe, ‘I’m just a cog in the wheel of this great big organization and if something needs to be changed, someone else will tell me’.  If you want to get a sense of meaning in your work, it will become a lot more satisfying if you can point to something tangible and say, ‘that was my idea, I did that’.  Think how personally gratifying that will be.  (Not to mention it’s a great thing to point out bonus and promotion time!)

Thoughts and opinions are purely my own, no ChatGPT here.  The above is just a brief conceptual summary, for more specific details, feel free to use ChatGPT.  I’d suggest a prompt along the lines of:

I work in a [insert type of company] in the [insert department] doing [insert type of work].  I am looking for ways to reduce organizational drag, but this is not something I am overly familiar with thinking about and questioning.  Can you highlight some traditional types of organizational drag that are typically prevalent in this type of work in this type of company, highlighting potential fixes may be as well please?  Can you sort the list be level of difficulty please so I can start with some easy things to build my confidence before diving into the more complicated areas?