There are also the financial problems associated with being BIG. As the media and many financial reform advocates have noted, the very large banks are not only too big to fail, they are also quite vulnerable. The same can be said for many other very large organizations—financial or otherwise. Part of the reason for this vulnerability resides in the increasing percentage of resources (people, money, time, space) allocated to indirect services (overhead), resulting in increasing costs for products and services. (Bergquist, 1993) A very large corporation or city often must devote more than 50% of its revenues to services that keep the organization together—what Lawrence and Lorsch (1967) identified many years ago as the “integrative” sectors of an organization. These are all the people and processes that aren’t actually involved in manufacturing the product being sold by the organization or providing the direct services for which the organization is being paid (what Lawrence and Lorsch identified as the “differentiated” sectors of an organization). For every police officer that a metropolis such as New York City adds to its law enforcement in order to get “more cops on the street” it must add at least 3 additional administrative staff to help keep everything well-coordinated, to ensure that there is clear communication between the expanding silos in the organization, and to provide the metrics needed to respond to demands for accountability.
Coaching that addresses the New York City State of Mind will often require reflection by the coach and client on the challenge of size and growth. Leaders are often tempted to solve organizational problems by helping their organization grow larger. Unfortunately, this often results in the organization becoming less efficient. Indirect costs and integrative services increase, while costs associated with production and direct services must either be reduced (via technology and mass production) or passed on to the consumers of these products and services. The increased costs must be addressed, in turn, either through control of the marketplace or a substantial increase in marketing and sales costs (further decreasing the percentage of resources devoted to production and direct services). A vicious circle can often be avoided only with skillful and challenging coaching: Is there any other way to address this problem other than growing larger? Are you sure that efficiency increases by adding to your workforce or adding this new division? Are increasing sales really the answer and what will it cost (in terms of expenses and potential quality of product or service) to expand the size of your customer base? How do you as a coach invite a client to explore both the upsides and downsides of a New York City State of Mind with regard to size? Is the BIG apple always easy to digest?Download Article 1K Club