TL;DR Organisations’ Culture Part 1: Tight vs. Loose and what does it mean?

TL;DR

There are two types of companies — loosely and tightly structured. This split was initially defined based on research between different countries where Asian cultures are usually represented as tight, while Latin & English-speaking are primarily on the loose spectrum. There is a place for both types, and ultimately one is not better than the other. This split also translates into companies’ structure and workload, impact on risk management, inclusion and creativity.

Tight companies. A few most important characteristics.

  • Well-defined roles and extensive organisation structure with often politics as a side effect.
  • Excellent at planning even a year ahead, and better at risk management, although it comes with a cost of flexibility and speed.
  • Extensive rules and processes where even creativity and innovation requires planning and behaviours are more predictable.
  • Predictable and risk-averse.

Loose culture and the main differences.

  • Creative and innovative at the core, with the flexibility to change direction when needed.
  • Poor planning may come with a cost to the motivation teams and predictability in execution.
  • Inclusive environment, high in openness without well-defined roles.
  • Risk management usually is reactive rather than proactive.

You can probably figure out where your organisation sits at this stage, but do you know why? So let’s dig a little more into these two types, and I will bring some examples to help you understand how these apply in the real world. The second part of this post will cover a concept of tight looseness and my experience with this approach, which adds some shades of grey to this black & white comparison.

What is a tightly structured company?

The tight culture can usually be found in large corporations that have been on the market for a very long time. It is typically a sign they stuck with it, rather than consciously decided that “tight” is the answer to their needs. GM, Kodak, Blockbuster, to name a few, actually failed to transform when new technologies emerged.

High-street banks are another example. These are highly regulated environments, and one of the main priorities is to maintain the risk. That translates to a high number of processes, red tape and a very extensive organisational structure. They want people to behave predictably. Unfortunately, it often comes with too many mid-level managers who want to be involved to feel essential yet don’t want to make any decision to avoid responsibility.

Any organisation where mitigating the risk is critical will be tightly structured — air traffic, oil & gas, health organisations like hospitals. They all end up with many processes and procedures to follow, and very often, there is not much freedom or creativity. Don’t see this as something negative. You would want to fly on your holiday with a crew that follows the most restrictive safety procedures rather than the one that might take too much risk and put your life in danger.

By the way, flying is the safest way of travelling. Unfortunately, the aviation industry’s success has been built over decades of accidents and the death of many people — I guess that’s another idea for a post about feedback loops and learning from mistakes.

Deep structure, defined roles and politics…

Where these companies stand out is by having well-defined structures and roles. Organisation charts look complicated but come with clear responsibilities and ownership. People know what they are supposed to do and what processes to follow. It’s easier to hire or replace for a particular role when necessary. However, because of complexity, we can’t miss the negative impact like an overhead of mid-level management who doesn’t bring value to the company or teams. They are often disconnected from reality and impose ridiculous expectations, which lead to cutting corners and unexpected outcomes. Another side effect that flourishes in such an environment is never-ending politics that creeps in on every corner and meeting. And whatever we believe in, we can’t just say stay away from it. We all become a part of the never-ending cycle of “I stroke your ego, you stroke mine”.

Planning, risk management and lack of flexibility…

Organisations take extra precautions and put effort to make sure the services they deliver are predictable and safe. That means the risk mitigation is often a priority whenever it’s the safety of the employees, customer data (yeah, I know, we have some terrible examples recently, and it’s hard to agree with that), or assets. As we could expect, it all requires excellent planning, and since these companies are stable, they can better predict future short-term and long-term projects. Teams have an easier time understanding the priorities and can focus on delivery, often followed by more accessible access to support and money to complete specific goals or projects. With good planning, processes and documentation usually come better preparation for disasters. There is a substantial cost associated with failures, and additional rules and approval chains are put in place to eliminate mistakes.

This is often why tight organisations have such a problem with flexibility. Management tends to stick with the plan, and it’s hard to make a more significant change without involving dozens of people, often including some CxO to make the call. Furthermore, it can lead to a sunken cost fallacy with overspending on massive projects as they are blind to their failures. The pinnacle of such situations is a meeting where employees raise their concerns, and all they hear back is, “This project is too big to fail”. Well, it already failed…

Where creativity and innovation need to be a process…

All processes must be well documented with a clear escalation path, potential contacts, and ownership. But these processes often are restrictive and with little room for Doing The Right Thing. For example, imagine customer service where strict rules prevent employees from doing what they were hired to do — help customers. As a result, there is less opportunity to be spontaneously creative and innovative. That’s the reason why tight organisations take ages to transform and often fail to do so.

Group thinking is more valued, and there is less space for individuality and direct contribution. You are likely to be a cog in a big machine. Organisations can avoid harmful side effects by implementing more rules to help with creativity, innovation, and flexibility, usually at a higher cost. You can often see big tight organisations spinning up small startups next to them — that’s an excellent way to bypass the self-imposed and restrictive rules.

Slow but predictable…

They are predictable for many reasons, and employees like to work in such places. The steady flow of work, maybe not too challenging, probably well paid. However, this predictability often affects the speed as changes require many discussions, approvals and the final sign-off before putting in place and rolling out across the company or all customers.

So how about loose organisations?
Are they any better?

How loose culture looks like?

As you could imagine, these are the companies where rules are flexible and often non-existent. People have the freedom to do almost whatever they want without formal approvals and all within a reasonably flat organisation structure. It sounds fantastic, but it’s not for everyone. You need the right people to work in such a culture. Unfortunately, some companies got it wrong in the past and paid the price for their mistakes.

It is where most startups begin their journey. Primarily due to necessity as people often need to be able to do more than one job. A small team doesn’t require overgrown processes and rules as communication flows easily. The majority of companies become more controlled and with more restrictions later in their life, and rarely do they consciously choose to stay loose. Netflix is an excellent example of the former. They continue growing flexibly, giving people autonomy and believing they will always Do The Right Thing. This very loose approach requires a lot of guts and trust in the team from the leadership.

Innovative, brave and unpredictable…

The flexible environment with no rules helps to foster innovation and brave decisions, where people can do what feels right. It’s easier to make a difference and lead the way without approval chains and politics. Such companies have a higher tolerance for mistakes and aim to learn from them. Of course, some decisions are not good, but the results will be visible five years down the line. I’ve seen it a few times, especially in technology-focused companies where choosing the wrong software stack in the early stages led to long-term headaches and problems in hiring.

One thing worth remembering, where there are no rules, we will find a black sheep that will try to abuse the system. However, how the person has been dealt with will predict the success of loose culture and the freedom everyone enjoys.

Bad planning meets flexibility and experimental approach…

It’s not that they totally suck at planning, but often people believe it is unnecessary — plans never get done, and they miss all deadlines, so why should they do it? The loose organisation often can’t adequately plan as priorities change, and it’s hard to make long-term commitments, especially with limited team size. Hard to predict workload usually affects teams’ morale, primarily when you work with engineers who love to know ahead what they deal with, so keep that in mind.

“Plans are useless, but planning is everything” — Eisenhower

This flexibility in commitments, in some instances, result in faster delivery and execution. Teams are truly agile and can focus where the leadership needs them without impacting the rest of the organisation. No processes to update, no approvals required, just get stuff done. But, unfortunately, disaster management is often reactive than proactive. Nobody pays attention until things go wrong, and that’s why loose culture rarely is used in places where risk management is a priority.

Inclusive and not that well defined…

Because many roles are not well-defined and people tend to be much higher on the openness spectrum, such organisations are naturally diverse and inclusive. Not because they have to, but simply people from different cultures, backgrounds and preferences want to work there. Rarely these organisations will put in their job specs a line like “we are inclusive employer”, which usually translates to “we want to be inclusive, but we have no idea how, so please work for us if you are different in any way “.

Loose roles often can introduce a lack of accountability and ownership, where both managers and employees tend to avoid taking responsibility for unexpectedly emerging problems. It will be hard for the leadership to manage it, and that’s where new rules and processes appear — the company slowly evolve into a tight-looseness culture. In general, it’s easier to become just a more tight company and find the sweet spot than introduce looseness in a very tight and controlled organisation.

Where does it leave us?

Finally, the tight structure doesn’t automatically mean a lousy company, but you should expect certain behaviours, attitudes, and side effects. A similar goes for loose companies, they are not for everyone, and I would probably have a hard time working myself in such a place (I like a bit of structure). What is astonishing is that you can learn most of those things during the interview if you ask the right question and know what you are looking for.

Now… There is something called tight looseness, and I will cover it more in the next part of this post.

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