In a conversational interview, Speaker A recounts a story about a small‑business CEO who took a six‑week vacation. While the company functioned adequately in his absence, the CEO noticed that many decisions made during that period introduced unnecessary complexity rather than simplifying operations. The discussion explores why employees, when left to their own devices, tend to choose more elaborate, redundant solutions—citing incentives such as risk‑aversion, personal empire‑building, and a lack of alignment with owner/shareholder goals. The speakers argue that CEOs must continuously combat this drift toward complexity by demanding simpler, more elegant solutions and aligning employee motivations with the overarching goal of reducing moving parts that can fail.
Chapters
So I was talking to a fellow CEO the other day and he told me a story that I'll tell you here, which is that he took a long vacation. He went away for 6 weeks, which, look, as a small business CEO, like, that's a long time to be away from your company. And very few companies are set up to actually be better when you're gone for 6 weeks. But anyway, that's not the point of the story here. The point of the story here is my buddy went and did it. He went and said, I'm taking 6 weeks off. And you guys, you know, take care of stuff while I'm gone. And one of the funny things about taking long vacations like that is it changes people's behavior in their organization, in your organization. They start to just like take on more responsibility 'cause they know you're not there to make those decisions for them. By and large, that's a good thing. If your organization can make good decisions while you're not there, well, that's like a win, right? 'Cause you can't make every decision in the organization.
And if they're doing that, well, that's better, right?
Hopefully the organization will operate much more efficiently. You might be thinking this story is one where, you know, the guy comes back and the business is ruined. And actually it wasn't. The business did just fine while he was gone. But it wasn't all fine because he told me when he came back, he started to look back on some of the decisions that were made while he was gone. And he noticed a pattern in these decisions that by and large, a lot of the decisions that were made made his business much more complex rather than made it simple. And yeah, while the folks, while he was gone, had decided on solutions for some things, they had naturally gravitated towards stuff that didn't make anybody's life easier. Yeah, it solved the problem, but by and large, they would just do things, well, in a more complex way than necessarily needed to be done. And he and I were talking, it was over lunch, and he was like, why did they do it this way? In his role as CEO, he realizes the best thing he could do is make things as simple as possible. He realizes complexity— when things have more stuff in them or more moving pieces or more people involved— that just gives more things that can possibly go wrong.
And look, when things go wrong in your organization, that's when you lose business, that's when you lose customers, that's when you lose profits, or maybe even lose good employees. And none of that's good for business. So this begs the question, like, why, when presented an opportunity to come up with a simpler, more elegant solution, or maybe one that trade-offs to be maybe a bit simpler and a bit less kind of prone to failure, did the employees choose something that was more complex? Well, it turns out the answer to all of this is those employees are highly motivated to choose more complex solutions. So why is that? Well, first, if you think about the way people get compensated in organizations, how do you get compensated in an American organization? Well, if you have more responsibility, and what typically comes with more responsibility more people working for you, bigger processes, more things going on. So ultimately there's a disconnect here. The employee can make more money by choosing a solution that potentially is less efficient for the company. And look, the perfect example of seeing this kind of empire building that benefits the employee more than it benefits the customer or the owner of the thing is when you go look at what goes on in the government. Go take a look at some of the processes that happen in some of these different departments. They are precisely designed to make the bureaucracy bigger and to elevate kind of the roles that people are having and to build more people and more function into those kind of governmental groups than to actually be efficient. Why? Well, that's because the bigger the organization gets and the more bloated it gets, it's counterintuitive. It's bad for the taxpayer or it's bad for, in that case, the owner. If you think about it, we as the taxpayers own these government entities and they function for us. But on the other hand, like, it's bad for the taxpayer, but big bloated bureaucracies, you know who that's good for? The employees of those bureaucracies. You tend to get bigger jobs, more responsibility. You can say, hey, I manage 500 people. Doesn't matter if you only really needed 100 people to do that job. It creates an incentive, well, to kind of choose a more complex and bigger solution. Second reason that people choose the more complex solution is a little bit more nuanced, which is think about your job as an employee. Your job as an employee, generally, you're not going to see much upside if the organization takes a risk on a solution and it doesn't work out. So you're actually, as an employee, motivated to choose potentially the safest or most foolproof, most highly redundant thing. In other words, it does you no good as an employee to be thinking of the bigger picture in terms of what's the right trade-off for the business. In other words, like, the best thing to cover your own ass is to choose a complex solution that, well, is going to have a lot of redundancy, a lot of ways that it can't go wrong, at least from the perspective of yourself or your managers. Good news, this is where the tension inherent in every organization comes to the rescue, which is there are people that own these businesses. There are stockholders, or the people that have shares of these businesses, and they are highly motivated to have things done in a very efficient manner because ultimately the decisions they want made for the business, whether the individual owner or just one of the shareholders, you want those decisions to be in the best interest of the shareholders. And, you know, the employees are important, but ultimately, like, let's remember who owns the company. It's the shareholders. And this is in the end why smart owners, they try to motivate the CEOs of the businesses to have the same kind of incentives they do. How do they align the interest of the shareholders with that of at least as many of the employees as they possibly can, and ideally as many as you possibly can, and not just the CEO. But let's say you're an owner-operator of a single business. It's kind of a beautiful situation. You are highly incentivized to make simple, elegant solutions happen inside your business, because ultimately, when you're the owner-operator, CEO of your own business, whatever you make, that goes in your pocket. So that's our saving grace, right? The CEO ideally, and the owners, are highly motivated to have simple, elegant solutions that aren't going to be perfect and aren't going to be at the benefit of anybody else besides the people that own the business. And so, that creates the ultimate kind of mission that I think CEOs have to understand they're on, which is all the time, every day, you have to understand that the people that work for you, they're highly motivated to do things potentially the hard way. And your job as a CEO is to go in there every day and do war against, well, complexity. War is you in every meeting asking, hey, is this the most elegant solution we could do for this? Can this thing be done more simply or more efficiently that's being proposed here? Are we taking a look at the whole picture and not just choosing kind of the easy way out in it? And those are all the things that when you're in meetings with your staff or you're hearing proposals of how they want to solve things or getting approval of stuff, you're asking like, is this optimal? Is this the best we can do? Is this the simplest it can be? And, you know, that's how the war gets fought, through asking questions. I think a lot of CEOs I talk to are frustrated that employees don't make the right decisions in situations like this. But the reality is, like, incentives matter a lot when people are making decisions. It's impossible, unfortunately, to set up a situation where incentives are perfectly aligned. The owners are going to think different than the employees. The partial owners are going to think different than other folks who are going to think different than the contractors and the customers. We all have our own incentives and our own motivations to do things we're going to do. And in the end, you got to just appreciate that stuff, accept it, and then realize, man, fighting complexity in this case is just part of the job of being a CEO. There's no way to avoid it. That's this video. Thanks for being here. Let me know what you think. We'll catch you next time. Oh, reply below. Make me super happy. See ya.
