Why Companies Get Worse As They Grow

You call customer service and end up trapped in a maze of menus that leads nowhere. You have a dozen subscriptions that took nine seconds to start and will apparently take an act of Congress to cancel. You go to the doctor for a flu shot and fill out the same form three times for three different people who all already have your information.

It feels like every business has gotten worse. And it turns out that’s not just a vibe. Gallup recently found that 37% of Americans now name big business as the biggest threat to the country’s future — essentially matching the highest figure in a trend line that goes back to 1965. When Gallup added “big technology” as a fourth option, big tech leapfrogged big business for second place. That’s not conspiracy thinking. That’s ordinary frustration with the companies we’re all forced to do business with, hardening into suspicion.

And here’s the strangest part: the people delivering the experience often seem just as frustrated as the people receiving it. The gate agent didn’t cause the delay. The support rep didn’t write the policy. Your manager didn’t invent the performance review system they’re using to rate you. Which points to something more interesting than bad people. Understanding why companies get worse as they grow starts with accepting that almost nobody involved decided to make it this way.

Everyone Wants a Villain

When work feels broken, we go looking for someone to blame. Greedy CEOs. Lazy employees. Late-stage capitalism. Remote work. AI. Pick your preferred antagonist and the story writes itself.

Organizations do the same thing internally, just with different vocabulary. When performance slips or morale sags, the standard response is more. More metrics. More monitoring. More process. More dashboards. More engagement surveys. Occasionally, more mandatory fun — retreats, trust falls, a sad pizza party in a conference room with the blinds down.

The logic is understandable. If something’s going wrong, measure it more closely. But that response treats the symptom as the disease, and it usually makes the underlying problem worse.

The Real Reason Companies Get Worse as They Grow

There’s a concept in systems thinking called suboptimization. It’s what happens when every part of a system starts optimizing for itself instead of the whole.

Marketing hits its growth targets. Support drives down average call time. Operations cuts costs. HR improves time-to-hire. Finance improves quarterly margin. Every scorecard is green. And the human being moving through all of it has a miserable experience.

This is nearly impossible to see from inside. From within any single department, the decisions look responsible. Reduce call time — efficiency matters. Improve productivity metrics — leadership wants accountability. Speed up patient turnaround — the system is overloaded. Nobody is being negligent. They’re being diligent about the wrong unit of analysis.

But you don’t experience “an airline.” You experience check-in, security, boarding, baggage, the connection, and the customer service line. A series of handoffs. And handoffs between departments are exactly where suboptimization shows up.

The airline industry gave us the canonical example. When regulators began requiring carriers to publicly report on-time performance in the late 1980s, airlines optimized hard for the number — padding published flight times and pushing back from the gate on schedule, even when the plane then sat on the tarmac. The metric improved. The passenger’s day did not. Technically, the flight departed on time. The measure survived. The purpose died.

Economists call this Goodhart’s Law: when a measure becomes a target, it ceases to be a good measure. Sociologists have a blunter name for it — goal displacement. The original goal gets replaced by the process built to track it. Serving the customer becomes hitting the KPI. Developing people becomes completing the review form. Building culture becomes raising the engagement score. Eventually the organization starts confusing proof of work with the work.

Wells Fargo is the version of this that still shocks me. Leadership set a clear, legitimate goal: increase the number of products each customer used. The internal shorthand was “eight is great.” Managers were evaluated on cross-selling. Rankings mattered. Jobs depended on it. And employees eventually opened millions of accounts customers never asked for.

The easy explanation was greed and corruption. But most of those people weren’t criminal masterminds. They were people inside a system that had spent years teaching them what actually mattered. Hit the number. And when survival depends on the number, people adapt — for better or for worse.

What Healthy Organizations Do Differently

Some organizations resist this drift remarkably well. Not perfectly — every company accumulates bureaucracy, and complexity is unavoidable once enough people are involved. But the healthiest ones understand something most companies forget: the goal of management isn’t optimization. It’s integration.

Most companies are designed vertically. Marketing does marketing, finance does finance, everyone protects their lane and reports upward. Almost nobody is responsible for the experience between the lanes. Fixing that means making thousands of smaller decisions differently.

Measure the seams, not just the lanes

Pick one customer or employee journey that crosses at least three departments and map what it actually feels like end to end. Then ask which local metric is degrading it. In most organizations, no single person owns that journey — which is precisely why it’s broken. Assign someone.

Build a channel for unfiltered reality

Nvidia uses a practice called “Top 5 Things” — employees send short notes on the five things they’re working on, noticing, or worried about, and Jensen Huang reads a lot of them. The point isn’t executive surveillance. It’s letting weak signals travel upward before they calcify into big problems. In most companies, a frontline concern gets softened at every layer until it arrives as “some implementation friction remains” — corporate for the people closest to the work are screaming, but very politely. You need at least one channel where messy, unpolished reality moves intact.

Make the downstream human visible

When KPMG began encouraging employees to connect their daily work to real outcomes — auditing as fraud prevention, as protecting systems people depend on — engagement improved sharply. The work didn’t change. The meaning became visible. Most people aren’t asking their accounting job to feel like curing disease. They just want to know their effort lands on somebody.

Give managers room to actually lead

A manager who can only enforce the process is not a leader; they’re a compliance layer with a title. Audit how many decisions your managers can make without escalation. If the answer is “very few,” you’ve built a system where nobody in the middle can fix anything they can see.

Treat metrics as tools, not identities

The moment a number becomes tied to someone’s evaluation, bonus, or job security, it stops describing reality and starts producing performance. Rotate what you measure. Pair every efficiency metric with an effectiveness one. And keep saying the quiet part out loud: efficiency and effectiveness are not the same thing.

None of this requires a revolution. It requires refusing to let optimization become the entire purpose of the organization.

Because underneath the dashboards and the approval chains and the color-coded rectangles, it’s still people. People trying to do good work, solve problems, feel useful, and trust each other enough to build something together. The organizations that stand out over the next decade won’t be the ones with the most automation or the most scale. They’ll be the ones that remembered how to stay human while they grew.