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Management debt is kind of what happens when you don’t do what you’re supposed to. Basically, it all comes from avoiding making a decision and taking action. I should fire that person, but that’s going to be very, very messy, so I’m going to blow it off. I should fill this executive position, but I’m also busy with other things, and so I’m going to let that go. Another one is, I’ve got two people who could run this organization. I can’t decide which one, so I’m going to have both of them run the organization, two in the box. Well, now if I’m in the org and I needed a decision made, I not only have to get it approved by one person, I’ve got to get it approved by two people. Everything is twice as long and, you know, eight times as frustrating.
Probably the most dangerous one is the P&L is upside down, and I’m losing money, and I need to cut expenses, but I’m not going to do it this quarter. I’ll wait till next quarter, or the quarter after that. And now I’ve got a dangerously low balance sheet. I don’t even have the money to execute the layoff, and now I have so much debt I’m going to lose the whole organization or the whole company. All these things kind of create management debt. That debt causes knock on effects. You don’t just have the problem of the bad executive or bad manager that you didn’t fire. You have the problem now that debt creates an employee satisfaction problem among everybody on that team. And then the reputation of that team starts to degrade inside the organization, and so now that team can’t be effective with other teams. And then you start to have attrition on that team because nobody wants to work in an organization with a bad manager that nobody else in the organization respects.
And so these things cascade, and pretty soon, it’s very, very difficult to kind of get out from under it. So it’s why I always like to say, you know, you need to run towards the pain and darkness and not away from it. And I think the best leaders always run towards the darkness. They always run towards a problem. They never run away from it. And then the ones that fail, you know, always hesitate.