Management debt

Technical debt is a popular term in software development. However, after my endeavours with tech startups and software houses, I experienced another set of problems which can hinder organisations, possibly more impactful than technical debt – a lack of proper strategic management and daily short-term trade-offs.

Management debt is just as Ben Horowitz puts it:

„Like technical debt, management debt is incurred when you make an expedient, short-term management decision with an expensive, long-term consequence. Also like technical debt, the trade-off sometimes makes sense, but often does not. More importantly, if you incur the management debt without accounting for it, then you will eventually go management bankrupt.”

Management debt is way more ambiguous than its more popular technical counterpart. With technical debt, you can objectively point to some part of the product working improperly. With management, there are a lot of subjective opinions and because of this, it can be far too hard to point out problems within an organisation.


Diagnosis is almost impossible from the inside. Employees (“insiders”) are familiar with how things run and by their nature, people are reluctant to change. Additionally, if a company is doing fine, the halo effect kicks in which hinders any more rebellious initiatives. Often employees don’t have a comparison with better-managed companies, so they accept the present state of the organization and don’t strive to make any changes. And hey, the company is doing fine, it gives me decent paychecks at the end of each month, am I right?

Management debt is also very hard for managers to address as this debt emerges from founders or managers personal issues (bad habits, management style, communication etc.) which influence the whole company. Employees model how they work on their leaders and they copy it all – good, bad, and ugly. In startups and software houses, founders have big authority and are natural leaders but alongside scaling the company, new challenges emerge. Management styles which worked perfectly for a small five-man team will be suicidal for a 10x bigger organisation. This transition and the challenges that come with it are well put in Ben Horowitz book „The Hard Thing About Hard Things”.


I think that there is one cause for management debt in tech companies; good management needs to follow certain principles similar to… waterfall development methodology.

  • You need to make proper research, decisions, and analysis beforehand;
  • You can’t reiterate on decisions at all or without additional cost: cash, relationship with client, team trust;
  • The insight („ability to understand people and situations in a very clear way”) creation process (which is one of the primary sources of innovation) is more efficient in a structured environment.

Lack of time for well-thought decisions is particularly visible in these tech companies because of their business models. Software houses focus on optimising their employee’s occupancy which brings them money. Startups need to maintain velocity and make a lot of trade-offs, like a famous Facebook saying, “Move fast and break things”.

Good management, bad management

Good management needs time and focus is the same as for developers in large parts of their work. You can easily recognise exhausted or overbooked managers by their decisions, they focus only on fires (urgent and important issues), just like the bad managers in “Good Product Manager, Bad Product Manager” they:

  • Ignore small decisions which need to be done within a given period (urgent, not important);
  • Delay strategic decisions which leave a lot of them in “Work in progress” status (non-urgent, important);
  • Delegate manager decisions onto other non-management employees (non-urgent, not-important).

Final thoughts

Managing software development (or coordinating) in current complex, risky, and ever-changing times needs more time and focus on managers. The technology stack is helping developers to optimise their work but there are no similar radical improvements for managers whose decisions have an enormous impact on the whole team.

Startups and software houses need to recognise the ever-growing importance of good managers. The best of them can push the whole organisation forward and give something extremely rare: certainty that the project or product will be done in the best possible way.

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