The Three-Idiot Problem

Ignorance more frequently begets
confidence than does knowledge.

Charles Darwin
The Descent of Man (1871)

Ask most people why so many larger companies seem rife with incompetence and lassitude while smaller companies seem to remain focused and productive, and you’ll likely hear the incremental argument: more people and more process results in less efficiency. Perhaps someone will cite the Peter Principle or Dunning-Kruger. You may even hear a market-friendly variation on social Darwinism: while larger companies usually have the capital to survive their mistakes, smaller companies have little choice but to sink or swim, resulting in a marketplace that seems to be primarily populated by well-run small companies.

There may be a simpler solution that borrows from the second law of thermodynamics, which you’ll remember from elementary school states that, over time, any isolated, ordered system dissipates into a state of disorder. Or, put another way: given a healthy window of opportunity, any efficient but unmitigated process will break apart into lesser, unproductive components. Consider that in Canada as elsewhere, daily door-to-door postal delivery — an ordered process predating telephones and email — is caught in a death spiral of junk mail, labor disputes and declining profitability, and you’ll see that even the most prodigious system can eventually decline toward a state of uselessness.

This sort of entropic argument ought to impact large and small companies alike, but in fact there’s a critical difference: declining efficiency is infectious, and in larger companies this has a higher impact on productivity and attrition. Here’s why:

Let’s assume, for the sake of argument, that 10% of all employees within any given company are incompetent at an arbitrary point in time. I’m feeling charitable.

A small company with 10% incompetency might have a single incompetent employee. We all know that guy: he’s the asshole who shows up for work half an hour later than everyone else, keeps a basketball in his office, and never seems to have gotten that important email or meeting invite. In all likelihood, everyone knows this guy’s a liability, and his authority is moderated by increased awareness and oversight. Few people will abandon ship because of one dysfunctional employee. Call this the one-idiot problem.

Now imagine a company ten times larger: we have ten incompetent employees, and the perception of endemic incompetence is much higher, potentially leading to an erosion of capable employees. Incremental impact has started to become exponential. Further, there’s a reasonable chance that some of these incompetent employees work for each other, which strengthens their mutual positions in the company; anyone who’s built a tower out of dominoes understands the load balancing advantage of placing one domino atop two others. We’ve now created the three-idiot problem.

Since both of these above scenarios are static, we need to add time as a variable. Over time, attrition results in some employees leaving and new employees coming onboard. Recruiting is a difficult task, and it’s easy to hire an unqualified or incompetent employee if you don’t due a reasonable amount of due diligence: testing hard skills, assessing leadership potential, bringing different interviewers into the room. A capable interviewer who does everything by the book still runs a healthy risk of hiring an incompetent employee, but an incompetent hiring manager will almost certainly end up with an incompetent employee (both because of the inherent difficulty in hiring a competent employee and because of the likelihood that a competent — and savvy — candidate won’t accept a job from an incompetent hiring manager). Over time, therefore, incompetent employees will begin to outnumber competent employees.

Here’s how viral incompetence might infect a large organization over an arbitrary period of time:

(If you can’t see the above spreadsheet, try reloading the page or clicking here.)

For simplicity’s sake, we’ve limited impacting factors to attrition  and recruiting, but of course there are countless other mitigating factors that come into play once a company crosses that Rubicon from primarily competent to primarily incompetent.

Like Donald Sutherland turned alien pod, incompetent employees seem to have an innate ability to isolate and neutralize their more capable colleagues. There’s also a price to be paid outside the organization: word of mouth within candidate communities helps ensure that potentially capable employees stay away from certain companies, skewing the balance even further toward the margins of the candidate pool.

Can a company step back from the brink? In principle, a senior enough manager with a mandate to clean house can contain an infection of incompetence through aggressively managed turnover, but tying off a tourniquet does little good if incompetence remains unchecked elsewhere in the organization. In practice, it’s almost impossible to dislodge incompetence once it’s entrenched in a company, so the trick is to move quickly and address the index case — Idiot Zero, if you will. Once the opportunity for preemptive measures has passed, it’s time to update your LinkedIn profile and start looking for somewhere new to hang your hat.


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