The Future of Bureaucracy is TBD

Efficiency In the Era of the Great Flattening

Every once in a while, business, cultural, and political trends coalesce around a shared force simultaneously, even if each started in different places at various times. I believe we are entering that period now. How did we get to “the great flattening,” and where does it go from here?

Bureaucratic Bloat In The Tech Sector
In early 2023, Meta officially began its “efficiency” initiative, executing mass layoffs and other initiatives designed to streamline what had become a severely bloated bureaucratic organization. This set off a chain reaction across nearly the entire tech ecosystem, much of which expanded significantly during the Covid years as more people spent time online, fueling unprecedented demand for the sector. According to Layoffs.FYI, an estimated 262, 735 tech workers were laid off in 2023 alone. For anyone who has spent time working in or near the tech sector, it’s no secret that many of the most desirable companies to work for did not run efficiently, partially because they didn’t have to. Competition for talent was fierce, job security and generous perks were baked into the cake, and the industry rolled on without much consequence. What started in tech is currently rippling through much of the business world and being rewarded by the market, while the phrase “doing more with less” becomes a rallying cry for organizations seeking to maximize profit margins and shareholder value.

The Dawn of Generative AI and LLMs
It’s no accident that the launch of ChatGPT (2022) and its rise in popularity coincided with Meta and the tech sector's purging of ranks in the name of efficiency. Sometimes, the tech industry has to pivot its entire business model around the inevitable. AI is changing how we interact with information (Google), and tech companies rightly realize that Generative AI will empower them to be more productive with fewer human beings (Agentic task completion). This reality, of course, is not limited to tech. Still, the industry acts as a canary in the coal mine for other sectors as they exist at ground zero for digital transformation. For example, a study by the University of California found that AI outperformed doctors by nearly 80 percent when providing factual answers and displaying empathetic responses. The findings on empathetic responses should be particularly troubling in the field of medicine as this is something we humans should naturally be better at. Since the beginning, I’ve discussed the advent of AI automation in the white-collar/knowledge work world, similar to how automation played out in the industrial/manufacturing sector—there are still people on assembly lines—just fewer of them, producing more while working with machines. Again, “doing more with less” is becoming inextricably linked to the AI age.

The Musk Effect In The Private + Public Sector
Elon Musk bought Twitter in 2022 and immediately and drastically reduced its headcount. In 2023, Isaac Williams's biography gave the world more insight into how Musk operates and what drives him. The book is a must-read for anyone wanting to understand how Musk will likely approach his newly created role as co-leader of the Department Of Government Efficiency (DOGE). Musk’s obsessions present a rare combination of seemingly competing priorities. At SpaceX, he took aim at overpriced, bloated government contracts. He outperformed them and continues out-engineering legacy organizations such as NASA and Boeing. At Tesla, he relentlessly pursued design aesthetics, something typically at odds with the engineering brain (Musk’s default setting). And when it comes to broadband in remote places, Starlink is proving to be critical infrastructure, especially during natural disasters. Musk’s obsession with doing “more with less” is deeply ingrained in his identity and what drives him. For better or worse, one could say that he pursued efficiency before it became fashionable. Now, we’re about to see how this driving force plays out in the public sector—where bureaucracy thrives as a feature, not a bug.

Middle Management and The Great Flattening

These seemingly unrelated trends have in common their ability to create massive ripple and domino effects. Each of these is like a contagion spreading across sectors, industries, and culture. In some sectors, like the startup world, the great flattening is already well underway because it is historically understood, and many startups are now being built with AI as the core of the business model. In more legacy models, the front line for the great flattening is likely to be waged where we’ve seen it targeted in the past—middle management. A recent Business Insider article explores the dim prospects of middle management employment:

“Earlier this year, when white-collar hiring was at its lowest point, openings for junior roles — entry-level positions requiring little to no prior experience — were down by 14%. But hiring had plunged by 43% for middle managers and 57% for senior leaders. If you had any sort of management experience, your job prospects were bleak.

As highlighted in the above visual, any organization's “middle layer” is where the highest probability lies for “bureaucratic bloat.” Part of this is the design of bureaucracies, which often create layers upon layers between the doers and the most senior executives. So, it stands to reason that this would be the area of focus for streamlining efficiency. However, it is also in this messy middle layer where it can be most challenging to discern the difference between work that motivates, directs, and enhances the performance of teams and work with little discernable impact. If the future of bureaucracy is TBD, it stands to reason that there will be both challenges and opportunities as organizations pursue doing more with less:

Challenges

Less traditional knowledge-based jobs:
AI alone has accelerated discussions about a world with fewer conventional knowledge work jobs. However, as I mentioned above, it’s not the only dynamic in play. Less bureaucracy plus doing more with less inevitably equals a smaller headcount. A “white-collar recession” has already been reported, with drops as high as 32 percent in once high-flying roles such as engineering and project management. All of this takes place as economic factors such as inflation steadily improve. Less traditional FTE opportunities in knowledge work will be disruptive, especially in geo markets like the US, where employees primarily rely on health insurance through employers. We’re not really ready for a rapid shift where there are fewer traditional knowledge-based positions, and the transition will be painful.

Overcorrection:
During the tech layoffs, there were several instances where acknowledgments were made that cuts went too deep. A friend of mine who works for one of the big tech companies had their job eliminated, only to be re-hired in a different business unit less than a month later, and this is not an isolated case. Contract work is another way companies manage overcorrection, bringing back former FTE employees on a contract basis to balance cuts that were too deep. There will likely be more overcorrections in the pursuit of running flatter and leaner.

Burnout:
Organizations that run too lean risk high-performing employees burning out. A recent survey found that nearly 45 percent of full—and part-time employees experienced job burnout at least once over the past year. A flip side to some of Elon Musk’s business practices, as embodied by his “ultra hardcore” work ethos promoted at Tesla, is that some employees report this bordering on abuse. Removing layers of bureaucracy may also have the unintended side effect of exhausting employees to the point of no return.

Opportunities

Flexibility:
One significant shift from the pandemic is the employee’s preference for flexibility and hybrid or remote work. As the contingent workforce (contract work) grows, knowledge workers can trade full-time perks for flexibility if that is their priority. I know many professionals who transitioned to contract work—some by choice and others by circumstance—and several of them prefer the freedom and flexibility of project—or contract-based work over traditional full-time jobs/roles.

Individual Contributor Renaissance:
Also known as “ICs,” Individual Contributors are the opposite of middle managers because they typically don’t manage anyone but perform work in specific areas and are often highly skilled in specialty fields and practices. However, they are also not entry-level employees. This puts “ICs” in the execution layer of an organization running with flattened efficiency, but they require little oversight and guidance and are self-directed. Highly competent ICs will likely find new opportunities as organizations realize more efficiencies, especially in areas where AI falls short.

Entreprenaurial Explosion:
When Google announced its layoffs, LinkedIn updates subsequently filled feeds with announcements of Xooglers (ex-Google employees) who rapidly founded startups, often with the assistance of AI technology. As once-flat organizations like Google become more bureaucratic and course-correct, former knowledge workers with deep industry knowledge can build business new models when we have historic levels of tools, services, and technologies that can make a small enterprise feel much bigger, capable, and impactful.

Efficiency in the era of the great flattening will undoubtedly mean less bureaucracy, but how private and public organizations do this with precision will likely put organizations on a learning curve. The current state of X may provide some clues, insights, and learnings about some of the pros and cons of running flatter and leaner. Proponents of X, for example point out that it functions well, with a fraction of Twitter's former headcount. The less moderated discourse is celebrated and viewed as a net positive and a win for free speech. Critics however, maintain that the experience has become subpar, unsafe, and dangerous for users, advertisers, and society. That said, one area where X remains undisputed in dominance is its ability to centralize real-time news, updates, and events globally, which remains true to its original purpose and function—and all of the above is worth consideration as the world of work flattens.

Visually yours,

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