THE IDEA
The interest payments you can’t see
Software engineers have a concept called technical debt: the accumulated cost of quick-and-dirty solutions that work now but create problems later. Every shortcut, every “we’ll fix it properly next sprint,” every workaround adds to the debt. The code still runs. But it’s harder to change, slower to develop, and more likely to break.
Organisational debt is the same thing, applied to how an organisation works rather than how its code works. It’s the accumulated cost of every role that was created as a workaround rather than a structural solution. Every process that nobody redesigned because it was easier to add an exception. Every decision that was deferred because the conversation was too difficult. Every time the answer to “why do we do it this way?” is “because we’ve always done it this way.”
Like technical debt, organisational debt compounds. Each shortcut makes the next structural decision harder, because there’s more entangled mess to untangle. The organisation still functions - people find workarounds, information flows through unofficial channels, the gaps get filled by individuals going above and beyond. But the effort required to maintain normal operations keeps increasing, and the capacity to change keeps decreasing. The organisation is spending more and more energy just keeping the lights on, with less and less left for anything new.
IN PRACTICE
The shortcuts that pile up
A growing company never redesigns its approval process. What started as “check with the founder” becomes a bottleneck as the company scales, so exceptions are created: this type of decision goes here, that type goes there, except on Fridays, except for this team. Five years later, nobody fully understands the approval process, decisions take weeks, and a significant portion of management time is spent navigating a system that was never designed - it accreted.
A team’s working patterns calcify around the preferences of people who left years ago. The Tuesday meeting exists because someone who’s long gone needed it. The reporting format was designed for a stakeholder who’s moved on. The division of responsibilities reflects a team structure that no longer exists. Nobody chose these arrangements. Nobody maintains them deliberately. They persist because changing them requires effort that nobody has time for - because the debt consumes the capacity that would be needed to pay it down.
A family accumulates household organisational debt. The storage system in the garage was a temporary arrangement from the move three years ago. The morning routine was designed when the children were younger and no longer works. The division of chores reflects who was available when, not who should be doing what now. Each arrangement was a reasonable shortcut at the time. Together, they create daily friction that nobody addresses because each item feels too small to fix and the total feels too large.
WORKING WITH THIS
Paying it down before it pays you back
The first step is seeing the debt. Most organisational debt is invisible because it’s been normalised. The workaround became the process. The exception became the rule. The temporary fix became permanent. To make it visible, ask: what takes more effort than it should? Where do people spend time navigating the system rather than doing the work? What would we design differently if we started from scratch?
Paying down organisational debt requires dedicated time and energy - time that feels like it could be spent on “real work.” This is the trap: the debt consumes capacity, leaving no capacity to address the debt. Breaking the cycle usually requires a deliberate investment - a team dedicated to structural improvement, a regular schedule for reviewing and redesigning processes, or a leader who protects the time for this work against the constant pressure of urgent tasks.
The most important discipline is preventing new debt from accumulating faster than old debt is paid down. Every time you choose a workaround over a structural fix, you’re taking on debt. Sometimes that’s the right choice - the workaround buys time. But only if you track the debt and plan to repay it. The organisations that drown in organisational debt aren’t the ones that take shortcuts. They’re the ones that take shortcuts and forget they did.
THE INSIGHT
The line to remember
Every shortcut you don’t pay back becomes a tax on everything you do next. Organisational debt doesn’t appear on any balance sheet, but it’s the most expensive liability most organisations carry.
RECOGNITION
When this is in play
You’re carrying organisational debt when simple things take too long and nobody can explain why. When new people are baffled by processes that insiders have stopped questioning. When the answer to “why?” is “because we’ve always done it that way.” When the organisation spends more energy maintaining its own systems than doing its actual work. When changing anything feels disproportionately difficult because everything is tangled with everything else. When people say “we know we should fix this” about things that have been unfixed for years.