Managing a Country Company

There are a lot of similarities between how companies and countries behave. After all, they’re just groups of people. Companies have a “few” people and countries have many. Of course, with scale, comes different sort of problems, but companies, in many ways, are just mini-countries. When they’re small and there aren’t too many rules, they can move fast. But when they get big, they become slow and are forced to defend their wealth from competitors. This applies to both companies and countries, but companies go through an accelerated cycle. Because of their similarities, there are helpful business management analogies we can draw from examining how countries are run.

For example, let’s look at how the leaders of a country (the government) “manage”. One of the most important responsibilities of the government is to ensure that the economy not only survives, but grows. To keep things simple, the governmental entity that’s in charge of this is a country’s central bank. They can “manage” the economy either by direct intervention or via a system. In the US, direct intervention would be supplying citizens with money directly, like they did with stimulus checks. Managing via a system would be adjusting interest rates via the banking system (open market operations, etc.)

Neither approach is perfect - they’re simply tools that should be used at different times and in different situations, each with its own pros and cons. For example, stimulus checks get money to the people who need it quickly, but it doesn’t mean the money will be used wisely. For all its shortcomings, the banking and financial system—if properly “functioning”—is a pretty efficient way to allocate capital towards productive endeavors. It might not get the money to the people immediately, but it will create a more productive economy in the longer term.

You can think of management in the same way - you can either help with direct intervention: one on one meetings, feedback sessions, coaching, etc. or you can create systems and rituals that incentivize or even force certain behaviors. Understanding when to use (and not use) each tool is crucial to not only growing, but keeping the economy / business alive.

Direct intervention methods are largely the same company to company. Implementing systems, however, vary, as it’s dependent on business model, culture, products, etc. A simple example: if you’re a logistics business that needs to get shipments out the door and you don’t have a system to manage the operation, you’ll soon find that even your hardest working and most passionate team members will burn out. No matter how many one-on-ones you have, there won’t be much of an effect, and sometimes, it can even cause harm. Instead, a systems solution might have a greater impact, for example, building an internal toll for triage. Just like allocating capital via the financial system, it might take longer, but it might be more efficient in the long run.

Another example of implementing systems over direct intervention is Facebook and React. Facebook’s apps had an increasing number of features and needed evermore developers to keep it running, but over time, the app (and by extension, the developers) became way too difficult to manage. In order to solve their scalability problem, instead of just adding more people and making improvements to their management styles, they realized that re-thinking the system itself would be much more productive.