Unnecessary hierarchy is a cancer. CEO's aren't geniuses or rockstars, and if executives can't convince their employees- the actual technical people who will implement whatever plan is- that a given plan is the right one, 99% of the time that means it's not.

Good management is about leading people (i.e. who follow voluntarily), not dragging people along.

A good summary of what I was trying to say is that most companies could do with more leadership and less management.

It sounds like we agree.

A very important distinction, in my "Creo" example above, our company specifically used the word "leadership" for the founders and other "leads" of the company.

Nobody used the word manager or boss annd anyone could be in a leadership role, it was based on meritocracy.

Spooky parallels to the Boeing and McDonnell Douglas merger. Thanks so much for sharing the history, great ideas and suggestions, and a lasting question to answer around how to defend the model from the barbarians.

It almost looks like the culture is the competitive advantage, and everything else follows. No market and technology synergies are important enough to risk the destruction of that culture in a merger. (Alternatively, all the upper and middle management of the acquired company has to be honorably discharged, and the remaining employees are to spend several months training in the new culture. A pretty hard sell for most mergers.)

I would strongly agree with this thesis.

Thanks for sharing, you're post really resonated with me and I want to learn more about Creo now.

While I don't have the shared experience, I think I've also landed on economic thinking as part of my primary model of how I think an eng team should function and been trying to push the concept with limited successes (although I've termed it differently). And I've never observed a team that I think has executed on it really well.

I think business decisions should be up to the support divisions. Has anyone tried that?

That sounds like a different sort of toxic culture, just one where “no politics” is given lip service more than at the usual company and different sort of people make it to the top. An ivory tower at the top of the food chain exists even if you close your eyes and believe what you want to believe. A game is played regardless - this is the psychology of humans and exists outside of whatever nonsensical things you convince yourself of as part of a company, and only the useful idiot ranking is unaware of it. The company had thousands of employees for fucks sake this wasn’t some scrappy 20 person shop where anyone could pick up the phone and play CEO for the day talking to customers.

So yes, the new management made 100% right call in how they responded - they have money to make not deal with LARPers. And people who do M&A have a sweet fuck-you side and the brutal “your ass is mine” realist side. You saw both I’m sure. I assume they stopped short of calling you (doe eyed wet behind the ears kool aid drinking employees to be) gullible. In public that is.

Do you have any first hand experience or writing from those who did have such experience to this being the case?

I facilitate M&A work across companies so first-hand experience for the most part, and a few stories here and there from the colleagues - think death threats for one. That’s what the job is. People in this line of business are fast tracked to C-suite positions for obvious reasons.

Also someone is going through all of my comments downvoting and flagging. @dang I know my comments hit a nerve with the young players but can you do us a solid mate and throttle the rabid down voters?

Throttle because of your arrogance and poor assumptions based on thinking your reality is everyone else's? Boo fucking hoo. Stay in your sad world and we'll stay in ours.

So the answer is "no."

This isn't reddit. People will downvote and flag far reaching toxically negative comments about a company the poster has no actual experience with. As they should.

I am sorry you have never worked anywhere like it. For over 10 years, the company grew like gangbusters. It transformed a whole industry. It grew from under 50 people to 5000. It made hundreds of millionaires.

It is a massively self-evident fact that a lot more money was made during the “principles” period than after. And the company outperformed its rivals to the point that it was able to acquire competitors with twice as many employees. If “money to be made” is your core objective, you should strive to be more like Creo in the decade that ended a year before its demise.

Decades after the company disappeared, it has a very active LinkedIn Group and people are singing its praises online. If you are right that it was so “toxic”, this is a strange legacy. Interestingly, the core technologies developed by Creo are also still very much alive and, as a very rare example in technology, have not been surpassed technically nor replaced in the market. Technology moved very fast at Creo but their tech has stayed virtually unchanged under Kodak. Amazing.

Where I work now, we do at least three M&A deals a year ( as the acquirer ). I have many ideas about M&A. My ideas about leadership are still very firmly planted and aligned with what I experienced at Creo.

We’ll agree to disagree. As a founder I often have to draw the line between how founders think and how the rank-and-file employees, including management and even VP suite think. So I tend to sympathize when Musk asks the interviewer, “you didn’t really think I was going to be normal, did you?” (me paraphrasing). For anyone who excels in such an environment it’s a paradise - and founders often do. For everyone else it’s a living crushing nightmare. And the acquiring company called it as they saw it. They may have gone through a similar phase or have had previous M&A experience that left them thinking “yeah we are not playing that fiddle again.”

If we are talking “founders”, the two Creo founders made hundreds of millions of dollars when the company sold. Long before that though, they gave away a third of the company to a guy they named as second CEO. Then the original CEO biked around China for a year while that guy made him that fortune. The two founders pooled their shares and then split it three ways with the new guy ( second CEO ). Many rank-and-file employees made millions as well. It was a different set of folks.

I am not sure how many hundreds of millions you have made but their way seemed to work.

I've run many teams like this and have generally received good feedback from my teams. It's pretty simple in my experience. Don't punish people for making generally sound decisions that end in failure. Reward them for decisions that end in success. The issue is that managers need to eat some of the risk of those failures although it is offset by the benefit of the team's successes. Few managers are actually able to do this versus trying to dump all the risk somewhere else (usually onto their teams). But if you can maintain a management layer like that then it's amazing.

> how founders think

The fact you literally believe your method of thinking is any different than other employees is exactly why 90% of startups fail.

No problem. I am not sure what we are disagreeing about.

The company was amazing. No offense but it is not important to convince you of that. And you are certainly not going to convince me that my experience or the stories told by hundreds of others are false.

You could be trying to convince me that management does not matter, as my core claim is that it does. If that is what we are disagreeing about, I would like to know more. Great ideas can come from anywhere but I want to stay evidence driven. It is the only way I know how after working at Creo.

You keep explaining imagined features of an alternate reality where the people who worked there actually hated it.

This isn't an abstract thought exercise. You're talking to someone who worked there, so it comes across as irrelevant to imagine people who hated the politics.

I agree with you generally that abstractly one should discount claims of lack of politics. founder soul, founder, sold it, Google for 7 years, then founding again.

> And the acquiring company […]

The happy lovey-dovey kumbaya-chanting rainbow bunnies that made piles of cash (aka Creo) were the acquiring company. Not the other way around.

> It is a massively self-evident fact that a lot more money was made during the “principles” period than after.

Is it though? I've seen a lot of claims about this or that management style or company structure to be responsible for huge profits and growth. It's usually a more simple explanation, such as market timing + smart people. Ultimately it's survivor bias. It could be argued that if this were really the case, all top companies would be using it by now.

But that last sentence is the Creo supporters whole argument - self interested management get much more out of rent seeking in a nice profitable company while seeing their hierarchy position reinforcing their social Status- in short as long as everyone keeps being “performative hierarchical management” and looking like they do a good job, there is no incentive to actually do a better job

I’m really curious to learn more. Do you have a way I could contact you?

Could you give us an example how this worked practically on a project basis?

Author here - I'm simultaneously quite pessimistic about, and very interested in heterodox organizational structures and especially real-world stories about them. I feel that failure or regression to the mean are quite likely and scaling or replicating success stories is very hard, but I am almost certain things will evolve beyond the current status quo eventually, just really not sure when and how.

So thank you very much for sharing and recommendations for further reading will be much appreciated!

I have a theory that organizations that grow fast and scale well all have this “cellular model” at their core.

Investment bank trading desks in the pre-2008 era, partnership at the big strategy consulting firms and even “multi-strategy hedge funds” now are actually all collections of very incentive aligned businesses. They share the Creo quality of making lots of millionaires and people looking back on their time there as one of great freedom and achievement.

In all these places, employees are paid according to the revenue they generate, with seemingly no ceiling to what you can take home. It is true that the size of any one cell doesn’t scale beyond a small number of people. But all the organisations I mentioned above scale by having units tackling small pieces of vast markets.

The main lesson I took away from reading “Barbarians at the Gate” is that big companies hugely suffer from the principal agent problem, where management is mostly out to enrich themselves at the expense of shareholders and employees (sometimes). This looting is however only possible at a company that was established by a founder with a deep vision and passion for the product and has set up systems and culture that generates sufficient cash for the professional management to leech off.

What I have not read yet is a systematic study of these “cellular organizations” and what the common features are that make them successful. My guess is that the key is that each “unit” or “cell” has measurable economics that makes it possible to share the economic value over a sustained period of time. A bit like why sales people get paid a lot.

Agreed on cellular, but life is not a picture, rather a movie… what works at a stage starts attracting people, and eventually you let the wrong people in. A bit like the hype curve. These wrong people start poisoning internal processes and culture, seeking to cash out. And then the model blows up.

The migration of shitheads from Wall Street 80s 90s to Silicon Valley - technobros is for me a solid example of this.

Indeed, an organism can only survive long enough if it can resist infection. For this, an organization should be openly hostile to certain forms of conduct, and should have a way to expel people who bring in wrong values, especially in management.

This is a really hard problem, due to its influence on the morale, and the danger of weaponization of these mechanisms by bad actors.

And don’t forget, people change too, sometimes becoming misaligned over time. Maybe that’s a little like cancer. Org resilience is hard to model.

> I feel that failure or regression to the mean are quite likely

i suspect that these failures are a failure for humans to adapt to a larger herd than the traditional tribal size - anything beyond a couple hundred people max.

Have you ever read the book "Loonshots" There's an entire chapter about how primitive human societies probably maxed out at about 150 individuals. Companies that exceed this headcount basically need to change themselves into highly hierarchical organizations, and many companies die in this transition.

I went through this stage with a smaller company and there's definitely this point where you no longer know everyone and things change. Creo however did manage to scale this well beyond 150 people. You don't necessarily need a lot of hierarchy but you do need to figure out a structure. Creo always had a hierarchy, it wasn't like Valve or something. It's just how things worked within that hierarchy.

I experienced this as two phases of growth in the path from ~100 people to ~15000 people: the first phase where you don’t know everyone and the second one where you don’t even know every department/major project.

Note that Dunbar's number (150) is quite controversial:

https://www.nytimes.com/2021/05/11/science/dunbars-number-de...

The observation that there is a (very) strong statistical correlation between cranium and social size is an interesting and correct observation.

That much is true and uncontroversial.

What the article takes issue with is the exact number of 150, which can vary from person to person. But really, the criticism entirely misses the point. The number is just a rule of thumb derived from extrapolation. It's not a hard and fast rule like "You can only have 150 friends". Obviously.

Perhaps it should be something like cranial volume / body volume, or else we'd expect whales and dolphins to have massive tribe sizes, yet they typically hang with something like 20 peers.

150 is Dunbar's number, made by extrapolating a monkey species tribe size / brain size correlation to human brain size. Something interesting to think about, but not exactly hard science.

The book Loonshots says as much. Extrapolating from monkey brain sizes to human social interactions is a bit reminiscent of phrenology IMO, but it is an interesting observation. Anecdotally, I've found it to hold true, particularly in startup land when companies transition into blitzscaling hypergrowth.

At Meta, we collected tons of real world data to pretty definitively prove this is true. Humans can only really relate to about that many others a time. And most people have about 5 others that they are actually close with.

Oh my god, this number lines up so perfectly with my experience at various companies.

I also worked at a company that was similar to the Creo story above.

This was a High Frequency Market making company, total employees ~ 250. "Flat" management, nobody had titles, just responsibilities. Everyone understood the mission and goals. Everyone was highly compensated and empowered to make important decisions without explicit approval.

The whole thing fell apart when the company grew and finally failed when merged with another larger competitor.

These great orgs only last when they are kept small.

Perhaps total size isn't as important as ratio of onboarding.

It’s definitely size.

It’s much harder to maintain a shared vision among 20 people than it is for 10.

It get exponentially harder as you add more people.

Since a shared vision becomes hard to maintain, only those with the vision (read: managers and leadership) can make decisions.

I put together a "High Performance Organizations Reading List" which includes a reference to "Reinventing Organizations: A Guide to Creating Organizations Inspired by the Next Stage of Human Consciousness" by Frédéric Laloux. You and "LeFantome" who wrote about Creo might find that book and other resources there of interest. Laloux's book provides examples of various companies with better management. https://github.com/pdfernhout/High-Performance-Organizations...

Better and healthier organizations are possible, as Laloux writes about. They are rare though -- and difficult to sustain in our current Western society. As with Creo, you definitely need enlightened management or enlightened major shareholders to "hold the space" as Laloux writes.

What did Creo do when team could not reach "full team agreement"? (And isn't that the other side of "Disagree & Commit"?)

It's important to note is agreement being everyone can live with the decision. I.e. it's not really a bike shedding thing. Just that nobody has strong objections (the reason being is that if there are strong objections there are probably good reasons for that and ideally those are understood before taking the decision).

At the end of the day, if there was a time critical decision and there was no consensus someone like a project manager would make the call. I haven't actually seen that happen, a well functioning team/project generally is able to make decisions.

Yeah. Creo was a great place to be and had some very good people. The focus on culture really permeated the company.

I would say though that it wasn't simply the dilution of the culture, there were also some real business challenges that led to external pressures and eventually the sale of the company. A takeaway from that is that business is an important part of, ya know, being a business. A financially successful business has more room to be a great place. Creo did well and grew well but operated in an area where making money isn't easy (the printing industry).

Reminds me a bit of Boeing aquiring McDonnell Douglas.

I’ve enjoyed the aphorism "McDonnell Douglas bought Boeing with Boeing's money"

It honestly reads as both CEO fault, but more importantly - override of culture by sudden big influx people.

It seems that Creo bought out their competitor, but in fact they got absorbed by them and paid for the privilege.

I think what's interesting here is that you must have had access to the raw financials (eg. sales numbers, P&L by department). These are very tightly controlled at all companies I've worked at, making it hard to know if a particular product is important to the bottom line or not.

This is also a great point. Teams should have detailed knowledge of the performance of the company or groups. It helps with the shared ownership, pride and responsibilities.

Yeah, I'm in a company that has transitioned to an ESOP. Management haven't figured out that financials have to be open, yet.

They are begging people to engage but I have no idea what projects are paying the bills, which ones are drags, and various other missing information.

If you keep all that a secret people have no choice but to tune out and just expect management to handle everything.

I don't think the current CEO wants anyone else loudly expressing concerns over the future of the busieness as we are trying to shift away from contracting to SaaS. This is an 80yr old company, mind you.

Now we are trying to grow and bring in employees (for a contract), promising them stock and supposedly stable employment but in the end most of the dozens of employees who are brought in will be let go before they vest. The long term base employees (there is a cache of 20+ yr employees) will have their stock price increase after these people (they will let go) put in years of work to deliver on record-breaking contracts. None of this is the stated intention but it's going to go down like this. About that time the CEO will retire and cash out.

Very interesting. After reading this, I looked up the Wikipedia page for Creo [1], but could not find anything about this unique type of management.

Would you mind adding something there for posteriority?

https://en.wikipedia.org/wiki/Creo_(company)

Yeah, the Wikipedia page is a bit disappointing. Maybe I'll have a go at updating it. Some references:

https://whattheythink.com/articles/101480-amazing-balance-wa...

https://www.encyclopedia.com/books/politics-and-business-mag...

(https://www.youtube.com/watch?v=mXTWMlRK0LE linked from the above - I remember this video but couldn't find it directly on YouTube :( )

Have you tried out being the executive yet?

> Creo stopped working when it acquired a rival that had more employees than it had

Huh. That'd make sense. From the outside, Creo Scitex looked like an unstoppable dreadnaught.

Creo acquired ScenicSoft in 2002. Alas, I saw no evidence of economic thinking.

Whoever was in charge of software was proud of having never canceling one of their ~dozen products. Me asking if there was a P&L for any of them was among my top 20 most brave/stupid work related selfowns.

They did cancel Color Central in short order. (Payback?) Basically CUPS with features for print manufacturing and a purdy UI. Super boring, but a necessary product. Although no longer affectionately known as Cash Cow (the internal code name Illumious had given it), it still had a huge installed base, had steady revenue (upgrades), and maintenance was on auto-pilot.

About a year later, Creo licensed Color Central's biggest competitor. (Sorry, forget that company and product name. I remember that they were a great team though.)

Rowan's UpFront was part of the ScenicSoft acquisition. Advanced print manufacturing planner. Pretty much unparalleled. A true diamond in the rough.

Further, I had invented a novel imposition engine for bookwork. Specify all the sizes and (crucially) the desired binding -- voilá, out comes a Preps template production plan. (Preps was ScenicSoft's flagship product, the gold standard for print imposition.)

Automating bookwork planning was the holy grail. The long sought replacement for Preps' very complicated, very necessary template editor.

I don't think the Creo people understood what they had. They were so focused on their (awesome) digital plate stuff and adjacent. Like most, they probably treated the bindery as an afterthought.

I forget how Creo managed to let Rowan slip thru their fingers. But don't worry, he did it all again and earned a pretty good exit the second time around.

--

Whatever Creo's shortcomings, the president and owner of ScenicSoft totally failed. After many rounds, he managed to negotiate Creo's initial $70m offer down to $9.5m. So saavy.

Interesting. I worked on output devices (and some very specialized ones at that) so I didn't really see a lot of the "software" side of the business. But I have seen some "not invented here" and rivalry between the Creo and Scitex teams. Part of the problem there was actually maintaining parallel products and teams that targeted the same markets.

Acquisitions are just tough. There were good people with good intentions and teams did try to work together. I spent some of my time trying to bridge the teams, with some success. What was missing is a good idea of how to restructure things to eliminate the duplicate efforts which is super tough when you're also dealing with large install bases. There were a few technical attempts to bridge the architectures and bit and pieces from "Creo" machines found their way into "Scitex" machines.