What the research says
Jay Galbraith’s research on organisation design, published in Interfaces, frames the core challenge facing a growing organisation as an information-processing one: as task uncertainty and coordination demand rise, an organisation either has to reduce the amount of information it needs to process, through simplification or standardisation, or increase its capacity to process more of it, through better systems and structures. A multi-site business expanding its footprint is, in Galbraith’s terms, mechanically increasing its information-processing demand with every new location — more conditions to track, more variance to account for, more coordination points — regardless of whether leadership has deliberately built the capacity to keep up.
Nelson Repenning and John Sterman’s MIT Sloan research on the capability trap, published in California Management Review, is directly relevant to what happens when capacity does not keep pace. Their work, based on system dynamics modelling and more than a dozen case studies, describes how organisations under pressure default to working harder within the existing approach rather than investing in a better one, because the people who would build new capability are the same people needed to manage what is already in front of them. Applied to a growing multi-site business, this means the moment visibility starts to erode is often also the moment the organisation has the least available capacity to notice and address it — the erosion and the response to it compete for the same scarce attention.
Why the loss is gradual and easy to miss
Visibility does not disappear all at once, and this is precisely what makes it dangerous. Early in expansion, a leader typically still visits most sites reasonably often, still knows most managers personally, and still hears about problems informally before they become serious. Each additional site subtracts a little from how completely that direct knowledge can be maintained, but the subtraction at any single step is small enough not to register as a change in kind. The organisation crosses, without any specific moment marking it, from a state where leadership genuinely knows what is happening everywhere to a state where leadership knows what is happening at the sites it happens to visit most, hears from the managers who happen to communicate most readily, and infers the rest from aggregated reporting that was never designed to substitute for direct observation.
This gradual quality means the loss of visibility is rarely noticed through its own symptoms. It tends to be noticed retrospectively, when a problem surfaces that, in hindsight, had clearly been developing for some time at a site nobody had visited recently or heard much from — at which point the natural question is “how did we miss this,” when the more accurate question is “when did we stop being able to see this, and did anyone realise.”
What tends to fill the gap
Something always fills the space left by declining direct observation, whether or not it was designed to. The most common default is aggregated reporting — dashboards, summary metrics, periodic reviews — which genuinely helps but has a specific limitation worth naming plainly: aggregation, by construction, compresses detail in order to make many sites comparable at a glance, and the detail it compresses is often exactly the kind of early, small-scale signal that would have mattered most to catch. A dashboard can tell a leader that overall performance is stable while several individual sites are quietly diverging underneath that stability, because the average, mathematically, is built to smooth exactly that kind of movement out.
A second, less visible substitute is relationship-based information — the sites a leader happens to hear from most, because a particular manager communicates readily, or because personal rapport happens to be strong. This is genuinely useful information, but it is not representative information, and organisations that rely on it without recognising its bias end up with visibility that is deep in a few places and genuinely absent in others, without a clear sense of which is which.
V. F. Ridgway’s research on performance measurement, published in Administrative Science Quarterly through Cornell’s Johnson Graduate School of Management, is relevant to the aggregated-reporting substitute specifically. Ridgway’s finding that composite measures can produce misleading impressions of overall performance applies directly to the dashboards multi-site businesses build to compensate for declining direct observation: a composite figure is designed to answer a question about the network as a whole, and using it to answer a question about any particular site will systematically understate exactly the kind of localised divergence that direct observation, at smaller scale, used to catch without difficulty.
The organisations that manage this transition well tend to do so by treating visibility as something that has to be deliberately redesigned at each stage of growth, rather than assumed to persist because it existed before. That means building mechanisms — some formal, some simply habits of attention — that are explicitly intended to surface information from sites the leader does not personally visit often or hear from readily, rather than relying on the sites that happen to be loudest or closest to make up for the ones that are quiet by comparison.
Where this shows up
This perspective is written with multi-site businesses in mind. It sits within the Multi-Site and Franchise grouping, and the questions it raises recur in other sectors too.
Questions worth considering
- Is the gap in visibility distributed evenly, or does it cluster around specific kinds of sites — newest, furthest away geographically, run by the quietest managers?
- Which sites has leadership visited or spoken with directly in the last month, and which have not come up at all?
- Is current reporting built to reveal the sites quietly diverging from the norm, or only the network’s overall trend?
- If a serious issue were developing at the site the organisation currently knows least about, how would anyone find out?
Your team is facing similar challenges?
Subscribe to The Riddle Ledger
Perspectives are sent as they are published, with no promotional email, and you can unsubscribe at any time.