What the research says
Jay Galbraith’s research on organisation design, published in Interfaces, frames organisational complexity as fundamentally an information-processing challenge, one that intensifies as task uncertainty and the number of coordination points rise. Galbraith’s work identifies design responses to this — self-contained units, vertical information systems, lateral relations between parts of the organisation — precisely because a growing organisation’s information-processing demand does not stay flat as it adds capacity; it grows with the number of things that need to coordinate with each other, not just with the number of things that exist.
Larry Greiner’s research on the phases organisations move through as they grow, still taught more than fifty years after its original Harvard Business Review publication and reissued as an HBR Classic with the author’s own commentary, adds a temporal dimension to this. Greiner’s central observation is that the practices which work well at one stage of growth are frequently the same practices that produce a crisis at the next stage, because they were never redesigned for the coordination demand a larger organisation actually faces — they simply continued because they had been working.
Why complexity compounds rather than adding up
The intuitive model of multi-site growth treats each new site as an independent addition: a new location, its own staff, its own local operations, contributing its own share to the whole. This model understates what actually happens, because a new site does not only add itself — it adds a new set of relationships between itself and every part of the organisation it now has to coordinate with: shared systems, central support functions, other sites it may share supply chains or regional management with, and the reporting and oversight structures that connect it back to the centre.
This is why the relevant measure of complexity in a multi-site business is closer to the number of potential connections between sites and functions than the number of sites itself, and the number of potential connections grows considerably faster than the number of sites does as a network expands. A network moving from five to ten locations is not simply doubling its site count; it is expanding, by a much larger factor, the number of relationships those sites and the functions supporting them now have to manage. This is a structural, near-mathematical feature of adding parts to a system that has to coordinate internally, not a reflection of any particular management failing.
Where this becomes visible, and where it stays hidden
Complexity of this kind tends to stay hidden for longer than businesses expect, because the early stages of multi-site growth genuinely do feel closer to the simple, additive model. A second and third location, added to a strong founding operation, mostly replicate what already works, and the coordination burden they add is modest relative to what the organisation can already absorb through existing relationships and direct oversight. The compounding nature of the problem becomes visible later, once the network has grown enough that the number of potential connections has meaningfully outpaced the organisation’s original coordinating capacity — and because the growth in connections is faster than the growth in sites, this transition can arrive more abruptly than leadership expects, even when site-by-site growth itself has felt steady and well-managed throughout.
A related and easily missed effect is that complexity does not distribute evenly across the organisation as this happens. It tends to concentrate specifically at coordination points — central support functions, shared systems, anyone whose role involves connecting multiple sites rather than running a single one — because those are exactly the roles absorbing the disproportionate growth in relationships described above. A site-level manager may experience little change in their own day-to-day complexity as the network grows; a central operations or support function serving all of those sites experiences the full compounding effect directly, which is why strain often appears first, and most severely, at the centre rather than at the sites themselves, even though the sites are where the growth is nominally happening.
This has a practical implication worth stating plainly: organisations that plan for growth by scaling site-level resourcing in a straightforward, one-to-one way — more sites, proportionally more site staff — while leaving central coordinating capacity to grow at a similar, linear pace are very likely under-resourcing the part of the organisation actually absorbing the compounding effect. The coordination burden, on the evidence reviewed here, grows faster than the site count that produces it, which means central capacity built to scale in step with sites is, in practice, built to fall behind.
Nelson Repenning and John Sterman’s MIT Sloan research on the capability trap, published in California Management Review, describes what tends to happen once that gap opens: organisations under this kind of pressure default to working harder within their existing coordinating structures rather than investing time in redesigning them, because the people who would do that redesign work are the same people already consumed by managing the compounding complexity directly. This is part of why the gap, once it opens, tends to persist rather than self-correct — the response the pressure most naturally produces is more effort applied to the existing structure, not a step back to ask whether the structure itself needs to change, which is precisely the step the underlying problem requires.
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
- Has central coordinating capacity grown in proportion to site count, or in proportion to the number of relationships between sites, which is a faster-growing figure?
- Where is complexity currently concentrating most visibly — at the sites themselves, or at the functions that connect them?
- Did the organisation’s coordinating structures anticipate this compounding effect, or were they simply carried forward, unchanged, from an earlier and much smaller stage?
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