Drowning In Middle Management - Is There A Way Out?

Summary

The video explores the evolution of middle management in tech giants, from Google's initial resistance to a complex hierarchy, to the current proliferation of management layers and titles. It highlights how roles like product managers transformed from marketing positions to key players in tech product development, leading to bloated management structures. Recent trends show companies like Instagram, Google, and Amazon starting to cut back on middle management. The narrative contrasts this with Apple and Nvidia's lean management approaches, suggesting that excessive management can hinder innovation and efficiency, and posits that the future success of tech companies may depend on their ability to streamline these structures.

Takeaways

• 💭 Middle management at big tech companies has significantly expanded, both vertically and horizontally, leading to complex hierarchies.
• 📌 Larry Page's initial move to eliminate project managers at Google reflects a historical skepticism towards middle management.
• 🛠️ The evolution of roles such as software engineers and product managers into layered hierarchies illustrates the growing complexity within tech companies.
• 🔥 Instagram's decision to cut a vertical of management, along with Google and Amazon's cuts to middle management, indicate a shift towards streamlining operations.
• 👨‍💻 The role of product managers in tech has significantly diverged from its original marketing-focused inception at Procter & Gamble in 1931.
• 💁‍♂️ The proliferation of management roles and hierarchies was initially beneficial for developing and launching complex products at scale.
• 💸 Excessive management layers can lead to inefficiency, especially in maintaining and refining established products like Gmail.
• 🚀 Companies like Apple and Nvidia have successfully avoided bloated management hierarchies, focusing on efficiency and direct lines of reporting.
• 🔧 Nvidia's management efficiency, with a lean team structure under Jensen Huang, showcases the effectiveness of fewer management layers.
• 🔨 The future of big tech may depend on their ability to pivot and streamline management structures, similar to Meta's recent workforce reduction.

Q & A

What was Larry Page's initial stance on middle management at Google?

Larry Page believed that the company had too much middle management and advocated for executive leadership to have direct contact with engineers, leading to the firing of all project managers at one point.

How has the management hierarchy at big tech companies like Google and Microsoft changed over time?

Big tech companies have significantly expanded their management hierarchies, both vertically and horizontally, adding numerous levels and titles within program management, technical program management, product management, and software engineering management.

What led to the creation of the product manager role at Procter & Gamble in 1931?

Neil McElroy at Procter & Gamble created the product manager role as a means to justify hiring more people, initially serving as a somewhat deadweight position that evolved over time.

How did the role of product managers change when introduced to tech companies?

At tech companies, the role of product managers evolved from focusing on branding and customer feedback to being responsible for translating user needs into technical solutions, eventually becoming mini CEOs for individual products.

What has been the impact of expanding middle management within tech companies?

The expansion of middle management has led to increased complexity and bloat within organizations, contributing to inefficiencies and potentially diverting resources away from development and engineering.

What recent changes have companies like Instagram, Google, and Amazon made regarding middle management?

Companies like Instagram, Google, and Amazon have started to make significant cuts to middle management, indicating a shift towards streamlining operations.

How does Apple's management structure differ from other big tech companies?

Apple maintains a relatively flat management structure with only a few layers of management, avoiding the extensive middle management seen in other tech giants.

What unique aspect of Nvidia's management style contributes to its efficiency?

Nvidia's CEO, Jensen Huang, has a large number of direct reports, eliminating the need for multiple layers of management and contributing to the company's efficiency and agility.

Can bloated tech giants like Google, Facebook, and Microsoft become more efficient like Apple and Nvidia?

While Zuckerberg has made significant workforce cuts at Meta, suggesting a possibility for efficiency improvements, it remains uncertain if Google, Microsoft, and Amazon can make similar transformations due to their large size and possibly different priorities of their leadership.

What challenges face tech companies with bloated middle management structures?

Tech companies with excessive middle management may face challenges in maintaining agility, innovating effectively, and efficiently allocating resources, potentially leading to being overtaken by smaller, more nimble competitors.

Outlines

00:00

🏢 The Evolution of Middle Management in Tech

The script starts by reflecting on the simple hierarchy at tech companies in the past and Larry Page's initial dismissal of project managers at Google, emphasizing a lean management approach. However, the narrative quickly shifts to the current state, where big tech companies, exemplified by Google and Microsoft, have significantly expanded their management hierarchies, both vertically and horizontally. This proliferation of management roles includes numerous levels within program management, technical program management, product management, and software engineering management. The script points out the excessive layers of management and the recent trend of companies like Instagram, Google, and Amazon beginning to reduce their middle management, suggesting a potential shift in the industry towards leaner structures.

05:02

📈 Rise of Product Managers and Management Complexity

This section traces the origin of the product manager role to Neil McElroy at Procter & Gamble in 1931, initially a means to justify hiring more people. It highlights the evolution of the role from focusing on consumer feedback for marketing purposes to becoming central in tech companies, where product managers had to envision technical solutions to customer needs. The narrative explains how this role expanded into creating executive teams for each product, leading to an explosion of management layers within companies. This complexity is exemplified by the Gmail team's structure, which ballooned to include a vast number of managers and supporting roles for even minor features, illustrating how the initial efficiency and necessity of such structures became burdensome and inefficient as companies matured.

10:03

🔄 Cutting Down on Middle Management

The final section discusses how some tech giants, specifically Apple and Nvidia, have successfully avoided the trap of bloated middle management, maintaining relatively flat organizational structures despite their massive size and valuation. Apple's lean management hierarchy and Nvidia's efficiency under Jensen Huang's leadership, with a high number of direct reports, are highlighted as models of efficiency that contrast sharply with the cumbersome structures of other big tech firms. The script concludes with a speculative note on the potential for companies like Meta to streamline their operations in the wake of significant layoffs and suggests that the future success of big tech may depend on their ability to become more like these efficient outliers.

Keywords

💡Middle Management

Middle management refers to the layer of management in an organization positioned between the senior executives and the front-line managers or workers. In the context of the video, it highlights the growth in the number of middle management positions within tech companies, contrasting the initial lean management approach by Google's co-founder, Larry Page, with the subsequent explosion of management roles. The video suggests that such an increase in management layers can lead to inefficiencies and bloated organizational structures, potentially stifling innovation and responsiveness.

💡Product Manager

A product manager oversees the development, marketing, and overall success of a product. Initially conceptualized by Neil McElroy at Procter & Gamble in 1931, the role has evolved significantly, especially in tech companies. In the video, it's described how the role shifted from a marketing focus to becoming central to the development of tech products, requiring product managers to understand customer needs deeply and translate them into technical solutions, effectively acting as 'mini CEOs' for their products.

💡Technical Program Manager

Technical Program Managers (TPMs) are responsible for overseeing the technical aspects of a project, ensuring that engineering solutions align with business objectives. In the narrative, TPMs were introduced as part of the expanding hierarchy within tech companies, serving as a bridge between the product vision and its technical implementation. This role is highlighted as an example of the specialization and division of roles that contribute to the proliferation of management layers.

💡Hierarchy Expansion

Hierarchy expansion refers to the increase in levels and complexity of organizational structure. The video discusses how tech companies have expanded their management hierarchies both vertically, by adding more levels of management, and horizontally, by creating parallel management tracks for different functions such as program management, product management, and engineering management. This expansion is critiqued for potentially leading to inefficiency and a dilution of accountability and decision-making.

💡Lean Management

Lean management is an approach that emphasizes the elimination of waste within a manufacturing system without sacrificing productivity. The video contrasts this approach with the current state of big tech companies, suggesting that a leaner management structure, as seen in the early days of Google or in companies like Apple and Nvidia, can lead to more efficient operations, better innovation, and faster decision-making.

💡Direct Reports

Direct reports refer to employees who report directly to a manager. The video uses Jensen Huang, CEO of Nvidia, as an example of a leader with an unusually high number of direct reports, illustrating a management style that reduces the need for multiple layers of middle management. This approach is presented as contributing to Nvidia's efficiency and agility, contrasting with the more layered management structures of other tech giants.

💡Engineering Efficiency

Engineering efficiency in the video context refers to the effectiveness with which a company can develop and improve its products relative to the size of its engineering team. Nvidia is highlighted for its exceptional engineering efficiency, attributed to its streamlined management structure and the direct involvement of its CEO in operational details. This efficiency enables Nvidia to innovate rapidly and dominate in fields like AI hardware, contrasting with the less efficient, more bureaucratically burdened tech giants.

💡Bloated Giants

Bloated giants refer to large, established companies with excessively large staffs and complicated management structures, leading to inefficiency. The video suggests that companies like Google, Facebook, and Microsoft have become bloated giants, with excessive middle management layers that hinder agility and innovation. It raises the question of whether such companies can reform their structures to become more efficient and competitive.

💡Layoffs

Layoffs are mentioned in the video as a recent trend among big tech companies, including Instagram, Google, and Amazon, to reduce their workforce, particularly in middle management. These layoffs are portrayed as attempts by these companies to streamline their operations and reduce the bloating of their organizational structures. It suggests a shift towards recognizing the inefficiencies created by excessive management layers and the beginning of efforts to address them.

💡Organizational Structure

Organizational structure refers to the way in which a company arranges its lines of authority, communications, duties, and resources. The video discusses the evolution of organizational structures within tech companies, from flat and lean to complex and layered, emphasizing the impact of these structures on the companies' agility, innovation, and efficiency. It highlights the importance of structure in determining how effectively a company can respond to market changes and innovate.

Highlights

Larry Page's radical approach to management at Google by firing all project managers.

The dramatic expansion of middle management in big tech, exemplified by Google's complex management hierarchy.

Microsoft's adoption of a numerical system for its numerous management levels due to their abundance.

The proliferation of management layers horizontally across various managerial roles in tech companies.

Introduction of multiple tiers within individual contributor roles, such as software engineers, to facilitate career progression without moving to management.

Recent trend of tech giants like Instagram, Google, and Amazon starting to cut down on middle management.

The origin of the product manager role with Neil McElroy at Procter & Gamble in 1931.

Transformation of the product manager role in tech, evolving from a marketing focus to becoming product owners or 'mini CEOs'.

Expansion of middle management leading to complex team structures for even minor features within a product.

The initial necessity and eventual inefficiency of bloated management structures in mature products and services.

Mark Zuckerberg's realization and subsequent workforce reduction at Meta to streamline management.

The contrast in management structure efficiency between Apple/Nvidia and other tech giants.

Apple's minimal management layers, emphasizing direct reports and streamlined decision-making.

Nvidia's lean management structure under Jensen Huang, contributing to its agility and efficiency.

The potential for companies like Meta to pivot and streamline efficiently, in contrast to the challenges faced by other large tech companies with more traditional CEOs.

The risk of larger, more bloated companies being overtaken by smaller, more efficient competitors.

Transcripts

MIDDLE MANAGEMENT: Once upon a time, the hierarchy at tech companies  

was pretty simple. You had engineers, project  managers, directors, vice presidents, and the C  

suite. Back in the day, Google’s co founder, Larry  Page, thought that even this was too much middle  

management. He felt that executive leadership  should have direct contact with engineers,  

so he fired every single project managers at  Google. This arrangement didn’t last too long,  

but it was clear where Larry Page stood on the  issue. But, since then, things have become the  

exact opposite at big tech. These companies have  been completely overtaken by middle management.  

Just take a look at Google’s modern management  hierarchy. They currently have program manager 2,  

program manager 3, senior program manager, staff  program manager, senior staff program manager,  

director, senior director, vice president,  senior vice president, a C suite for the sector,  

and finally the C suite for the actual company.  If you’re an entry level manager at Google,  

there’s literally 10 management layers  between you before Sundar Pichai if not more,  

and that’s just the program manager hierarchy. And  if you thought Google was bad, just take a look at  

Microsoft. They have so many levels that they  gave up on giving each of them names. Instead,  

they just have a bunch of numbers. These companies  have not only expanded management vertically but  

they’ve also expanded management horizontally.  You see, program manager is just one type of  

manager at big tech. Adjacent to them, you’ve got  the technical program manager hierarchy which has  

all the exact same positions. And adjacent to  that, you’ve got the product manager hierarchy.  

And adjacent to that, you’ve got the software  engineering manager hierarchy. Nowadays, these  

hierarchies even apply to individual contributors  like software engineers. Back in the day,  

there was just engineer and then senior engineer,  and after that, you had to pivot to management to  

keep moving up. But nowadays, you’ve got software  engineer 2, software engineer 3, senior software  

engineer, staff software engineer, senior  staff software engineer, principal engineer,  

distinguished engineer, and fellow. It’s the same  thing with hardware engineers, data scientists,  

solution architects, business system analysts,  and basically every other role at these companies,  

a lot of which they invented themselves. But  it seems that things are finally starting to  

change. Just earlier this year, Instagram laid  off 60 people which in the grand scheme of  

Meta’s layoffs is nothing. But the thing that was  unique about this round was that Instagram didn’t  

just cut people across the board. Instead,  they cut out a whole vertical of management:  

technical program managers. Google and Amazon have  also begun to make big cuts to middle management.  

So, it seems that these companies are finally  leaning down, but how did things even get this  

bad? How did Google go from not even wanting  a single project manager to having dozens and  

dozens of management titles and what this does  mean for the future of these bloated giants?

THE RISE OF PRODUCT MANAGERS: Taking a look back, the position that  

really kicked off this whole trend with middle  management was product managers. And that takes  

us back to a legend named Neil McElroy at Procter  & Gamble in 1931. Fun fact, McElroy was the guy  

who would eventually oversee the creation of NASA.  But back in 1931, he was just a marketing guy at  

P&G who was in charge of helping the company grow  their head count. And in that vein, he would come  

up with the new job title: product manager which  largely started off as just a justification for  

P&G to hire more people. Talk about a deadweight  position. But, while product management started  

off as a deadweight, overtime, it did develop  into a somewhat serious role but it was nothing  

like the modern definition of product manager.  Originally, product managers were branding guys  

who were in charge if keeping a close eye on  consumers. Their jobs was to get feedback from  

customers and help the company refine the product,  place, price, and promotion to maximize sales. So,  

really, they were marketing guys who were judged  based on how much they were able to improve sales  

and profits. But, when this role was imported  into tech companies, the role completely changed.  

At the core, product managers were still in  charge of keeping a close pulse on customers and  

implementing their feedback, but implementation  was completely different at tech companies. I  

mean, just think about it. What sort of feedback  do you think customers were gonna give about  

something like P&G’s toothpaste? Maybe that it’s  too minty or that the packaging is a bit confusing  

or that the price is too high. You know, simply  stuff like that. But what happens when you ask for  

feedback on tech products like Gmail? Customers  might say something like, I would like to send  

files that are larger than 25 MB. Seems like a  simple enough request, but the solution is usually  

not as simple as just increasing the maximum  file size. It might involve creating a complex  

cloud storage solution like Google Drive and then  conveying to customers how Drive can be used in  

conjunction with Gmail. A lot of users probably  won't get it on the first go around, so you’ll  

have to refine the UI and put out help articles  and FAQs and so on. In others, the role of tech  

product managers wasn’t just to convey user needs  to the tech team but visualize how user needs  

could even be addressed using technical solutions  which was usually a lot easier said than done.  

Over time, this led to product managers becoming  product owners or essentially mini CEOs for each  

product. For example, at Instagram, you might have  a PM for search and a PM for the news feed and  

a PM for stories and so on. And slowly these PMs  built out executive teams for each product. First,  

they hired a CTO type of person who could actually  implement their vision, and this is what would  

become known as technical program managers.  Then, they hired a COO type of person who  

could handle general administration and business  development sort of tasks, and this is what would  

become known as program managers. And before  you knew it, things would get way out of hand.

MIDDLE MANAGEMENT TAKES OVER: Before you knew it, the Gmail push notification  

team alone would have a product manager, a  technical program manager, a program manager,  

a software engineering manager, several engineers,  and a couple of supporting roles like analysts and  

marketing guys. And this was the same case with  each and every feature across the entirety of  

the company. Zooming out a bit, you had this same  sort of hierarchy at a higher level. Put together  

a few of these teams and you had the Gmail iOS  app team for which you had staff product manager,  

staff program manager, staff engineers and so  on. Zoom out a bit more and put together the iOS  

team, the android team, and the web team, and you  got the Gmail team for which you had a director  

of product management, a director of program  management, and principal engineers. Zoom out  

a bit more and you get VPs and C suite guys and  so on and so forth. While all of this might seem  

a bit excessive, in the early days, it actually  made sense to essentially have small executive  

teams and a bunch of engineers for each and every  feature, product, and sector. The reality was  

that each feature was so nuanced that all of them  played a serious role in bringing these products  

to market and developing them further. This is  why Google was able to bring so able to develop  

so many complex products at the same time whether  it’s YouTube, Gmail, Chrome, Maps, Android, Drive,  

and so on. But, while this sort of team structure  is extremely valuable for an up and coming company  

bringing a bunch of new products to market, it  doesn’t work so well after the initial go to  

market effort is over. All of a sudden, you’ve  got a Gmail team with 500 people, 200-300 of  

which are just managers. When in reality, all you  need is a 100 people or so to continue maintaining  

and refining Gmail given that everything has  already been built out. At least, with Gmail,  

it’s an extremely popular service used by nearly  2 billion people. So, while a bloated headcount  

might not be the most optimal, it can easily be  supported financially. When you apply this same  

mindset to new endeavors with nowhere near as much  traction, you run into some serious trouble. This  

is how you end up with a $1.2 billion project  that looks like 2006 Wii graphics and only ends  

up attracting 38 active users. The problem is that  the vast majority of that $1.2 billion was likely  

not spent on actual development or engineering  but rather high paid managers managing other  

high paid managers. Fortunately, it seems that  after burning $10s of billions of dollars only  

to get lack luster results, Zuckerberg is  finally coming to this same realization.  

That’s why he’s cut a quarter of Meta’s workforce  and is cutting out entire echelons of management  

and hierarchy. And all of this brings us to  the question of can bloated giants be fixed?

ESCAPING MIDDLE MANAGEMENT: I know this video has just been all doom and gloom  

about middle management at big tech, but the good  news is that there are notable exceptions who have  

not fallen for this trap, specifically Apple and  Nvidia. To this day, Apple only has a couple of  

layers of management despite being a $3 trillion  giant. On the engineering side, you’ve got manager  

1, manager 2, senior manager, director, senior  director, VP, and senior VP. And there is no C  

suite for engineering. You know the top guy with  good hair: Craig Federighi? Well, he’s not CTO,  

Apple doesn’t even have a CTO. Craig is actually  Senior Vice President. In other words, if you’re  

a senior manager at Apple, there’s only 3 layers  of management between you and Craig himself. Even  

if you’re an entry level manager, there’s only 5  layers of management between yourself and Craig.  

It’s the same thing with Nvidia but even more so.  Nvidia only has 26,000 employees total despite  

being a trillion dollar giant. And this is very  much a result of Jensen Huang’s management style.  

Jensen himself has 50 direct reports. For  perspective, the average executive only  

has 10 direct reports. So, by taking on this many  direct reports, Jensen has eliminated the need to  

hire 4 or 5 more C suite executives. And this  doesn’t stop at Jensen either. His management  

style naturally trickles down the entire company.  Just think about it. If you’re the CTO of Nvidia  

and you interact with Jensen on a regular basis  and you see that he has 50 direct reports as CEO,  

it would feel quite weird to only have 10 or  15 direct reports yourself. Maybe, you don’t  

go for 50 like Jensen, but it’s likely that you  go for a comparable number like 40, and the same  

thing happens at the next level of management.  A VP underneath the CTO is not gonna want only  

10 direct reports when his boss has 40. So, maybe  the VP goes for 30 and the director goes for 25  

and regular managers go for 20. And all of sudden,  your entire company has 70 to 80% less management  

than your peers. This is precisely what’s happened  at Nvidia. They only have a fifth of the employees  

that Intel does but they’re worth 10 times as  much. So, you could argue that Nvidia is 50 times  

as efficient as Intel. Even if you want to take  out the recent run up Nvidia has experienced and  

say that they’re equivalent to the size of Intel,  Nvidia is still 5 times as efficient. And this  

insane discrepancy in efficiency is exactly why  Nvidia has been able to pivot from gaming GPUs to  

mining GPUs to data centers to now being the king  of AI hardware. Meanwhile, Intel wasn’t even able  

to capitalize on the mobile trend much less the  AI trend. And if you haven’t realized yet, Google,  

Facebook, and Microsoft are the Intel in this  story: the bloated established giants. Can these  

guys pivot and become more like Apple and Nvidia?  Well, I think it’s quite possible that Zuckerberg  

can do so with Meta. He’s already made the massive  25% cut that are required for such a pivot, and as  

the founder of Meta, there’s no question that he’s  highly motivated to do what’s best for the company  

long term. When it comes to Google, Microsoft, and  Amazon though, it’s a far different story. While  

they’ve all made cuts in the tens of thousands,  compared to their headcount, it’s usually not  

even 5%. Moreover, I think their vanilla CEOs  are much more interested in saving face in the  

short term and optimizing for stock performance  as opposed to long term fundamental growth. So,  

it’s likely that at this point, they’re just lame  ducks that are waiting to be overtaken by smaller  

more efficient companies that are a fraction of  the size like OpenAI. And that right there is the  

fate of big tech companies that are drowning  middle management. One of the main reasons  

for that is the vanilla CEOs at some of these  companies. Check out this video to learn more.