Growth is normally associated with scale.
More customers create more revenue. Additional employees provide more capacity. New departments enable companies to develop specialised expertise.
Yet growth can introduce another cost that rarely appears directly on a financial statement: coordination.
As organisations become larger, work increasingly moves between employees, departments and systems before it reaches the customer.
A request that once required one decision may eventually require multiple approvals. A customer issue may move between sales, operations, finance and support. A product launch may depend on marketing, technology, legal, procurement and compliance.
Every handoff may be reasonable on its own.
Together, they can create what could be called a coordination tax.
Growth Creates More Interfaces
Small companies can often move quickly because organisational distance is short.
The person making a sales commitment may sit close to the person responsible for delivery. A pricing question can be resolved through a conversation. A customer problem can reach senior leadership quickly.
Growth changes that structure.
Specialisation creates departments, management layers and formal processes.
That is often necessary.
But every organisational boundary creates another interface.
Information must be transferred.
Responsibility needs to be understood.
Decisions can require consultation or approval.
Systems must exchange information.
The more interfaces an organisation develops, the greater the opportunity for friction.
Research from McKinsey on organisational decision-making has highlighted how organisational complexity can cloud accountability, increase the number of decision-makers and create excessive meetings and communication without necessarily improving decision quality. (McKinsey & Company)
Handoffs Are Where Work Often Slows
A department can perform efficiently while the overall customer process remains slow.
Consider onboarding.
Sales may complete its part immediately.
Compliance may then wait for documentation.
Operations may not know when approval has been granted.
Finance may require information that was collected earlier but stored somewhere else.
Every individual team can achieve its internal targets while the customer still experiences a long delay.
This is why departmental performance metrics do not always reveal organisational performance.
The friction frequently occurs between functions rather than inside them.
McKinsey has specifically recommended mapping cross-cutting decisions around the most important handoffs, alignment points and decision moments rather than documenting every individual activity. Its work on cutting through decision-making clutter illustrates why these interfaces deserve direct management attention. (McKinsey & Company)
Coordination Costs Are Difficult to See
Coordination problems rarely produce a single identifiable expense.
Instead, they appear indirectly.
Employees spend additional time in meetings.
Managers chase approvals.
Customers repeat information.
Projects wait for decisions.
Different teams perform the same work because they cannot see what another department has already completed.
Employees create spreadsheets, private messages and informal tracking systems simply to keep processes moving.
Individually, these behaviours may seem minor.
Across a large business, they can consume significant productive capacity.
Microsoft's research provides an indication of the scale of modern workplace interruption. Its 2025 Work Trend Index reported that employees were interrupted by meetings, emails or messages on average every two minutes during core working hours. Microsoft's Work Trend Index research calculated this at around 275 interruptions per day. (Microsoft)
Not every interruption is unnecessary.
But the volume demonstrates why coordination itself has become an important productivity issue.
Meetings Can Be a Symptom
Growing organisations often respond to coordination problems by adding meetings.
When teams are poorly aligned, bringing everyone together can seem like the easiest solution.
Sometimes it is necessary.
But recurring meetings can also become a workaround for an unclear operating process.
If five departments require a weekly meeting simply to determine the status of customer orders, the deeper issue may be fragmented information or unclear ownership.
The same principle applies to management meetings that repeatedly revisit decisions.
McKinsey has observed that poor clarity around decision rights can produce meetings with extensive discussion but little actual decision-making. Its research on better decision meetings argues that eliminating unnecessary meetings is often less important than clarifying who has authority to decide. (McKinsey & Company)
Decision Rights Matter
Many coordination problems are ultimately authority problems.
Employees know what needs to happen but do not know who can make the final decision.
That creates escalation.
A manager asks a director.
The director consults another function.
The question travels upward until someone feels sufficiently senior to accept responsibility.
Over time, organisations can develop cultures in which relatively routine decisions require increasingly senior approval.
This slows the company and consumes management capacity.
Clear decision rights can reduce that burden.
Employees need to know which decisions they own, which require consultation and which genuinely require escalation.
The objective is not to eliminate controls.
It is to align the level of control with the significance of the decision.
Technology Can Reduce — or Increase — Coordination
Digital collaboration tools are usually introduced to improve communication.
They can have the opposite effect when poorly integrated.
One department communicates through email.
Another runs work through a project-management platform.
Another relies on messaging channels.
Important customer information sits in the CRM while financial data is stored elsewhere.
Employees then become the integration layer between systems.
Automation can reduce this problem by allowing data to move automatically.
However, technology cannot fix unclear ownership.
Automating an ambiguous handoff simply transfers the ambiguity more quickly.
Process clarity still comes first.
AI Is Creating a New Coordination Question
Artificial intelligence adds another dimension.
AI can help employees retrieve information, summarise meetings, route requests, automate administrative work and identify gaps in workflows.
But giving individuals more speed does not necessarily improve organisational coordination.
Atlassian's State of Teams 2026 research argues that many companies are already encountering an AI fragmentation tax, where individual productivity improves faster than coordination across teams. Atlassian estimates that this fragmentation costs Fortune 500 businesses approximately $161 billion annually. (Atlassian)
Its study also found that while 89% of executives believe AI increases speed, only 6% reported clear examples of organisation-wide AI return on investment.
The implication is important.
AI can make individuals faster while leaving the company's overall workflow unchanged.
If employees produce work more rapidly but approvals, information sharing and decision-making remain slow, the bottleneck simply moves.
Organisational Interfaces Need Owners
Businesses usually assign owners to departments.
They are less likely to assign ownership to the spaces between departments.
Yet many critical processes cross multiple functions.
Customer acquisition can involve marketing and sales.
Revenue recognition may involve sales, operations and finance.
Supplier onboarding can require procurement, cybersecurity, legal and finance.
Product launches often involve most of the organisation.
Without end-to-end accountability, departments naturally optimise their own performance.
That can create local efficiency without organisational efficiency.
A process owner looking across the entire workflow can identify where work waits, where information is duplicated and where objectives conflict.
Standardisation Reduces Coordination Load
Not every situation needs a new discussion.
One reason coordination becomes expensive is that companies repeatedly solve problems that should already have standard answers.
Pricing exceptions, contract clauses, supplier onboarding and approval thresholds can all become unnecessarily customised.
Some exceptions are necessary.
Too many exceptions create complexity.
Standardisation reduces the number of decisions that employees need to make.
It can also make processes easier to automate because the system does not need to interpret a new workflow every time.
Management attention can then be reserved for situations that are genuinely unusual.
Hybrid Work Makes Process Design More Important
Distributed work has also changed the role of informal coordination.
Inside an office, poorly defined processes can sometimes be compensated for by spontaneous communication.
A conversation at a desk can resolve uncertainty quickly.
Hybrid organisations cannot depend as heavily on those interactions.
Documentation, visible workflows and clear ownership therefore become more important.
This does not mean hybrid work automatically causes coordination problems.
In many cases, it reveals processes that were already dependent on informal workarounds.
Companies with clear operating systems may function effectively from multiple locations.
Companies dependent on constant informal intervention may struggle.
Measuring Flow Instead of Activity
Traditional management systems often focus on activity.
How many calls did sales make?
How many support tickets were closed?
How many invoices did finance process?
Those metrics can be useful.
But coordination requires a different kind of measurement.
How long does a customer take to move from signed contract to activation?
How much of that time represents actual work?
How much represents waiting?
How many times does information change hands?
How often does a task return to an earlier team because something is missing?
This is where process flow becomes more important than departmental activity.
Growth Without Organisational Drag
The coordination tax cannot be eliminated entirely.
Specialisation has value, and larger organisations genuinely require more communication.
The objective is to prevent coordination costs from expanding faster than the business.
That means defining decision rights, standardising repeatable activities, integrating information and measuring processes across departmental boundaries.
As AI further accelerates individual work, the need becomes even greater.
The companies that derive the most value from new technology may not simply be those that make employees faster.
They may be those that make the organisation move together more effectively.
Growth gives companies more resources.
Coordination determines whether those resources create leverage or bureaucracy.
References
McKinsey & Company — Untangling Your Organization's Decision Making. McKinsey
Microsoft — Breaking Down the Infinite Workday. Microsoft Work Trend Index
Atlassian — The State of Teams 2026. Atlassian
McKinsey & Company — Want a Better Decision? Plan a Better Meeting. McKinsey
McKinsey & Company — Decision Making in Your Organization: Cutting Through the Clutter. McKinsey