Organizations as bounded systems

The Overlap #19

Welcome to The Overlap, a biweekly newsletter that’s somewhere between product and organization design.

I said my next post wouldn’t come out until 2/24. I was climbing in Utah. Turns out climbing produced some thoughts about underbounded and overbounded organizations. So, this one came a week early.

Our next one will come out on 3/10, three weeks from now! Another bouldering trip this weekend, this time to Bishop. Although I may pull a fast one and get it out two weeks from now. Stay tuned.

People who work in software appreciate a good constraint.

Constraints can be things like:

  • Features that aren’t in scope in a spec or product requirements doc

  • Design systems that you can’t deviate

  • Deadlines, launch dates

  • Working no more than 8 hours a day

Generally, people appreciate when constraints are clear.

PdMs, designers, and developers can intuit when their product development process is either over-constrained, under-constrained, or optimally-constrained.

In an over constrained product development process…

  • Your roadmap can’t change, even if you discover that it’s not prioritizing the most valuable features first

  • You have to spend this year’s budget, regardless if you find a cheaper way to build your product

  • Your design system doesn’t serve your project. But you have to use it anyway, or else the design systems team will be out for your blood

In an under constrained product development process…

  • You have no idea why you’re building what you’re building. Your PdM’s answers aren’t helping

  • You’re unclear on what your team wants to learn from user research

  • Your design exploration phase is taking a little too long. There isn’t alignment on what the product actually is

An optimally constrained product development process might look like this:

  • Everyone is clear on what they’re building and why they’re building it

  • Everyone is clear on what they’re not building

  • Everyone knows everyone’s roles

  • Meetings are a good use of your time

  • Everyone weighs in on when a feature needs to be de-prioritized or re-scoped

For the remainder of this essay, let’s use the word boundaries instead of constraints. An “optimally constrained process” doesn’t sound too optimal to me.

I think organizations have boundaries too. And I think organizations can be overbounded, underbounded, or optimally-bounded.

An overbounded org has micromanagers, outdated processes, and tons of bureaucracy. They are in danger of staying the same when the customer, market, or environment demands them to change. They’re like a person who never changes their mind, stuck in their own ways.

An underbounded org has little coherence. They go with the flow a little too much. They react frenetically without getting clear on what they want to accomplish. They’re like a person who’s always on their phone, reacting to every single push notification, badge, and sound.

An optimally-bounded org has a coherent strategy. People feel safe sharing ideas and honest feedback. Their customers enjoy interacting with this org. The org makes agreements explicit but deviates from their agreements when it doesn’t serve the problem at hand. They’re like your best friend’s most admirable qualities.

Clayton Alderfer wrote about overbounded and underbounded organizations in 1980. Here’s a summary of his thinking:

When a system is optimally-bounded, there is a healthy sense of group membership and optimal interactions exist with outside systems.

Overbounded systems are in danger of becoming too distinct, and can lead to phenomena such as group think and elitism; these systems are usually managed in a strict hierarchical manner where the chain of command is clearly defined. Members of an overbounded system usually display positive affect distribution, whereby group members are tight-knit and roles are explicitly defined.

Underbounded systems, conversely, are in danger of becoming absorbed by its environment; the looseness of the system prevents cohesion between its members and the sense of belongingness is minimal; these systems often suffer from ambiguous and conflicting role definitions and lack of clarity.

I credit this find from Tom:

Organizations are complex systems. So they aren’t solely overbounded or underbounded. They’re both. Here’s more from Clayton’s Psychology Wiki bio:

Systems can behave in both underbound and overbounded ways in reaction to different groups and situations; they are rarely one or the other in all instances. In addition, overbounded suprasystems often create underbound subsystems, and vice versa. Systems display these characteristic behaviors as a way of balancing the two extremes in order to achieve optimal boundaries; they react in relation to one extreme or the other and as such, are shaped by the embeddedness of multilayered systems.

Overbounded suprasystems create underbounded subsystems! And vice versa! Your company as a whole can be overbounded, while your team can be underbounded.

I’ve consulted for a company that was overbounded with underbounded subsystems. This company was a multinational financial institution. The company overall was heavily regulated, risk-averse, always protecting their customer’s data, and trying to make every quarter profitable. But the cross-functional team I worked with was underbounded. They rallied around the product’s goal, which was at odds with the goals of the team members’ departments. They solved hard problems every week. This team was underbounded in an overbounded org, and the work led them to play with their own boundaries.

Systems can’t be controlled, but they can be designed and redesigned.

–Donella Meadows, Dancing With Systems

To achieve an optimal bounded-ness, organizations organically balance being overbounded and underbounded. Isn’t that wild?

To create change, start with the right boundaries

Organizations being both overbounded and underbounded systems means that we can play with those boundaries. And as change agents, playing with boundaries is what fosters positive, lasting change.

A former mentor, Aaron Dignan, loves to say: “To change an organization, do something radical at a non-radical scale, rather than something non-radical at a radical scale.”

Leaders try to do the opposite: do something non-radical (fill out a post-project survey!) at a radical scale (every team must do it!).

Not only is this uninspiring, it rarely works. Not every team will do it. Which gets leaders to double down and force teams to complete the survey. But the more they force teams to do it, the more teams create ways to stay unbounded.

Finite players play within boundaries; infinite players play with boundaries.

–James Carse, Finite and Infinite Games

If you want to create change in your org, start with the right boundaries.

So how do you find the right boundaries?

  • Determine where it’s less safe (politically, financially) to try the change.

  • Determine where it’s safe to try the change.

  • Start with what’s within your control.

  • Start small.

Oftentimes, this looks like starting with your immediate team. To some, it feels counterproductive to start with just your team. “This won’t solve any underlying issues with our structure/process/business model.” To which I’ll say, can you fix that problem now? To which you’ll likely respond with: no. Great, let’s start somewhere.

Successful change happens within optimal boundaries. That might mean trying a four-day workweek for four weeks, trying a new decision-making process with one team, or forming a cross-functional team for a new initiative. Find the right boundaries.

Is your org overbounded or underbounded?

I’d love to hear from you!

  1. Is your org overbounded, underbounded, or optimally-bounded?

  2. If your org is overbounded, where might there be examples of underbounded subsystems? What teams, departments, or efforts come to mind?

  3. If your org is underbounded, where might there be examples of underbounded suybsystems? What teams, departments, or efforts come to mind?

  4. What might optimally-bounded look like in your org?

Share your answers as a reply to this email or in the comments!


  1. Negentropic vs entropic organizations. Similar spectrum to overbounded vs underbounded orgs, but playing with the idea of entropy and negentropy. Written by my friend Sam Spurlin.

  2. Dancing with pace layers. I think you’ll enjoy Behzod’s research project, Organizations as Ecosystems.

  3. My colleague, Iz, published our parental leave policy! Not only does she share the actual policy, she shares how we made this decision: through the consent (rather than consensus) of ~25 employees.

  4. Designing in triples (podcast). I love this podcast from Kate Ritter and Laura Klein. This one’s on “functional design” — the part of the design process where you focus on nailing the product’s functionality.

See you in two weeks,