Stratified Systems Theory

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Decoding the Science of Elliott Jaques

It is a classic startup tragedy: A founder builds a brilliant product, scales a team to 50 people, and then—suddenly—everything begins to stall. Decisions slow down. Quality drops. The founder feels overwhelmed, and the company feels directionless.

Common advice says the founder needs to learn to delegate. But the work of Elliott Jaques suggests a much deeper, structural reality: The company has outgrown the founder’s Time-Span of Discretion.

Requisite Organization & SST

Jaques’ Stratified Systems Theory (SST) posits that work is organized into distinct levels of complexity. These levels are defined by the Time-Span of Discretion—the longest period a person can act independently toward a goal without oversight.

  • Level 1-2 (Tactical): Focused on 1 day to 2 years. The world of "doing" and short-term results.
  • Level 3-4 (Managerial): Focused on 2 to 5 years. Connecting tactics to systems.
  • Level 5+ (Strategic): Focused on 5 to 20+ years. Navigating global markets and industry-wide shifts.

Why Companies Outgrow Founders

As a company grows, the complexity of the work increases exponentially. A founder who was a genius at Level 3 (building a 1-year product roadmap) may find themselves cognitively ill-equipped for Level 5 (restructuring an entire industry).

Cognitive Mismatch

If the work requires Level 5 strategic thinking but the founder is operating at Level 3, they will micro-manage down into the weeds, suffocating the layers below them.

Structural Misalignment

Organizations break when they have too many or too few layers of work. A founder often fails to build the requisite structure needed to handle new complexity.

The Harsh Reality

Elliott Jaques famously argued that "human capability is the ultimate constraint on organizational size." To survive, a founder must either undergo a massive leap in cognitive maturity or have the wisdom to hire a CEO whose time-span matches the company’s new scale.

Related Theories

Organizational growth is limited by human cognitive span. These frameworks explore the structural and psychological dynamics of scaling through complexity:

1. Scaling & Complexity

  • Stages Theory: Mapping the biological transition from tactical birth to strategic maturity.
  • Entrepreneurial Entropy: The disorder that occurs when internal structure fails to meet external complexity.

2. Cognitive Agility

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