McKinsey surveyed 10,000 leaders across 15 countries for their State of Organizations 2026 report. The headline finding isn’t about AI readiness, talent wars, or digital transformation. Two-thirds of leaders admit their organizations are too complex and inefficient to execute effectively [1]. Not on some future initiative. On anything.
That number deserves a second read. These aren’t middle managers venting in an engagement survey. These are the people who designed the structures, approved the processes, and signed off on the governance layers. And the majority now concede the machine they built is working against them.
This isn’t an efficiency problem. It’s accumulated decision debt.
How Decision Debt Compounds
Every organization makes structural decisions under pressure. A new approval layer gets added after a compliance incident. A cross-functional committee forms because two departments can’t align. A reporting cadence doubles because leadership lost visibility during a crisis. Each decision makes sense in isolation. None get revisited.
Over time, these accumulated decisions calcify into process. Senior executives now spend nearly 23 hours per week in meetings, up from less than 10 hours in the 1960s [3]. McKinsey estimates that 20 to 30 percent of operating expenses are lost to structural inefficiency [2]. That’s not a rounding error. It’s organizational friction consuming real output.
In my previous article on the Time Poverty Paradox, I showed that 92% of product leaders now own revenue outcomes while nearly half lack the time for strategic planning. The complexity tax is the mechanism behind that paradox. It’s not that product leaders are bad at time management. It’s that the organization consumes their capacity through coordination overhead before they can spend it on value creation.
Clayton Christensen’s RPV framework explains why this is self-reinforcing. Complexity doesn’t just live in org charts. It embeds in Processes (how work gets done) and Values (what the organization prioritizes). Once embedded, it protects itself. Proposing simplification threatens the roles, committees, and approval chains that complexity created. The antibodies are already in place.
Deploying AI Into a Broken System Amplifies the Dysfunction
Eighty-eight percent of organizations are deploying AI. Yet 86% of leaders say their organization was not prepared to integrate AI into daily operations [1]. Only 14% reported that leaders consistently championed AI adoption, and one in six organizations lack a clear C-Suite AI owner [1].
The pattern is familiar. Organizations adopt a new capability, push it through existing structures, and wonder why results stay flat. AI doesn’t simplify a complex organization. It accelerates whatever the organization already does, including its dysfunction. When you automate a process that includes three unnecessary handoffs and two redundant approvals, you get faster unnecessary handoffs and quicker redundant approvals.
Forty-three percent of executives list productivity as their top 2026 priority [1]. That instinct is correct, but the playbook most reach for is wrong. Familiar productivity moves like restructuring, delayering, and cost-cutting are hitting diminishing returns [2]. McKinsey’s own research on workflow redesign points to a different lever: reducing handoffs, eliminating duplication, clarifying decision rights, and cutting unnecessary meetings [2].
The difference matters. Restructuring rearranges complexity. Workflow redesign removes it.
The Pressure Paradox
Three-quarters of organizations are struggling to build high-performance cultures [1]. The instinct is to push harder. Sixty-one percent of leaders report high pressure to deliver productivity gains [1]. But the data shows pressure backfires.
In high-pressure organizations, only 43% of employees are willing to go the extra mile, compared to 50% in lower-pressure environments [4]. Reduced commitment runs at 23% in high-pressure organizations versus 14% where the pressure is lower [4]. Pushing harder on people operating inside broken systems doesn’t produce performance. It produces disengagement.
The cultural obstacles are structural, not motivational. Forty-seven percent cite limited career progression as the biggest barrier to high-performance culture. Forty-three percent point to a lack of targeted incentives. Thirty-eight percent identify disengaged employees, and the same percentage flag rigid performance-management systems [4].
Only 20% of leaders believe non-financial rewards significantly affect performance [4]. That belief gap matters. It means the vast majority of leadership teams are designing incentive systems around financial levers while ignoring the structural friction that makes performance difficult regardless of compensation.
What Simplification Actually Requires
McKinsey’s data contains a ratio worth remembering: for every $1 spent on technology, organizations should invest $5 in people [5]. Organizations that prioritize people alongside technology are four times more likely to maintain top-tier financial performance [5].
Human-centric leadership drives a 56% increase in employee satisfaction and a 42% improvement in decision-making quality [5]. Those aren’t soft metrics. Decision-making speed and quality are the operating system of every product organization.
Simplification starts with three concrete moves. First, audit decision rights. Map every decision that requires more than two approvals and ask what would break if one layer disappeared. Most of the time, the answer is nothing. Second, measure coordination cost directly. Track the percentage of time teams spend on internal alignment versus customer-facing work. If alignment exceeds 30%, the structure is consuming its own output. Third, treat process removal with the same rigor as process creation. Every new committee, review board, or reporting cadence should carry an expiration date and a measurable justification.
In my article on Decision Velocity Infrastructure, I argued that the speed and quality of decisions determine organizational throughput. Complexity is the friction that infrastructure must overcome. Reducing that friction isn’t a one-time project. It requires the same continuous attention organizations give to technical debt in their codebases.
The Structural Truth
Organizations don’t become complex because leaders want complexity. They become complex because every local decision to add structure, process, or governance made sense at the time. Nobody schedules a meeting to make things worse. But the cumulative effect of thousands of reasonable decisions is an unreasonable system.
Two-thirds of leaders already know this. The question isn’t awareness. It’s whether organizations can treat accumulated decision debt with the same urgency they bring to financial debt. Because unlike financial debt, decision debt doesn’t show up on a balance sheet. It shows up in the 23 hours of weekly meetings, in the 20 to 30 percent of operating expenses lost to friction, and in the AI deployments that automate dysfunction instead of eliminating it.
Commitment to simplification without structural change is just another decision that adds to the debt.
Ralph Jocham is Europe’s first Professional Scrum Trainer, co-author of “Professional Product Owner,” and contributor to the Scrum Guide Expansion Pack. As an ICF ACC certified coach, he works with organizations to build Product Operating Models where strategic clarity, operational excellence, and adaptive learning create measurable competitive advantage. Learn more at effective agile.
References
[1] McKinsey & Company, “The State of Organizations 2026: Three Tectonic Forces That Are Reshaping Organizations,” McKinsey, 2026. https://www.mckinsey.com/capabilities/people-and-organizational-performance/our-insights/the-state-of-organizations
[2] McKinsey & Company, “Want to Break the Productivity Ceiling? Rethink the Way Work Gets Done,” McKinsey, 2026. https://www.mckinsey.com/capabilities/people-and-organizational-performance/our-insights/want-to-break-the-productivity-ceiling-rethink-the-way-work-gets-done
[3] Perlow, L., Hadley, C., and Eun, E., “Stop the Meeting Madness,” Harvard Business Review, July-August 2017. https://hbr.org/2017/07/stop-the-meeting-madness
[4] HRZone, “McKinsey’s State of Organizations 2026: 75% Fail to Build High-Performance Cultures,” HRZone, 2026. https://hrzone.com/mckinseys-state-of-organizations-2026-high-performance-cultures/
[5] UNLEASH, “McKinsey’s The State of Organizations 2026 Research: Three Decisions to Make Now,” UNLEASH, 2026. https://www.unleash.ai/strategy-and-leadership/mckinseys-the-state-of-organizations-2026-research-three-decisions-to-make-now/