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Why Informal Systems Stop Working as Your Business Grows
- Lindsay Sheldrake
- Mar 31
- 5 min read
Updated: Apr 23
Welcome to Diary of a Leader: Real Stories, Leadership Lessons, and Personal Growth
There is a particular kind of exhaustion that comes from solving the same problem more than once.
Not a new problem. Not a harder version of an old one.
The exact same problem. Again.
Most founders have felt this. A client situation that mirrors one from six months ago. A breakdown in communication that got resolved and then reappeared. A decision that was made, communicated, and somehow never landed.
The instinct is to look at the people involved.
But in most of the businesses I work with, the people are not the problem.
The informal systems underneath the work are.
Welcome back to Diary of a Leader, where we explore what is really happening beneath leadership, growth, and the structures meant to support both.
This week is about why informal systems stop working as your business grows.
Not the obvious, dramatic version of that story. Not the moment something breaks catastrophically.
The quiet, compounding version. The one that shows up as repetition.
The Story I Keep Hearing
I was sitting with a founder recently who was walking me through a problem on one of their projects.
As she described it, something felt familiar.
I asked her when this had happened before.
She paused. Thought about it.
And then started listing dates.
Six months ago. Eight months before that. Twice the year before.
Same problem. Different project. Different people involved each time.
She had solved it every single time. Jumped in, resolved the situation, moved on.
What she had never done was ask why it kept coming back.
The answer, when we looked at it together, was straightforward.
The business had never designed a clear process for how this type of situation should be handled. There was no defined ownership. No standard for how information should travel. No agreed upon way for the team to resolve it without the founder.
So every time it appeared, the founder solved it.
And every time the founder solved it, the system reset.
Ready to create the exact same problem again.
What Informal Systems Actually Cost
Most founders think of informal systems as a temporary solution.
Something that works for now. Something they will formalize eventually when there is more time.
But informal systems are not neutral while you wait to replace them.
They are actively costing you something.
Every time a problem recurs because the process was never defined, the founder pays in time and attention. Every time a decision has to be made from scratch because there is no framework for how it should be made, the business pays in momentum. Every time a handoff breaks down because the standards were never established, the team pays in confusion and rework.
None of those costs appear on a spreadsheet.
But they compound quietly in the background.
And the founder, who is busy solving today's version of yesterday's problem, rarely has time to notice the pattern.
Until the pattern becomes impossible to ignore.
The Hidden Cost of Informal Systems in a Growing Business
Here is what makes informal systems in a growing business particularly costly.
When the business is small, informal systems work because the founder fills every gap.
They are close enough to everything to catch problems before they compound. They carry the context that makes informal coordination possible. They are the system holding the informal system together.
Then the business grows.
More people. More projects. More distance between the founder and the work.
The informal systems that once worked because of proximity now have to work across distance.
And they cannot.
The gaps the founder used to fill automatically are now too wide and too numerous to bridge informally. Problems that once resolved quickly start recurring. Decisions that happened naturally start stalling. Communication that used to travel on its own gets lost.
The founder keeps solving the same problems.
Not because anything suddenly broke. Because the informal systems that were always fragile finally have more distance to cover than they were ever designed to handle.
Signs Your Business Has Outgrown Informal Systems
This shows up differently in every business, but the pattern is recognizable.
You might be here if:
The same types of problems keep surfacing across different projects or teams
Decisions consistently travel back to you that should not require your involvement
Handoffs between people or departments are a recurring source of friction
New team members take much longer than expected to find their footing
You are often the one who knows where things stand on a given project
Quality or client experience varies more than it should
None of these are people problems.
They are structural signals.
The business is showing you exactly where informal systems have reached their limit.
The Question Worth Asking
Most founders in this situation ask:
Why does this keep happening?
The more useful question is:
What is the informal system underneath this problem and what would need to be true about how it is designed for this to stop recurring?
That question changes what you are looking for.
It usually reveals that the problem was never really about the situation itself.
It was about the system that kept recreating it.
Reflection Questions
Which problems in your business have you solved more than twice?
What do those recurring problems have in common?
Where does your business rely on informal coordination that worked when you were smaller but is starting to strain now?
What would need to be defined for the team to resolve those situations without you?
What are you still filling in informally that a designed system could hold instead?
Wrapping Up: The Cost Is in the Repetition
Informal systems do not fail dramatically.
They fail quietly. Repeatedly. In the same places.
And the founder who keeps solving the same problems is not failing at leadership.
They are paying the hidden cost of systems that were never designed.
The good news is that recurring problems are not just frustrating.
They are information.
They are the business showing you exactly where the informal system has reached its limit.
That information, seen clearly, is the beginning of something better.
You Don’t Need to Solve This All at Once
If this resonated, that is enough for now.
Awareness comes first. Clarity follows. Change comes later.
When you are ready to look at the structure underneath your business, that is where the real work begins.
When you're ready, you can reach out at SOLVED Collective.
Frequently Asked Questions
What are informal systems in a growing business? Informal systems are the undesigned ways work gets done inside an organization. They rely on proximity, relationships, and individual judgment rather than defined processes, clear ownership, or established standards. They work well when businesses are small but become costly as distance grows between the founder and the work.
Why do informal systems stop working as a business grows? Because informal systems depend on the founder being close enough to fill every gap. As the business grows, that proximity disappears. The gaps become too wide and too numerous to bridge informally. Problems that once resolved quickly start recurring because nothing was ever designed to hold them.
How do founders know when informal systems are costing them? The clearest signal is recurring problems. When the same issue keeps appearing across different projects, teams, or timeframes, it is almost always a sign that the informal system underneath has reached its limit. The founder keeps solving the problem but the system keeps recreating it.
Continue Reading
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Stay tuned for more real-world reflections on leadership, operational clarity, and purposeful growth in the next installment of Diary of a Leader.
