When I was younger, I often heard the Peter Principle defined as follows, “Everyone rises to their own level of incompetence.” Thus, I saw it as a statement of the stupidity of corporations: that they promoted incompetent people. But that is not it at all.

Investopedia provides a far better definition of the phenomenon, “The Peter Principle is an observation that the tendency in most organizational hierarchies, such as that of a corporation, is for every employee to rise in the hierarchy through promotion until they reach the levels of their respective incompetence.”

It was only when the Peter Principle started to be applied to me I came to understand it. And it was then that I saw that it wasn’t an attack on the employee but on the corporation.

Peter Principle in High Tech

Consider this example, which I have seen in action many times. A computer programmer is hired by a company and they are great — a modern-day alchemist who manages to things done no one thought was even possible. So the company, wanting to reward this exceptional coder, promotes them to a programming manager. And this person is not great at the new job. To start with, they don’t like it because programming is in their bones. But also: they don’t know anything about management. They hate going to meetings. They think spreadsheets and reports are things people create because they don’t know how to code or that they’re just plain stupid. So, far from being a great manager, they are a bad manager — maybe bad enough to get fired.

Meanwhile, that same company probably has a mediocre programmer who would make a great manager. But they can’t be made a manager because it would be unfair. The mediocre coder would now be above the brilliant coder in the the hierarchy. The mediocre coder would make more money. The mediocre coder would be sent to conferences and fly business class. In other words, the mediocre coder will be better than the brilliant coder.

Hierarchy Destroys Diversity

The problem, of course, is that most companies have it all backwards. And a hierarchy is almost never the best way to structure a group. But you see the human tendency toward hierarchy. The World Wide Web was definitionally flat. It was, quite literally, a web. But once it became commercialized, it turned into a hierarchy. The vast majority of people on the internet spend the vast majority of their time on the top 100 websites.

And it’s built in. If you are on Facebook, why? Why not another platform? Because Facebook is only useful if everyone is there. It isn’t just a monopoly, it’s a company that can only exist as a monopoly. There is absolutely nothing technologically interesting about it and that has been true from its very idea. It provides Sudoku Meaning to people. But it’s also herd mentality. Have you ever noted the shape of a stampeding herd?

The point is the hierarchy — this idea that we need one. The fact is that it is much easier to find a good middle-manager than it is to find a good programmer or other creative. But because we think the hierarchy is natural or right or whatever, we must put the creatives at the bottom. We must pretend that although necessary, they aren’t worth that much. Hence, companies try to turn exceptional creatives into exceptional managers, but end up with mediocre (and generally unhappy) managers.

We Need a Better System

There are better ways, of course. The most obvious is the ecosystem. It is typical of the stupidity of man that the lion is referred to as the “king of the jungle.” (And that makes no sense given that lions don’t live in the jungle, tigers do.) That’s not the way the jungle works. Yes, there are apex predators. But everyone dies and is eaten. Humans think they control this planet? Ha! Insects and bacteria.

But there is no reason that a manager of programmers should necessarily make more than any given programmer. Especially if you want to believe in a meritocracy (and we don’t have one and can’t have one), you should see this. A programmer working alone can revolutionize the world. A manager working alone can’t do anything at all.

In a company however, you need lots of people doing lots of things. And doubtless, some of those people are worth more to the company than others. But the hierarchy doesn’t come close to modeling this. An ecosystem does.

The Lost in America Reversal

There’s a scene in Lost in America where this idea is put on its head. Albert Brooks plays an idiot, as usual. He’s a great advertising creative and gets upset when he isn’t going to be promoted to management. And his supervisor tells him plainly that Brooks is too talented a creative to lose him to management so he promoted someone with far less ability.

And that’s the way it should be. Except it shouldn’t be that the other guy was “promoted.” There should be an ecosystem where everyone plays their role — doing what they like and are good at. And if that means a lowly coder makes as much as the vice-president of finance, so be it. (Note: the vice-president of finance is just at the top of a huge group of people. So he isn’t actually doing any more work than the coder, and isn’t necessarily any more important — even if the vast bureaucracy he leads is).