The Peter Principle is a concept in management theory which posits that people in organizations tend to rise to their level of incompetence. The principle is named after Dr. Laurence Peter, who formulated it in his 1969 book The Peter Principle: A Theory of Organizational Decline.
Especially in times of economic expansion, when demand for talent is higher than supply, organizations tend to promote more from within, exacerbating the Peter Principle effects. We even have a positive-sounding brand for this activity: We call it taking on “stretch opportunities”. They are a “stretch” because the person taking it isn’t yet a master of that work.
Now that we’re in the era of Quantitative Tightening, this voracious demand for talent is reversing throughout the entire economy. That means we’ll see a reversion in The Peter Principle throughout many organizations. I believe it will be especially stark in Growth Marketing orgs.
Many of this era’s growth marketers have never worked through a recession. They are used to being promoted quickly and being given ever-increasing budgets, while also having relatively lenient thresholds on performance (both individually and on the campaigns they run).
But in a recession, the opposite is true. Budgets get cut, people get laid off, and performance standards are increased. The Peter Principle will hit growth marketers hard over the coming year and is already doing so.
The key for growth marketers who want to avoid the worst over the coming year is to get ahead of the curve. Increase your personal “cost to value ratio” as much as possible. Raise your own standards on campaign efficiency and profitability. Make it clear to your team that you’re willing to do work that you’re already excellent at but have been trying to shed in the name of promotion. Most importantly, get emotionally ready for a very different kind of marketing environment. Use the challenging time ahead as source of motivation rather than something that unknowingly wears you down.
This Reversion of the Peter Principle in Growth Marketing orgs won’t be all doom and gloom. It will come with some useful benefits. It will create opportunities for us to do some of the highest quality work of our careers, strengthen the teams that surround us, and will fuel a new wave of creativity from us.
No matter what this reversion brings, we need to be prepared for it because it’s coming whether we acknowledge it or not.
Shout out to Andrew Foxwell and Courtney Vann for giving me feedback on this.