How the absence of a CCO feeds the bureaucracy

Over the last few years I have repeatedly seen a company with no commercial director, and with C-level heads from the operating side (and often not all of them at once).

Since I have usually run commercial organizations, I noticed a frightening pattern. Internal services try to “make” the commercial side play by their rules, at the expense of the business.

Long, complicated approvals where a decision needs to be fast. Endless corrections to a brief, with a mandatory lecture attached. Every form and regulation is “tuned” to reporting and safety, not to the result. Control and safety are, of course, critical to a business staying upright. Nobody is calling for anarchy. But when the tools of control start to be used at the expense of speed, flexibility, and the profit you could have made, you get an imbalance.

Why does this happen? Often, where there is no single commercial director, the CEO does that job. But the CEO has to deal with the heads of the support functions (finance, IT, legal) on the same level as mid-level commercial managers.

That is not an equal fight. The weight and authority of a top manager outweigh the voice of a department head. The CEO’s attention gets diluted.

In the end, the commercial functions carry a double load: competition and the uncertainty of the outside market, plus the concrete internal barriers of their own company.

I decided to check whether I was imagining it. Was this only my experience? I wanted to know whether such a thing exists in management theory. If it does, what it is called, why it happens, and how, for heaven’s sake, to fix it.

Here is what I managed to find.

The diagnosis: this is not a bug, it is an architectural error

What I had observed by instinct has long been described in management theory. It is not a conspiracy of “evil bureaucrats”, and it is not a question of bad characters. It is a system error in the design of the organization.

To see the point, you have to go back to the base. Michael Porter, in Competitive Advantage (a book on the strategy of competitive advantage, 1985), split the activity of any company into two types:

Primary activity: sales, marketing, production. The people who generate value and bring in the money.

Support activity: finance, IT, people, security. The customer does not pay for how perfectly your balance sheet ties out. The point of these functions is to lower the costs of the primary ones.

In a healthy company, the “support” functions serve the “primary” ones.

In the situation I described, the inversion happens: the support functions start to run the primary ones.

Why? The sociologist Robert Merton called this “goal displacement” (a concept in his work on the sociology of bureaucracy, 1940). The means becomes more important than the end.

The goal of the business: make money on a new product. The means of IT: a stable system. The means of finance: transparent reporting.

When the board has strong heads from IT and finance, and nobody from the commercial side (or the voice is weak), the “means” beats the “end”. Stability and reporting become more important than revenue. The tail wags the dog.

Why does the commercial side lose the internal fight?

Why does the CEO often side with the finance director or the operating director, and squeeze sales?

The answer is in resource dependence theory, described by Jeffrey Pfeffer and Gerald Salancik in The External Control of Organizations (a book on power and dependence in organizations, 1978). Power in an organization belongs to the person who controls uncertainty.

Control of the chaos. The operating director and the finance director control the inside world of the company. Budgets, regulations, the staffing plan. They create, for the CEO, an illusion of order and predictability. That is comfortable.

The source of stress. The commercial side works with the outside market. And the market is chaos. Customers are capricious, competitors are aggressive, the sales plan is under threat. Commercial people always bring bad news and risks.

Without a strong commercial director who could defend the right to take a risk, the system instinctively chooses the person who promises order, not the person who promises growth through problems.

The price: efficiency versus effectiveness

Where does this victory of administrators over entrepreneurs lead?

Peter Drucker, in The Effective Executive (a book on managerial effectiveness, 1967), separated two ideas that often get translated into Russian as the same word, though they mean different things:

Efficiency: doing things right. By the regulation, cheaply, without errors.

Effectiveness: doing the right things. The ones the market needs, even if that is expensive and difficult.

When service functions seize power, the company starts, with manic persistence, to optimize efficiency.

You get a perfectly tuned process for approving a contract, and it takes three weeks. The contract is flawless. The customer left for a competitor on day three.

You get a tax on action. The commercial resource is spent not on fighting the market, but on breaking through internal walls.

How to treat it: architectural decisions

If the problem is in the structure, the solution has to be structural. “Let’s all get along” will not work here.

1. Restore the balance of power (appoint a commercial director)

The commercial director has to be put back into top management. Not “the head salesperson”. An architect of revenue, who joins marketing, sales, and product. Their status has to equal the status of the finance director and the operating director.

On the board there should be a healthy conflict. The commercial director answers for growth (revenue), and the finance director for resilience (profitability). The system runs steadily only when these forces balance each other. If control of risk always outweighs the drive for growth, the business stops developing.

2. Change the paradigm: the internal customer

The principle has to be put in hard. The business unit is the customer. IT, legal, and finance are the contractor.

A contractor has no right to forbid the customer. A contractor can only present a bill, or warn about the risks.

Wrong: “Legal did not approve the contract.”

Right: “Legal priced the risks at 1 million rubles. The commercial director took the risk onto their budget and signed.”

That returns responsibility to the business, and the service function to service.

3. Remove the functional split (cross-functional teams)

The classic problem of large companies is “functional silos”. Lawyers sit in the legal department, developers in the technical one, and each defends the interests of their own department, not of the shared work. Information between them travels only through the top, which slows the work critically.

The solution is cross-functional teams. How this works as architecture:

Decentralize the resources. You take a lawyer, an analyst, and a developer, and you move them out of reporting to their functional bosses into operational reporting to the product leader.

Change the motivation. The most important part is the bonus. Before: the lawyer gets a bonus if the contracts have no errors. Their strategy is to block everything non-standard. After: the lawyer gets a bonus if the product hits the revenue plan. Their strategy is to find a safe way to sign the contract as fast as possible.

One window. The product team becomes an autonomous combat unit. They do not need to write a memo to the IT department and wait a month. They have “their” developer inside the team, who does the task here and now.

The role of the functional head. The head of legal stops being “the dispatcher of tasks”. They become a coach and a methodologist: they hire lawyers, train them, watch the standards of the profession, and they do not step into the daily tasks of the product teams.

The result of this architecture: the speed of decisions rises by a multiple. People stop playing football with tasks and start working for a shared result, because they are now in the same boat financially.

In short

What I watched for years is a classic “institutional trap”.

A company works at its most effective not when the commercial side does whatever it wants, but when there is a balance. A strong operating director (order) and a strong commercial director (growth) have to balance each other.

The problem appears only when the balance tips. When control starts to dominate development, the company becomes very correct, and it loses speed. In the conditions of 2026, getting that balance back is a necessary condition of staying competitive.