A few years ago a former colleague coined the phrase — “corporate tax.” He used it to refer to all the stuff you had to do once you were part of large organization. While small companies or startups are usually constrained by lack of funds and staff, large companies are typically hampered by internal processes, procedures, and polices. Collectively, all of these things make up the corporate tax.In the world of enterprise software, examples of corporate taxes include:

  • Localizing your product in languages none customers use
  • Certifying on platforms that only one or two customers use
  • Supporting inappropriate sales channels that don’t fit the product
  • Adhering to a release process that doesn’t suit the product
  • The list goes on …

Now, why do these taxes have to exist? The simple answer is: encapsulation. Large organizations are always a collection of silos. The silos can be loosely or tightly coupled but they always exist. Since each silo has to interact with the other silos, it would be inefficient and complex for each silo to have a separate policy for each of the other silos. To avoid this problem each silo creates its own polices and procedures and requires each of the other silos to follow them for its service.
For example, take the legal department. They may decide they need six months notice to review your export control application. Now, you may be an avant-guard agile development crew who can churn two releases in that time. In this case you have to pay the corporate tax resulting in waiting on legal to approve your work. Alternatively, you can ask for an exception to expedite your request, which may or may not happen.

Upon stumbling into a corporate tax for the first time most people initially try to find a way to avoid it or work around it. Personally, I have tried this many times with mixed success. Sometimes it works other times you waste more time and energy avoiding it, then it would have been to just live with it.

So what is the best way to deal with the corporate tax? After lots of trial and error, my recommendation is to embrace and accept the corporate tax. Small companies find a way to succeed in spite of having less money and less staff. Large companies can succeed, albeit at a slower pace, in spite of the corporate tax. Its counter intuitive to accept the inefficiency and live with it. The reality is the most efficient way to deal corporate tax is to accept it.