Working Memory Theory of Company

A company’s outcome is largely determined by how it allocates its working memory. In a similar way to how humans can only hold so many ideas at one time, businesses are limited in the same way.

In the early days, working memory is wholly dedicated to finding things that work - exploring. Once you find what starts to work, working memory is shifted to keeping those things that work going - exploiting.

The problem is that when operation begins to take over, that same competitive advantage of ideation that allowed you to find product-market fit now is now gone. Working memory is spent more on keeping the ship afloat versus increasing it’s speed or pursuing the right direction.

There’s 3 ways to solve this: people, processes, and tools.

People involves identifying those people whose time is best spent on ideation and then moving other people into operations so that the ideators can ideate.

Process involves creating a clearly defined set of steps to increase the accuracy and efficiency of operations allowing more time for the higher-leverage activities.

Tools involves creating software that executes operations for you. This is where I like to live and where I get most excited. Pre-AI, tools would create months to spin up. With coding agents, this is no longer the case. For the most complex tasks, you can’t spin up a stable solution in a day or even a week but you can do it far quicker than before. And when we can engineer complexity into simple solutions, working memory frees up and ideation begins to dominate yet again.