In a meritocracy, people are rewarded based on their abilities, skills, accomplishments and achievements.
In a bureaucracy, regulations and systems rule. People are rewarded based on politics and seniority.
When I worked for investment banking firm Montgomery Securities in the 1990s, it was a meritocracy. You were given as much responsibility as you can handle and if you performed, you were rewarded financially and promoted. This created growth and success.
You have to be a certain kind of person to survive in a meritocracy. It’s sink or swim. But if you swim, your success has no boundaries.
The firm eventually merged with two very large commercial banks. These were two notorious bureaucracies. Every decision required layers of approvals. Those rewarded were those who had been there for a long time, whether or not they were the most effective at their jobs.
When you build your business, think about whether you want a meritocracy or a bureaucracy.
Meritocracies can create an incredible advantage for businesses and allow the small guys to compete against the big ones.
As you choose your business partners, understand what kind of organization they have and how decisions are made. What kind of individuals and companies do you want to align yourself with?