More Layers, More Handoffs, More Overhead: How Complexity Takes Over a Company, and the Executive a Simpler One Needs

No company sets out to become complicated. Complexity builds up one reasonable decision at a time, until the organization spends more energy coordinating itself than serving customers. This week two of America’s largest grocers said so publicly. AI is now giving every company a way to simplify, and a simpler company needs a different kind of executive to run it.

On October 12, Kroger CEO Greg Foran told employees the company has “more layers, more handoffs and more overhead than we need.” Kroger will cut about 3,000 corporate jobs over the next three years to create “broader roles and faster decision making,” and the memo says the company will use technology to reduce duplicative work (Grocery Dive, October 12, 2026).

The next day, Albertsons reported its third straight quarter of slowing comparable sales. CEO Susan Morris said part of the problem came from earlier changes that added complexity, unnecessary processes and higher costs. Executive chair Meg Whitman said the company “must become a simpler, more focused company that gets the basics right every day” (Grocery Dive, October 13, 2026). Albertsons had already been consolidating 11 divisions into four regions and folding media and marketing into merchandising to speed up decisions (Grocery Dive, October 2026).

These are multibillion-dollar retailers, but the same thing happens at a $30 million brand. I see it often in my work as a fractional CEO, COO and CMO. The difference is that a smaller company can see it coming and choose a different path.

What is organizational complexity?

Organizational complexity is the gap between how simple the work should be and how many people, layers, approvals and handoffs it actually takes to get it done. Some complexity is necessary. A company that sells in three channels and makes products in two plants will never be as simple as a startup. The problem is the complexity that serves the organization instead of the customer: reports nobody reads, roles whose main job is to pass information to other roles, and decisions that need three meetings to make.

Foran’s phrase is a good test. Layers slow decisions. Handoffs lose information and accountability. Overhead takes money that could go to price, product or people. All three show up long before anyone calls it a problem.

How complexity gets out of hand

Complexity rarely arrives in one big decision. It builds up in small, sensible steps.

A company grows, and the founder can no longer see everything, so a management layer is added. A launch goes badly, so an approval step is added to make sure it never happens again. Two teams don’t talk to each other, so a coordinator role is created to connect them. A new system goes in, but the old spreadsheet stays “just in case.” A senior leader wants visibility, so every team starts producing a weekly status report. Each of these makes sense on its own. Together, they create an organization where the people closest to the customer wait on people further away from it.

Three warning signs show up first. Decisions get escalated that should be made one level down. More time goes into preparing for meetings than into the work the meetings are about. And when something goes wrong, it takes a long time to figure out who owned it. When those signs appear, the company is paying what I call the complexity tax. It doesn’t show up as a line item, but it shows up in slower launches, missed shelf resets, frustrated retail partners and good people who leave because they can’t get anything done.

Albertsons is a useful example because its leaders were candid. The complexity didn’t come from neglect. It came from changes that were meant to help. That is exactly why complexity is so hard to see from the inside.

Why the push for simplicity is happening now: AI

Companies have always tried to simplify. What is different in 2026 is that AI can take over much of the work that the layers were built to do.

Gartner predicted in 2024 that through 2026, one in five organizations would use AI to flatten their structure, eliminating more than half of their current middle management positions (CIO Dive, October 22, 2024). The trend is now visible. Manager headcount fell 6.1% between May 2022 and May 2025, according to Live Data Technologies, and Gallup found the average manager’s number of direct reports rose from 10.9 in 2024 to 12.1 in 2025. Google reported 35% fewer managers overseeing small teams year over year (Forbes, June 30, 2026).

Coinbase CEO Brian Armstrong went further. In May he replaced what he called “pure managers” with “player-coaches,” capped the company at five layers and moved to an employee-to-manager ratio of 15 to 1, with some teams made up of one person directing AI agents (Fortune, May 5, 2026).

Not every cut is about AI. Some analysts say many of these reductions are a correction after years of pandemic-era overhiring (Forbes, June 30, 2026). But the direction is clear, and it is reaching consumer products companies too.

What AI can replace, and how it makes executives more productive

A lot of middle management work is moving information around: collecting updates, consolidating reports, translating data for the people above and passing decisions to the people below. That work exists because executives couldn’t see the business directly. AI is changing that.

Liquid Death offers a clear example from the beverage world. At Advertising Week this month, Benoit Vatere, the company’s chief media and digital commerce officer, said he can now check what is happening in the business without relying on Slack, writing his own queries or asking his team to post updates. Retail media optimization moved from weekly or twice-weekly reviews to daily. His goal is to run a sizable media budget with only two people in-house (Marketing Dive, October 7, 2026).

That is the real productivity gain. When an executive can ask a question and get an answer from the data in minutes, several things change at once:

In practice, AI lets a smaller group of capable people do the work that used to require a larger hierarchy. Executives spend less time waiting for information and more time acting on it.

Download the Complexity Tax flip-book (PDF)Download

What AI doesn’t replace

AI doesn’t replace judgment, relationships or accountability. It won’t sit across from a retail buyer during a line review, settle a dispute with a co-manufacturer or decide which of two good opportunities to walk away from. It won’t build trust in a team going through change.

There is also a real risk in flattening too fast. In a Korn Ferry survey, 41% of employees said their company had cut management layers, and 43% said leadership alignment had suffered. DDI found leadership bench strength at just 20% (Forbes, June 30, 2026). Removing layers without changing how leaders lead just moves the complexity onto fewer, more overloaded people.

That is why the most important question isn’t how many layers to cut. It is who should lead the organization that remains.

A simpler organization needs a different kind of executive

For decades, the path to the top ran through managing managers. Senior executives were valued for running large organizations: setting direction, reviewing work, allocating resources and holding people accountable through layers of reporting. That model made sense when information moved slowly and the executive needed a hierarchy to see the business.

In a flatter, AI-enabled organization, that model breaks down. With fewer layers between the executive and the work, there is no one to delegate the details to. The leader has to be closer to the work. The best word for this is hands-on.

A hands-on executive looks different from a manager of managers in a few important ways:

They do some of the work themselves. They build the forecast, join the retailer call, review the co-manufacturer’s scorecard and write the brief. They don’t just review other people’s versions of those things. Armstrong’s “player-coach” label fits: someone who plays and coaches at the same time.

They read the data directly. They don’t wait for a monthly deck. They use AI tools to ask their own questions, which means they spot problems earlier and ask better questions of their teams.

They own outcomes, not departments. In a simpler structure, roles are broader, which is exactly what Kroger said it is aiming for. The executive is responsible for a result, such as margin, velocity or on-time delivery, across functions rather than for a box on the org chart.

They coach by working alongside people. With wider spans of control, there is less time for formal oversight. Hands-on leaders develop people by solving real problems with them, which also helps rebuild the leadership bench that flattening can erode.

They are comfortable making decisions with less process. Fewer layers mean fewer checkpoints. That requires experience and judgment, because the safety net of multiple reviews is gone.

I wrote earlier about why leading managers isn’t the same as leading executives. The shift now is that many companies need fewer people who lead managers and more who can lead and do at the same time.

What this means for growing consumer brands

Most food, beverage and consumer products companies between $10 million and $200 million in revenue are at a turning point. They are big enough to start adding layers, but not so big that the layers are locked in. That gives them a choice large companies like Kroger and Albertsons no longer have.

Instead of building the traditional hierarchy and paying to undo it later, a growing brand can stay lean on purpose. Pair a small, capable team with AI tools that handle reporting and coordination. Then put hands-on executives at the top who can make decisions with direct access to the data. This is the same idea behind scaling without bloat, now with better tools to make it work.

This is also where fractional executives fit naturally. A fractional CEO, COO or CMO is, by design, a hands-on operator. There is no team of direct reports to delegate to and no time for layers of process. The role works because an experienced leader steps directly into the work, makes decisions and builds the capability of the team around them. For a growing brand that wants senior judgment without adding a layer of permanent overhead, that model fits the simpler organization this moment calls for.

Frequently asked questions

What is organizational complexity?

Organizational complexity is the gap between how simple the work should be and how many layers, approvals and handoffs it actually takes to get it done. Some complexity is necessary, but much of it builds up over time through well-meant decisions that end up serving the organization instead of the customer.

What are the signs that a company has become too complex?

Common signs include decisions being escalated that should be made at a lower level, more time spent preparing for meetings than doing the work, roles that mainly pass information between other roles, and unclear ownership when something goes wrong.

How is AI changing organizational structure?

AI can handle much of the reporting, tracking and coordination work that management layers were built to do. That lets companies operate with fewer layers and wider spans of control. Gartner predicted that through 2026, one in five organizations would use AI to flatten their structure, and Gallup found the average manager’s number of direct reports rose to 12.1 in 2025.

What is a player-coach executive?

A player-coach executive is a leader who does part of the work directly while also leading and developing a team. In a flatter organization, executives can’t rely on several layers of managers, so they need to be hands-on, read the data themselves and own outcomes across functions.

Can a fractional executive help simplify an organization?

Yes. A fractional CEO, COO or CMO works as a hands-on operator, which makes the role a good fit for a lean organization. An experienced fractional leader can identify where complexity is slowing the business, bring senior judgment to decisions and build the team’s capability without adding a permanent management layer.

Simple is a choice

Kroger and Albertsons are paying the complexity tax all at once. Growing brands don’t have to. AI now makes it possible to run a company with fewer layers and faster decisions, but only if the people at the top are willing to lead differently, closer to the work and with their own hands on the numbers.

If your organization feels slower than it should for its size, or you are deciding what kind of leadership your next stage of growth needs, I would be glad to talk it through. Start the conversation here.

Related reading: Scaling Without Bloat; Why Leading Managers Isn’t the Same as Leading Executives; The Need for Speed; and Subtraction Is a Growth Strategy.

Marc Drucker is a fractional CEO, COO and CMO who helps food, beverage and consumer products companies turn growth into a business that lasts. He is the author of “How Leaders Fuck Up Innovation.” Learn more at marc-drucker.com.

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