In 1967, economist John Kenneth Galbraith published The New Industrial State. At a time marked by the rise of large businesses, he broke with the vision of capitalism dominated by owners and shareholders. For him, real power no longer lay in the hands of shareholders, but in a new entity: the technostructure.
This term refers to the organizational layer composed of managers, engineers, experts, and planners who control the business on a daily basis. Contrary to the myth of the entrepreneur eager to have an impact on the market and the world, the technostructure does not aim for profit or the good of society. Its concern lies elsewhere: ensuring continuity—its own continuity—by reducing uncertainty with the primary goal of preserving its own existence.
Based on this analysis, Galbraith describes a mechanism that we have all had the opportunity to observe: whenever an organization becomes more efficient, it does not free itself but reorganizes and becomes more complicated. Margins, whether in terms of time, money, or energy, are immediately captured and reused solely for the benefit of the organization.
And if you’re wondering why I’m digging up such an old concept in 2025, it’s because it has perhaps never been more relevant, and a reminder never hurts.
In short:
- Galbraith identifies the technostructure (managers, engineers, experts) as the real center of power in large organizations, supplanting shareholders.
- The technostructure aims above all to ensure its own continuity, absorbing all margins (time, money, energy) to strengthen its internal functioning.
- Each gain in efficiency generates organizational complexity: instead of simplifying, the organization adds layers of control and coordination.
- This mechanism can be observed in large businesses, the public sector, and digital transformation, where tools intended to lighten the workload actually reinforce bureaucracy.
- The central issue is not only to increase efficiency, but to protect the resources freed up so that they truly benefit operational actors and not the technostructure.
The organization feeds on all gains
In Galbraith’s analysis, gains in efficiency never remain unused. When a task is simplified, the organization adds control steps; when a tool saves time, the time saved is quickly filled with meetings or reporting; and when a financial margin appears, it fuels new projects and new departments.
Thus, the technostructure does not return profits to individuals or shareholders: it recycles them into its own operations. The organization acts like a gluttonous monster, always ready to swallow up any available or newly available resources for the sake of its own growth or, at the very least, its survival.
The more there is to eat, the hungrier it gets, the more it eats, the more it demands to eat.
A machine that lives only for itself
It would be easy to see this mechanism as a deviation from the normal functioning of organizations. Galbraith shows, on the contrary, that it responds to a coherent logic: the technostructure favors stability over innovation and predictability over risk-taking.
Each additional resource becomes an opportunity to consolidate the system, reinforce the balance of power, and justify its workforce. As in the barrel of the Danaids, gains fill a void that can never be filled. The organization does not tolerate emptiness: anything that could appear to be room for maneuver, regardless of its nature, is immediately converted into a new layer serving the organization.
One could speak of an organization within the organization, but it is more complicated than that. An organization has bosses and leaders, whereas the technostructure functions as a diffuse collective, without embodied leadership, where power is distributed among experts, procedures, and control mechanisms. It is therefore everywhere but difficult to grasp.
A persistent pattern
More than half a century later, Galbraith’s concept has not aged a bit.
In large businesses, support functions are multiplying. An initiative intended to streamline the hierarchy results in an inflation of committees and procedures. The introduction of a new tool immediately generates a need for guidance, support, and training. I refer you to Yves Morieux, who has described the problem of organizational complexity better than anyone else (How to Manage Complexity without Getting Complicated).
The same mechanism can also be observed (and some would say especially) in the public sector. Each wave of administrative simplification paradoxically adds additional forms, controls, steps, committees, and agencies. Far from becoming lighter, the technostructure is becoming stronger.
Digital transformation also illustrates this trend. The promises of automation and fluidity lead to a proliferation of tools. Each automation requires new interfaces, the promise of fluidity leads to more time spent coordinating, and each tracking table leads to another tracking table. Far from creating leeway, digitization consumes it.
Who benefits from efficiency gains?
What Galbraith tells us is that the more efficient an organization becomes, the more inertia it gains. The gains are not released for the benefit of operational staff, but rather for the technostructure, which acts less as a tool in the service of a project than as an end in itself. It governs itself and absorbs all available resources to ensure its own reproduction.
This is what makes it so difficult to reform: any attempt at simplification and streamlining, far from reducing its weight, becomes a pretext for new management, coordination, or control mechanisms.
It is as if it were programmed to grow by feeding off the business.
Bottom Line
Galbraith understood that in a large organization, nothing is ever truly gained or saved. The margins generated do not remain available and are absorbed by the technostructure, which recycles them for its own operations.
This observation simply puts a name to something we have all experienced and observed: introducing new tools and automating processes is not enough. The real challenge is knowing how to protect the margins generated so that they benefit individuals, groups, operations, and useful investments, rather than being swallowed up by a bureaucratic machine whose appetite seems insatiable.
Galbraith therefore warns us against organizations that tend to become systems that grow for their own sake. The real issue in contemporary management is therefore not only one of efficiency, but also one of preserving and utilizing the space that has been freed up.
To answer your questions
Galbraith uses the term “technostructure” to refer to the group of managers, engineers, and experts who run large organizations. It is no longer the shareholders who hold the power, but this organizational layer, whose priority is to ensure its own continuity. It reduces uncertainty and absorbs all available resources to strengthen its existence, to the detriment of employees or shareholders.
Every saving in time, money, or energy is immediately recouped by the organization. Rather than lightening the workload or being redistributed, these benefits fuel new processes, services, or controls. The technostructure strengthens itself by recycling available margins, preventing them from truly benefiting individuals.
Instead of simplifying, each improvement in efficiency adds control steps, meetings, or committees. The organization adopts new procedures that make its operations more cumbersome. This mechanism transforms the business or administration into a machine whose purpose becomes its own survival, rather than the service it provides.
Digitization promises simplicity and time savings, but often produces the opposite. Each tool requires additional training, management, and coordination. Automation generates an inflation of software and tracking tables, consuming more resources than it frees up. The technostructure thus feeds on the margins created by digital technology.
Paradoxically, reforms aimed at simplification create new layers of control and coordination, and moreover, the technostructure has no real leader to target. It transforms any attempt at change into an opportunity for growth. This inertia explains the resistance of large organizations: nothing is ever really saved, because any resources that are freed up are immediately absorbed.
Image credit: Image generated by artificial intelligence via ChatGPT (OpenAI)
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