The coordination tax

Why the 10% is normal — and why normal isn't the same as fine.

There is a tax your company has paid every year since the day it split its commercial work into functions. It appears to have no return. No authority collects it, no one signs it off, and no line in your budget names it. You will not find its rate anywhere in your books and unlike every other tax you pay, no one in your company has ever been asked to bring it down.

In my last essay, I argued that nobody has ever seen the 10% — the famous share of revenue said to leak in the handoffs between marketing, sales, and customer success — because a leak is revenue that never happened, and systems only record what did. This essay takes the harder question that follows. If roughly every company loses something like that share, then the leak isn't an anomaly at all. It's normal. And here is the claim I want to defend: the leak is a tax — the standing cost of dividing commercial work between specialists — and because it is normal, nobody manages it. But a tax has a rate. Rates vary. And you have never checked yours.

Why the tax exists

Splitting the commercial motion into marketing, sales, and customer success is one of the best trades a growing company makes. Specialists get better at their piece than any generalist could; that's why the functions exist. Economists have understood the other side of the trade for nearly a century: as Ronald Coase and the transaction-cost tradition after him showed, every boundary where work changes hands charges a toll. Information decays in transit. Context gets re-bought. Incentives fragment into local scoreboards, each rational yet jointly incoherent. Inside a company, every handoff between functions is a miniature market, complete with the frictions of one.

So, a company paying zero coordination tax is not a well-run company — it's a company with no specialists. Zero was never the goal, and this is worth saying plainly, because the alignment industry mostly won't: the leak is not a scandal. It is the price of a structure that earns far more than it costs. The scandal, if there is one, is smaller and stranger — that companies which negotiate every supplier contract and optimize their actual tax rate to the decimal have never once asked what rate they're paying at their own internal borders.

Why does a normal cost never reach the agenda?

Think about what earns a place on a leadership agenda: variances, anomalies, things that changed. A cost that is universal, stable, and pre-baked into every plan has none of those properties. The coordination tax has four features that keep it invisible, and they compound.

It has no line item. The seam between two departments cannot appear on a P&L that is organized by department. It has no variance. It was there last year too, so it never trips the exception reporting that feeds agendas. It has no owner. Every function's number is somebody's job; what the numbers fail to add up to is nobody's. And it is already priced in. Every budget, forecast, and industry benchmark you compare yourself against was produced by companies paying the same tax, so paying it looks like par.

There's a fifth reason, and it's self-inflicted: the topic has been burned. Most leadership teams have lived through an alignment initiative — the workshop, the shared channel, the joint offsite — that produced good feelings and then evaporated by quarter-end. So, when the subject comes up, it files under tried that. Framed as an alignment problem, the tax isn't just absent from the agenda; it's mildly discredited on it.

Except the tax is on your agenda — under an alias

Here is what makes this a 2026 question rather than a timeless one. Look at what leadership teams say they care about right now: in Gartner's surveys of C-level priorities for 2026, increasing operational efficiency and productivity sits at the top of the enterprise agenda alongside growth, most CFOs put enterprise-wide cost optimization in their top five, and about half name improving forecast accuracy as a leading priority. Meanwhile, the same CFOs plan their largest budget increases for sales, with marketing close behind, because those functions are expected to carry growth.

Read those together. Companies are pushing more money through the commercial engine while declaring efficiency their first priority and forecast quality their chief anxiety. Nobody has "coordination tax" on that agenda. Everybody has their symptoms: why does growth cost more every year? Is the tax showing up in the spend? Why can't we forecast? Is the tax showing up in the numbers' refusal to add up? And note the arithmetic that follows from the budget plans — if the money flowing through the engine grows and the rate at the seams stays untouched, the absolute tax grows with it. You can hit every efficiency target inside every function and still pay more at the borders between them than you did last year.

Where the tax becomes visible: the buffers

If the tax never appears in any report, where does it live? In my experience, in the buffers. Watch a commercial organization closely, and you can see each function quietly pricing the tax into its own behavior. Marketing over-generates leads because it has learned that a share of them will die in the queue between definitions of "qualified." Sales pads the pipeline and hedges the forecast, because it has learned what happens to deals in the gaps. Renewal teams reach for the slight discount because a discounted renewal is a win on their scoreboard, and the erosion lands on nobody's. None of this is misconduct — it is each function rationally self-insuring against the seams. The buffers are the tax made visible. Add them up across the engine, and you are looking at the 10% — not as a statistic, but as a set of habits your own teams have already built around it.

I watched one of these buffers form over the course of a single year, in a sales-led motion. Leads came in faster than a busy sales team could work them, queued, and quietly cooled — they died of waiting time, not quality. And each planning round answered the same way: more volume at the top, the buffer swelling to cover an operational drag that no report measured — because in the system, a lead that cooled in the queue and a lead that was never any good looked exactly the same.

Normal is an average, not a fate

Now the turn. Everyone pays energy costs, too; energy efficiency still makes board agendas, because the rate varies and the rate is a choice. The 10% is a mean across companies paying very different effective rates. Some engines run their handoffs on one customer definition, one pipeline, one scoreboard, and pay a low toll at each border. Others pay a premium at every seam and have benchmarked themselves into believing it's normal, because against the average, it is.

That reframing changes what's worth doing. The prize was never the whole 10%. Anyone promising to eliminate the tax is promising to eliminate specialization. The prize is the spread: the difference between the rate you're paying and the rate a well-connected engine pays. That's a smaller claim than the alignment industry makes, and a more honest one — and it has a practical consequence. You cannot know the spread without knowing your rate, and your rate, as the last essay argued, is not in any system you own. A tax you intend to manage needs the thing every other tax gets: an assessment. Measured from evidence rather than self-report, on a scale that stays constant, so that when you re-measure next year, the word "improved" means something.

And when the assessment finds a seam where the toll persistently exceeds what the specialization buys, the fix follows from the framing. You don't lower a structural tax by exhortation — that's the alignment workshop, a treaty between functions that collapses under quarter-end pressure. You lower it by redesigning the border it's charged at: one definition of the customer, one definition of pipeline, one metric layer that the functions share. Structural costs get structural fixes. Everything else is asking your teams to absorb the toll and calling it culture.

The only question left is the rate.

So the chorus is half right. The leak is real, and it is roughly where they say it is. What the chorus misses is that it was never an anomaly to be purged — it's a tax that came with the org chart, which is why fifteen years of alignment campaigns haven't put it on the agenda and why your benchmarks have made it invisible. You have been paying it every year either way, and you'll pay it next year, too. Whether you pay this year's rate or a lower one is the only part that was ever up to you — and it starts the way every tax question starts. With an assessment.

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