The size of your team determines how it will behave

(This article is an excerpt from the draft of my upcoming book, Growthadox: Embracing Paradox to Unlock Personal and Business Growth, available as ebook and paperback in autumn 2023).

150 - the magic number.

Do organisational structures need to transform once they exceed 150 members in number?

Many companies experience growth that takes them past the 150-team member mark without them realising what’s happening to them.

Why 150? What is it with 150 that makes it significant?

The idea was first floated by British anthropologist Robin Dunbar (b. 1947), but subsequently popularised by Malcolm Gladwell in his book The Tipping Point.

Known as Dunbar’s number, the number 150 is a theoretical maximum number of individuals with whom a group can maintain a social relationship where each knows who each other is and how they all connect socially.

So - in a group of 150, it is still possible to know everyone else, understand their roles and their relationships with each other. Beyond that, forget it.

This number is pretty significant therefore when it comes to shaping organisational structures. With a team of 150 you can still manage with a relatively flat reporting structure, fairly informal communication processes and decision making.

Once you cross from the medium company threshold into large, the old ways just don’t work any more. You need a different way of managing communication, direction and decision making. What’s more, the people that worked well in that environment probably aren’t the same type of people that work well in the smaller team. “Things aren’t the same around here”, “It’s not what it used to be”, suddenly you’ve got 30% attrition and a stressed out recruitment team.

Gore Associates (makers of Gore-Tex among other things) apparently keeps manufacturing teams under 150 people. It found this size keeps people in touch with each other. If it needs more production capacity, rather than expand a team that’s at the 150 limit, it’ll start a new one.

Army regiments work in a similar manner. And just for good measure, Dunbar’s surveys of settlements in ancient times show a tendency to be limited at about the 150 number.

Good companies require effective teams to succeed. Most companies however grow organically and rarely do leaders stop and ask how the social relationships in their teams work and what the effect of growth on those relationships might be.

Complexity of groups is exponential

People often ask me what it’s like to have four kids. The answer is, it’s fantastic. Another point I make though is that a six-person family is exponentially more complex than a four person family. Here’s why.

When you first meet your partner, there is one relationship. Two people with one relationship.

If you then have a child, there are now three relationships. Mother < > Father, Mother < > Child, Father < > Child.

In a family of four, there are six relationships. In a family of six however the number of relationships rockets. To 15!

Our family mealtimes can have up to 15 different possible interactions going on. Everyone has to work harder to be heard and needs to be able to listen and wait their turn to talk.

It’s like this in startups. The more people you add, the more relationships are added, and most people don’t realise that the complexity is non-linear.

So what happens when you get to 50 people?

As it happens there’s a formula to work out the number of potential relationships. Where r is the number of potential 1:1 relationships and n is group size, the formula is this:

r = (n x (n-1)) / 2

50 people gives the following result;

(50 [group size] x 49 [group size minus one]) / 2 = 1225 [potential relationships]

1225 potential relationships!

Tripling from 50 people to 150 can increase complexity not three-fold but 10-fold! 10 times as many possible relationships.

Humans typically deal with the increasing complexity by creating more formal communication and relationship structures, the most common one being a hierarchy.

Just as Dunbar’s number is an inflection point in terms of the complexity of human groups, there are other inflection points to be aware of. An inflection point can be considered a turning point after which a dramatic change, with either positive or negative results, is expected to result

“It all changes when you get to 50 people”, said Alicia Navarro, at the time, CEO of Skimlinks at a talk she gave about startup growing pains. She’s right - in my experience, what you do to manage a team of 30 people is very different to what you do when you manage a team of 60. And 50 is a number that matters. It’s an inflection point.

I’ve seen this myself. At Bookatable we grew from 25 people to 170 people in three years. At HouseTrip we grew from eight people to 160 people in less than two years. I’ve worked in teams from less than 10 to working in larger companies with more than 2,000 people.

On each growth journey there were inflection points caused by the number of people in the company.

I’ve found that there are three company size inflection points that startups need to be aware of.

Whenever the organisation size goes past one of these numbers the dynamics change. What worked before doesn’t work now. Different skills are needed, different processes and different leadership styles.

You might find that you thrive in one group size but struggle in another. This is totally normal, and most people don’t realise that the group size itself has a massive effect on what’s needed to survive and thrive as a contributor or leader.

People that join a startup when it’s at 15 people sometimes find they don’t like the way things are changing when they get to 150 - or even 50 - people. They miss out on information, they are not included in as many decisions, there are process hoops to jump through and they just don’t like it. This is normal.

Many people don’t realise that you can predict how human groups will behave in different ways depending on how large they are. And because fast growing startups (or scale-ups) can grow every month, the dynamic changes without anyone noticing. Unless, of course, you know these inflection points exist - and that they matter.

It’s my opinion that in scale-ups that team dynamics change in a predictable way. I use the analogy of human settlement sizes to illustrate what I mean. I’ll list them below. This is the default progression that most teams will see unless they do something to the contrary. There are predictable inflection points where the team dynamics change.

The 3 inflection points; 7, 50, 150

There’s also a third inflection point to be aware of that happens very early in the startup journey: seven people. Seven,50 and 150- any time the group size increases (or decreases) around these thresholds - everything changes - and nobody realises!

Many companies start with a single founder. There is no group here so there is no group dynamic - just one person trying to do everything and wishing there were more hours in the day.

Then - there is a team…

2-7 people - The Hunting Party

In this small group size, it’s as if there is a hunt.

Imagine our ancestors out for the day tracking deer on foot. The group works together in real time with some (but only where needed) planning. A leader often emerges but really only if someone needs to be in charge and people follow a leader because they are willing for that person to be the leader.

Everyone has their own skills and contribution. Everyone is involved and everyone knows almost everything. The team has an objective to catch their prey and they work together on this common purpose using the skills and tools that they have at their disposal.

8-50 people - Family Huts

When the hunting party brings back its prey, it’s to a small settlement with a few huts, one for each family. Each family has a recognised leader that’s needed if required but most people still talk directly to each other, and everyone knows everyone else on first name terms. The elders might tell stories around the fireplace in the evening and not much organisation is required.

This is what the early stage of a startup is like once you get past seven people. There are distinctive groups who take on specific responsibilities and challenges - the tech team, the sales team, the marketing team etc. You need leaders for each group, but very little process is needed, and work gets done, albeit chaotically.

50-150 people - “The Village”

As Skimlinks’ Alicia Navarro said, once you get past 50 people, everything changes.

You now have to work at it so that people bond. You need to start developing processes to get stuff done. You try to channel communications. You have to broadcast more information. You start having to channel requests and instructions via group leaders. You have a more formal decision-making leadership team.

You now have a light hierarchy.

This is like a small village. In a small village there are specialist roles. The schoolteacher, the bar owner, the mechanic and so on. There are people in charge and there are more rules. You can still know everyone, what their role is and how they relate to each other, but you won’t know everyone on first name terms.

150+ people - The Town

After 150 (Dunbar’s 150), the village becomes a town.

Here, it becomes almost impossible to know everyone by name and to know what everyone does. Throughout history, humans have defaulted to a hierarchy system to organise themselves in larger groups. There are probably many exceptions, but it is very common to use a hierarchy as an effective organisational method.

In the town there are systems. Systems to make sure that repeated and expected events are handled with predictability. There are traffic lights, drainage systems, planning restrictions and street numbers. There are people in charge and there are people that work within more specialist roles.

So - in a group of 150, it is still possible to know everyone else, understand their roles and their relationships with each other. Beyond that, forget it. This number, like seven and 50 is pretty significant therefore when it comes to shaping organisational structures. With a team of 150 you can still manage with a relatively flat reporting structure, fairly informal communication processes and decision making.

Every company that scales will face these challenges. All fast-growing teams will experience similar organisational challenges as they reach and pass the inflection points.

Think about your own preferences and where you thrive.

Some CEOs that launch startups can really struggle in a big organisation. Some big company CEOs would struggle to launch a startup from scratch. We all have our sweet spot.

I’ve learned over the years that I am suited to Family Huts and Village Life. I can hunt if I need to, and I prefer not to be a townie (although I’m learning a new set of skills to perform better in larger groups). At heart, I’m more of a village dweller. That’s where my skills are best used. It suits my management style, partly because I like to do, partly because you need more political skill to succeed in town, less so in the village.

Whatever, your preference, pay attention to group size and what it does to your culture - you underestimate it at your peril.