Platt Perspective on Business and Technology

Moving past early stage and the challenge of scalability 15: developing and scaling up a business past a Dunbar’s limit headcount

Posted in social networking and business, startups by Timothy Platt on January 22, 2013

This is my fifteenth installment in a series on building a business for scalability and long-term success (see Startups and Early Stage Businesses, postings 96 and scattered following for Parts 1-14.) I said at the end of Part 14: developing and maintaining the will to change and to scale up that I would be returning to further discuss business scalability and I begin doing so here with a posting that also brings up issues of Social Networking and Business. And I begin here by noting two extreme points that we tend to simply take for granted:

• When you look at a startup and the group that is engaged in building and running the organization, everyone there knows everyone else. And many of the interpersonal relationships that are found in these groups are longstanding and complex. Everyone there really does know everyone else and not just as recognizing a connected name and face in passing.
• When you look to a major corporation you see people in crowds, with everyone purposefully streaming from their one recent place of activity to their next. And most of these people know only some or even a small few of the people they pass and certainly when they are in the company facilities but away from their own usual work areas. Larger corporations become communities of strangers – of people perhaps recognized for their recurring familiarity but not actually interpersonally known.

From a social networking perspective, scaling up a business and certainly from small group startup to large corporation and even multinational is a series of processes in which interpersonal connectedness changes, and both incrementally and profoundly. And if you look at the overall workforce communities involved in businesses as they scale up over time, you see what amounts to a series of phase transitions that are as dramatic and profound for their qualitative shifts as you see in thermodynamic systems as for example when a gas changes to a liquid or a liquid to a solid. As the headcount expands you, for example, see a transition where a business community goes from an “everyone knows everyone else” state to one in which the larger overall community divides up into smaller groupings where people know each other within their local community, but much less so or not at all between them. And this has profound implications.

I have written in earlier postings about Robin Dunbar’s limiting number: the outer-limit number of individuals with which any one person can simultaneously maintain active social relationships (see for example, Robin Dunbar and the Limits to Social Networking – a fundamental question of purpose and definition. I would argue here that:

• When a business’ in-house community is small enough so that everyone can and does know everyone else socially, and when anyone can directly reach out to anyone else should real need arise,
• Communications systems and patterns tend to be much less formal, and operational systems tend to follow suit.
• But when a business’ in-house overall community begins to fragment into local social networks with much less social interconnection between them
• Communications systems and patterns have to become much more organized and rules-based and operational systems have to follow suit for that too.

I tend to argue the need for building organization in from the beginning, and one of the reasons I stress that which I have not perhaps fully articulated is that when a startup begins entirely ad hoc, it can hit a wall in not being prepared for growth as its community expands – and ad hoc suddenly becomes unsustainable as a social connectivity phase transition point is reached. And this all too often arises as miscommunications and failures to even try to communicate in appropriate directions within the overall organization begin to emerge.

• A business can be defined in many ways and one of them is as a community, and as being built around effective communications flows.
• Smooth scalability processes and progressions depend on anticipating and preparing for change in both the types of communications systems needed and the types that are in fact even possible.
• And to the extent that Dunbar’s number represents a valid and even immutable outer limit as to how many people we can hold simultaneous significant social connectedness with, a more informal and ad hoc approach that might be tried in a small startup, is likely to really begin to break down by the time the overall business head count hits Dunbar’s 150 or so.

I am going to follow this in a few days with a series installment in which I will look at operational structures and systems and tables of organization, building that on the foundation of ideas discussed here. Meanwhile, you can find this and related postings at Startups and Early Stage Businesses. You can also find related material at Business Strategy and Operations and at its continuation page: Business Strategy and Operations – 2. And for the specific relevance of this series installment to the issues of business social networking, you can also find it at Social Networking and Business.

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