Platt Perspective on Business and Technology

Moving past early stage and the challenge of scalability 16: Dunbar’s limit and operational systems scalability

Posted in social networking and business, startups by Timothy Platt on January 28, 2013

This is my sixteenth 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 1-15.)

I began a more general discussion in Part 15 as to how Robin Dunbar’s limiting number: the outer-limit number of individuals with which any one person can simultaneously maintain active social relationships, impacts upon business scalability and its concomitant headcount expansion.

I focused there on communications patterns and noted how they change as headcount passes levels in which everyone can know everyone else, to situations in which the overall personnel of a business begin to divide up into local groups, with less interpersonal connection between than within them. I in fact wrote of business scaling and its concomitant headcount expansion as following a pattern of communications and social networking 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.” And at the end of Part 15 I began to discuss how this impacts upon operational processes and practices, and on what does and does not work. My focus there was on how scaling up towards an interpersonal connectedness and social networking capacity phase transition in an organization, correlates with a requirement for greater standardization and organization and a move away from ad hoc and one-off approaches and solutions. More precisely:

• The level of free-wheeling ad hoc decision making and follow through that can work for a small startup founders group and that might even seem essential at that stage, can bring everything into a chaotic halt if tried in a larger organization.
• And as an organization grows it reaches a series of watershed transition steps in which it has to develop to a next organizational level if it is maintain effective communications and functionality.

My goal in this posting is to take that discussion a step farther and at least begin an analysis of what types of operational standardization should be developed and with what priorities as headcount expands and as the communications and interpersonal connectedness patterns that arise from that create need for organizational consistency. And I begin that by posing a set of four closely connected fundamental assertions:

• There are operational-development best practices that define best routes to scalability for any organization.
• There is always opportunity for creating unique value-defining best practices for how a business scales up.
• Finding and pursuing the right scalability best practices can be a defining source of long-term business vitality and strength as a business scales up.
• And what constitutes best practices in this for a business depends on its basic business model in place and for the context that it operates in.

There are two possible approaches that I could follow in proceeding from here in this discussion. I could attempt to cover this topic on what amounts to a special case by special case basis, focusing on a series of specific business models and their application. Or I could attempt to outline a set of basic parameters that any significant scaling up of a business would meet if it is to stay focused and competitively effective and regardless of the details of its particular business model in place. I may very well come back to this discussion area to focus more specifically on one or a few specific business models that hold particular relevance, as specifically appropriate case studies or working examples. But my approach here will be to follow a more open-ended and broadly applicable approach. And I do this for the same reason that I eschew focusing on specific here- and-now state of the art technologies that would quickly be supplanted for relevancy or significance as the state of the art rapidly advances. State of the art business models advance rapidly too, and will definitely continue to do so as we proceed into this 21st century. But basic, fundamental principles are more likely to endure, and if not necessarily in all detail, then as points for systematically articulated disagreement and as tools for bringing new ideas into clearer focus. So with this explanation as to why I write what follows as I do, I continue this posting and series with a discussion of general parameters and considerations that would have to be adapted to the specific business model context.

• As a business scales up from a small and entirely interpersonally interconnected, single social group to a socially partitioned organization, a situation arises where barriers begin to arise that limit effective communications.
• These barriers form along lines that mirror the structure and divisions of the still early table of organization, and can leave the bulk of the inter-group conversation in the hands of those more senior managers and executives who still meet together as same-level team members and with their overall managers and ultimately with the CEO.
• That means that any communications between groups, at least along “official channels” can in an extreme case situation, be limited to what is filtered up the chain of managerial command within that group’s line on the table of organization, and be selectively limited for types of content and skewed for priority and presentation as well.
• So even when intra-group communications within socially connected groups of employee peers are good, inter-group communications between less-connected or unconnected individuals can become delayed and highly dysfunctional. And this has to limit any operational effectiveness.
• Within the basic parameters and strategic guidelines of the particular business model in place, the core requirement of effective operational scalability practices should be to maintain and improve communications and resulting functional responsiveness and both within and between socially networked and connected groups that arise within its overall personnel and across the organization as a whole.
• More effective overall communications and knowledge sharing means more rapid and flexible responsiveness and both in maintaining standard ongoing operations and in recognizing and responding to the unexpected, positive or negative.
• This is a place where effective information technology resources such as intranets and web 2.0 enabled intranets, and cloud-based collaborative information and knowledge developing and sharing resources can become the great enablers – and both for operational efficiency at the current state and stage of a business and for its development and as it scales up.
• Here, developing the right tools and implementing them in the right way has business model-specific as well as general and even generic goals and requirements. The basic goal here should be to enable a larger organization to still function as if were a smaller lean and agile business for its capacity to communicate and connect across scale-created internal boundaries.

I am going to continue this discussion in my next series installment and will also at least begin a discussion of business model scalability and evolution. 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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