[Life Back West – March 2010] Size Matters – Even at the Bus Stop

There is size that counts, and size that doesn’t: this is a post about size that counts.

And where size counts most (apart perhaps from your bank account and the quality of life/family /health measures) is the number of people in a team, group, or organization.

This tale about size starts with a story and ends with a bus stop: bear with it – it’s a story that applies to you too.

A few years ago I had lunch to catch up a friend I’ll call Jake, who I know from when we were both at Oregon State. He works with what I think of as one of the best, most diligent, and most earnest financial services firms in the United States. In many respects, Jake and the firm are alike: both work hard at doing the right thing.

When we met he mentioned that the firm was doing well, and growing: growing so much that they would soon push past 150 people in headcount, and change office lay-outs to move to multiple floors. I suggested that if there weren’t doing it, the firm should be revisiting how they managed the people side of the business, and offered the thought that relative anonymity of what was a close-knit group would increase, and the serendipity of “ran into” conversations would decrease. Last, I suggested that “plumbing stuff” like staffing and internal communications could probably use a revisit as well.

Jake is polite, and I’m sure he thought I was (just) some whacked-out guy who does exec coaching, works with teams and groups, and has a grad degree that didn’t come from HBS or Stanford’s GSB. We went on our ways, and didn’t see each other for a couple of years.

When we caught up again his firm was now over 185 people, and from what I could decode from Jake (who is pretty understated and not exactly a grouser), the sense of everyone knowing everyone in the firm had gone south. It also sounded like interactions in the firm had become focused on subgroups, rather than the firm as a whole – so cross sharing of ideas and leveraging of talents and experiences had dropped. And my guess is that the effectiveness of plumbing processes like staffing, particularly around “culture fits,” had dipped as well.

Smart people, smart firm, and stubbed toes. What happened?

Organizations like workgroups, teams, and companies have certain proximate size points where things change: size really starts to matter. It’s at those size inflection points when  the number of people and their interactions, and the quality and quantity of those interactions, markedly shift.

The very old AT&T learned this lesson with telephone switching systems for cities: 1+1 = 2.5 or 3.0, not 2.0. Complexity, quantity, and quality all matter.

And it’s at these size points that leaders and group members need to take a pause and figure out what, if any, changes need to be made. People get into a mode of operating at home or in organizations (employee communications, all-hands meetings, staff meetings, new hire orientation, holiday parties, etc.) and as things scale they keep on doing things the same way, just bigger and / or more.

The potential new hire interview, for example, which worked well with all 5 people in the firm now becomes the new hire interview with the 30 people in the firm – and it doesn’t work so well, even apart from trying to get on everyone’s calendar. One company I know  literally shuts down for three weeks per quarter for the top 200+ managers to sit through a series of status updates: the process worked fine when the company was at 150 people, it just doesn’t work so well now that the company is over 3,000 employees.

It would be simple if just doing more was the more effective or efficient way of doing things: it’s not. The goal for leadership (and everyone else) should be to work smarter, easier and do more – not work harder and do less.

My experience has been that the group of 4 or 5 (think founders of a company) start to shift when the group hits 12-15. Another shift seems to occur around 30 people, another around 50, another around 150, and another around 300. After 300 people it’s just a whole, different, ball game and all bets are off. (And by the way, there are solid evidence-based reasons behind all these trigger points.)

Add multiple locations, multiple time zones, different physical locations, and maybe a cultural / language difference or two and the size points can come earlier and harder than usual.

Decades ago 3M limited the size of their plants to 150-300 people. Why? Bad things happened when the plants got bigger than that number, and good things happened when folks stayed within that range. When I headed up HR for McKesson’s $13B distribution business, you could take all the distribution sites that were between 90-150 employees and assume that their performance statistics were top quartile. Why? Big enough to gain some efficiencies, small enough to sustain sense of community and accountability. Who didn’t perform so well? Mostly small sites (no leverage of numbers) and big sites (less community and less accountability).

The ability to have a second sense about size points  applies to all sorts of things beside work, but it’s on the job  (caution: self promoting pitch coming) that it’s really helpful to have gray hairs around. You want the people who do organization stuff working with your firm to have this type of wisdom. While it’s true it’s not rocket science, it is about experience. “Good decisions,” a wag once suggested, “comes from wisdom.  Wisdom comes from bad decisions.”

For most for profit-seeking companies the one luxury you can’t afford – at least if it’s a competitive business outside of fine wine making – is time. And it’s wisdom that buys you this sort of organizational time, not more money, or more smarts, or the latest technology. If you don’t have it, get it!

And when you know what happens at different size points you start to understand how people behave, and what you can and can’t count on to happen.

My son’s Traylor’s bus stop in Noe Valley has 12 sets of parent(s) that consistently do drop off with around 20 kids. It is about a 10-15 minute encounter five schools days a week. (And 12, by the way,  is my favorite number for board size and near the upper limit for most groups that are really effective teams).

At 12 people you know that people will notice and account pretty much for everyone, so things like missing kids or families get seen  – as does the late straggler running down the hill to catch the bus. Communication around any school events circulates pretty easily, because your span of possible contacts is a narrow – but too narrow – focus. It’s also a broad enough circle to cover a lot of ground. I also know that if I need some help – as I did last week with pick-up – there are lots of options of people I really know (the narrower focus) and trust (since I’ve got a sense of parenting competence, the reliability, and personal motive).

Scale the number down to 5 or 6 parents and stuff like options and back-ups degrades substantially because you lack critical mass. Scale it up to 20-30 and things like missing kids/families don’t get noticed because the time duration is short for the number of people involved.

Each of the size points mentioned above have predictable characteristics, and every size point has both advantages as well as some liabilities. Understand the effects of size on groups and you frequently can anticipate the group’s behavior.

Understand the effects of size on groups andyou frequently can anticipate the group’s behavior.

And as I said, size matters – even at the bus stop.

Life Back West is an occasional set of writings focused on ways people, teams and organizations can be both more effective (doing the right thing) and more efficient (doing the right thing well). More about executive and team coaching services can be found at the “About J. Mike Smith and Back West, Inc.” sidebar or the “Hire Me” tab above.

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