Why is Dunbar’s number the most important number for founder led businesses?

Are you the founder of a business that seems to have hit a growth ceiling? Are you confident the market opportunities are there, but every time you push for growth, it’s a case of 2 steps forward and 2 steps back? This is a problem faced by many founders who’ve become integral to the whole operation of their business. It doesn’t matter how great you are as a leader or how hard you work, there comes a point where you can’t get the best out of your people unless you take a more systemic approach…

I was recently talking to the founder of a business that’s been hovering around 90 people for a few years. She was complaining that so much of her day is currently taken up with resolving inter-personal issues and trying to get people to apply a bit of common sense and work together.

Her real frustration is that every time she adds a few more people to her business, rather than delivering more and better work, her problems seem to multiply.

When she started out, one of the things that excited her was bringing people into her company and growing the team. But now she’s at 90 people, there are times when she reminisces about the good old days when people just got on, when they worked together as a team and when it was a lot easier to get work done.

Does this sound familiar? Well don’t worry, this is a common problem in founder led businesses that seem to hit a growth ‘ceiling’ and we know a way to fix it.

Why 150 is the magic number…

Before we look at what you can do about it, let me quickly introduce you to a concept called Dunbar’s number (named after the the Anthropologist Robin Dunbar)…

Dunbar’s number is about 100–150. Dunbar’s view is that this is the maximum number of stable relationships that an individual can maintain.

Groups of less than 100 people can operate cohesively by using informal, reciprocal exchanges to regulate behaviour. People understand where they sit with each other and they can moderate their relationships so everyone gets along.

But once groups get bigger than 100–150, the human brain no longer has the capacity it needs to keep on top of ‘who owes who a favour’, ‘who should I ask for help’ and ‘who’s in with who’. To continue to function effectively the group needs to resort to an outside authority or some established rules.

When you were small, the lack of structure, the informality and sense of equality meant you could get work done quickly.

But as you’ve grown beyond 50+ people, you’ve got a level of social complexity that means you’re no longer collaborating as effectively as you once did. It’s likely that new joiners find it especially difficult to navigate your organisation and get up to speed.

The key thing to recognise is that the reason Sally in Marketing isn’t talking to Jane in Sales isn’t because there’s a personality clash. If you changed the individuals, the problems would resurface, because these types of problems are symptoms of your culture.

The key thing to recognise is that the reason Sally in Marketing isn’t talking to Jane in Sales isn’t because there’s a personality clash. If you changed the individuals, the problems would resurface, because these types of problems are symptoms of your culture.

So what can you do to start busting through that growth ceiling?

If you want to grow your business past 100–150 people and to operate at pace, you need people to collaborate effectively. To do this you have to develop new aspects to your culture — you need to start deliberately engineering your people operating system or peopleOS …

Successful companies have an effective and coherent peopleOS — a set of management practices and ways of working that help them to:

• Attract, align and retain the talent they need to be successful
• Enable people to work effectively so that they can deliver on what’s been promised to customers and shareholders
• Explore opportunities to improve and grow

Building out your peopleOS doesn’t mean you have to become a boring company, with policies and procedures that drive the life out of your business. But you are going to need to start experimenting with new ways of working to discover what works for you.

If you get your peopleOS right, you’ll have a culture that flows… where it’s easy for people to work at their best; where teams become more than the sum of their individual talents; and where you’re able to fulfil your growth ambitions.

Our peopleOS survey will help you get a measure on where your business is now: what parts of your peopleOS you should be prioritising; what’s already sorted; and what can you afford to ignore.

Click here to take the survey and start busting through that growth ceiling!

Originally published at https://thepioneers.co.uk on February 4, 2020.