Jason Fried recently pronounced that Joel Spolsky‘s assertion that growth is essential for his software as a service bug tracking software company to keep up with competitors. Jason’s 37 Signals has succeeded wonderfully with a small team, a focus on simplicity, and by saying “no” far more often than not. Joel however, may not wish to remain small, he may wish to be a large player in the market which might require greater investment and marketing spending. And it may be that bug tracking IS a network effect business in certain respects. Both are wrong. Both are right. Thus we arrive at the most unsatisfying of answers: It Depends.

For every hard, unwavering proclamation by a successful business person one can find an equal and opposite rule from an equally successful business person.

Just as species evolve to thrive in a particular environment so too do businesses survive and thrive in their own particular environment in pursuit of their own ends.

This helps resolve the seemingly contradictory paths one might take, for example, in the design of a product or service along the spectrum of open vs. closed development, of open source vs. Apple. Both are right, both are wrong. It depends on what your environment, goals, company position, and industry are.

Speciation and useless business advice is a post from: co>innovative

You may not have heard about the Dunbar number, but in essence it is a “a theoretical cognitive limit to the number of people with whom one can maintain stable social relationship”. Developed by a fellow named Dunbar, as luck would have it, he came up with about 150 — but the number swings from 100 to 230 with 95% confidence intervals.

Regardless of the exact number, we as humans are limited by our neocortex to hold a certain number of social relationships with any significance in our head at once.

Dunbar’s surveys of village and tribe sizes also appeared to approximate this predicted value, including 150 as the estimated size of a neolithic farming village; 150 as the splitting point of Hutterite settlements; 200 as the upper bound on the number of academics in a discipline’s sub-specialization; 150 as the basic unit size of professional armies in Roman antiquity and in modern times since the 16th century; and notions of appropriate company size.

Through my semi-coherent logic, it seems to follow that a Communist group in which everyone knows everyone else and in which the contributions, points of view, and needs of everyone are understood, the group can prosper. Bureaucratic layers are not present and people are on generally equal footing, all working towards the group’s survival. This hypothetical, isolated group falls apart when it expands beyond this point.

And to the main point: would this not argue for companies or operating groups to remain under 150 or 200 people? If a company or group of people who have to work together grows beyond that point, the friction and interaction costs become too great, and people fall outside of your Monkeysphere. The amount of social “grooming” (attention and communication between group members) becomes too great. The center cannot hold. The group (whether a commune or business) has an incentive to stay together and work towards a common goal of survival — actual survival in the case of the commune; marketplace survival in the case of the business. Christopher Allen sees the number for active creative and technical groups as “somewhere between 25-80, but is best around 45-50″

We covered a case in school in which a successful manufacturing company capped it’s plants to 150 people. Once a plant got above 150 they would open a new plant, thereby keeping each group under 150. (Of course, I can’t find the case, but the general thrust of the above is correct.)

Whether the Dunbar number is correct or useful within a business context, there is something to the concept of considering the impact of a group growing too large. The number of people in your team, company, society dictate the best operating approach, as the dynamics change dramatically based on the situation.

Pay attention to the tribes within your organization; understand the monkeysphere.

The magic Dunbar number: Why Communist societies and operating groups should be fewer than 150 people is a post from: co>innovative