The 150-Employee Tipping Point

The 150-Employee Tipping Point

Oxford evolutionary psychologist Robin Dunbar is most famous for his theory that humans can only maintain personal relationships with about 150 people at any given time, so much so that the figure is referred to as “Dunbar’s number.” Quartz’s Kevin Delaney explores the application of Dunbar’s number to management in the context of growing startups:

“There is no question that the dynamics of organizations change once they exceed about 150 or so,” says Dunbar. “The [Hutterite faith group] deliberately split their communities at this size in order to avoid having to have both hierarchies and a police force. Keeping things below 150 means you can manage the system by peer pressure, whereas above 150 you need some kind of top down, discipline-based management system.”

At a startup, once the staff exceeds 150 people, employees are no longer the single, cohesive, culture-reinforcing unit they were during the company’s earliest days. Staffers become more specialized and entrenched with their teams, which are probably sprawled across an office, perhaps on multiple floors or in several locations.

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Has Apple Outgrown Its Functional Corporate Structure?

Has Apple Outgrown Its Functional Corporate Structure?

For a large organization, Apple has an unusual structure. Rather than being separated into discrete business divisions, the company’s leadership structure is almost entirely functional—a characteristic more common among startups than corporate giants, Vox’s Matt Yglesias observes. Pointing to Apple’s “semi-withdrawal from the professional grade computer market,” Yglesias posits that the iPhone maker may be discovering the limitations of its innovative organizational design:

Functional structures, more broadly, allow for collaboration. Apple is able to develop features like continuity across multiple Apple devices or use a chip developed for the Apple Watch to power the new TouchBar in part because its top executives are responsible for things like “software engineering” and “hardware technologies” (i.e., chip development) rather than for specific products.

Collaboration, unity of purpose, and synergies across groups are things that every company wants. But most CEOs do not attempt to manage enormous global companies with purely functional structures, because even though it sounds good, it’s extraordinarily difficult to make it work in practice. …

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The Merits of Multiple Managers

The Merits of Multiple Managers

Corporate culture is changing and organizations are increasingly experimenting with new, non-hierarchical models of management like holacracy, while some are even embracing the concept of “corporate democracy.” Central to “flat” management philosophies like holacracy is the idea that nobody has a line manager, per se; instead, teams are self-organized and the organization makes large-scale decisions through sometimes elaborate processes, rather than simply taking orders from senior executives.

Offering a counterpoint to this trend at Fast Company, Jes Kirkwood makes the case for shaking up structure by creating more managers, not fewer:

The truth is, some employees have more experience and expertise than others. That’s why their peers intuitively look to them for advice and leadership. But leadership doesn’t have to be centralized. If you’re considering a shift toward distributed leadership but aren’t sure if going completely flat is right for your company, consider embracing joint leadership. Yes, it means you’ll have more managers, not fewer—but that could be just what your growing company needs. Here’s why.

Joint leadership simply means dividing what’s typically one person’s managerial duties between multiple people, who put their heads together to make leadership decisions. By adopting this model, you can benefit from two unique skill sets and personality types.

Kirkwood also advocates this model of leadership as a way to enable employees with little or no management experience to test the waters:

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Is Holacracy Too Bureaucratic?

Is Holacracy Too Bureaucratic?

Holacracy, the “flat” management philosophy popularized by Zappos CEO Tony Hsieh, is meant to unchain decision-making from the strictures of hierarchical authority, but at Forbes, critic Jurgen Appelo derides it as “a top-down, bureaucratic, big government framework” that is “completely the opposite of what agile, scalable organizations need in the 21st century”:

Most importantly, when I delegate work to someone, I ask a human being. I asked my friend Sergey to automate some of our business processes because I fully trust his programming skills as a developer and his business insights as an entrepreneur. I specifically did not delegate this work to our Business Process Architect, because A) we don’t have one, and B) we don’t want one. We have Sergey. And here we encounter the fundamental problem at the heart of Holacracy, the trendy corporate governance framework that is known for causing some turbulence at Zappos, Medium, and other forward-thinking companies.

According to founder and creator Brian Robertson, Holacracy is like an operating system, but for organizations instead of computers. It is yet another version of the organization-as-machine metaphor that has led the world of business to adopt and implement far too many misguided, command-and-control practices. This is the sentence from the book Holacracy that made me cry out in despair: Roles are the most basic building block of Holacracy’s structure. When we distribute authority, we distribute it not to individual humans, but to the roles that they fill. …

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Why Medium Dropped Holacracy

Why Medium Dropped Holacracy

Last week, the online publishing platform Medium announced that it was abandoning its experiment with holacracy after about four years of trying to make the idiosyncratic, flat management structure work. In January, Zappos, the most high-profile adopter of the model, revealed that 18 percent of its staff had taken a buyout offer rather than stay on as the organization completed its transition to holacracy—though CEO Tony Hsieh objected to the way the press characterized that news as a sign of trouble—leading some critics to wonder whether the experiment was working.

Following up on last week’s news, Bloomberg reporter Rebecca Greenfield asks Brian Robertson, the originator of the holacracy program, why his invention didn’t work for Medium:

Medium failed because it didn’t fully commit to holacracy, said Robertson. “I’m not surprised it was getting in the way for them.” The company wasn’t doing it right, he said. “If I have a screwdriver and I keep smashing nails with it, I’m going to think it’s a pretty shitty tool. On the other hand, if you use it for what it’s designed for, you might end up with different results.”

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Medium Drops Holacracy

Medium Drops Holacracy

In a blog post published on Friday, Medium’s Director of Operations Andy Doyle announced that the online publishing platform was abandoning the holacracy model of organizational structure, which it has been using for the past few years. Doyle explains why the radical experiment in “flat” hierarchy didn’t work for his organization:

Our experience was that it was difficult to coordinate efforts at scale. In the purest expression of Holacracy, every team has a goal and works autonomously to deliver the best path to serve that goal. But for larger initiatives, which require coordination across functions, it can be time-consuming and divisive to gain alignment.

Holacracy also requires a deep commitment to record-keeping and governance. Every job to be done requires a role, and every role requires a set of responsibilities. While this provides helpful transparency, it takes time and discussion. More importantly, we found that the act of codifying responsibilities in explicit detail hindered a proactive attitude and sense of communal ownership.

However, it looks like Medium isn’t simply retreating to a traditional management structure, but rather trying to innovate its own organizational philosophy to reap some of the benefits of holacracy without the downsides:

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Too Functional to Function?

Too Functional to Function?

In an excerpt at the Harvard Business Review from their book Strategy That Works, Paul Leinwand, Cesare Mainardi, and Art Kleiner criticize the functional model of organizations and make a case for establishing permanent cross-functional teams as a way to scale up a business’s distinctive capabilities:

A growing number of long-standing innovation groups, for example, bring together disparate functional skills (typically R&D, marketing, customer insights, and IT) to facilitate the launch of new products or services. Some of these teams are relatively informal, whereas others involve major shifts to the organizational structure. In one case, to develop its portfolio management capability, Pfizer Consumer (before it was sold in 2006) set up communities of practice: semi-formal ongoing networks that included lawyers, health professionals, and marketing experts. These communities helped spread key ideas and best practices to brand and product groups around the world.

From permanent cross-functional teams, it’s only a small step to having formal capabilities teams.

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