How High-Performing Organisations Scale Without the Bureaucracy

The Hidden Trap of Rapid Scaling

Not all organisations grow equally.

Famously Peter Thiel (co-founder of Paypal) told Brian Chesky the founder of AirBnb, ‘Don’t fuck up the culture’ as they grew, because it’s all too common.

One reason for the culture dying along with speed, creativity, efficiency, and output is that most people think the only way to grow is to add more layers to the cake.

The “Expensive Cake” Problem

The primary reason for this slowdown is simple: most leaders assume the only way to scale up is to add more layers to the cake.

You add a manager, then a manager to manage the manager, then a manager to manage the manager’s manager and before you know it that is one expensive cake!

Each layer more expensive than the previous, each one adding a layer of decision-making friction and each one moving the money away from the impact and putting it into a bureaucracy that nobody loves.

Keeping Authority at the Edges

If in elite football, they say ‘you want your money on the field’, in organisations you don’t want to add layers of hierarchy or centralisation but to keep the authority nearest the edges of the organisation. Haier (a global manufacturing company that is famously decentralised with no hierarchy) call this the principle of ‘zero distance’.

Real-World Proof: Scaling Without Middle Management

Self-managing teams are an alternative to this.

Rather than grow massive departments or add layers instead, we stick to small teams.

• Buurtzorg the Dutch nursing company could be considered a company of 20,000 people, or it could be considered 2,000 teams of 10-12 people. When the team gets to 12, they split into two small teams of 6 until they get to 12 again. Each team retains its authority over everything. They build strong cultures and keep their decision making authority.
• Spotify’s engineering department functions on similar principles achieving autonomy through self-managing ‘squads’ which have co-regulating processes between them for alignment. This allows teams to move fast individually whilst aligning collectively using some particular meetings practices, decision making and prioritising practices and transparent dashboards to stay aligned together.

Keep teams small

There are several reasons for working in this way. One is the waste that come with handover. With our clients, we often demonstrate this through simulation games which evidence that each time an item is handed over to somebody else, it creates waste. Meanwhile when we stick to small teams, there is less handover, and so less waste.

Also, with size accountability gets lost, which is why big departments collaborate so badly with each other, we see this all the time in silod organisations.

But there is also another reason, which is that with the incremental in people in a group, you get an exponential increase to the number of relationships. Sure a group of 3x people have 3x relationships, but 4x people have 6x relationships. 5x people have 10x relationships, 6x people have 15 relationships and by the time you get to 15 people there are 105 relationships (the math I believe goes: ‘[total people] x [total people – 1] / 2’).

Why did I stop at 15? Because that’s the number that the esteeemed anthropologist Robin Dunbar says is cognitive limit for the innermost layer of a social network. 15 is the ceiling for maintaining intense group rituals and true peer-to-peer empathy. And in organisational change circles, this is actually considered to be a bit big.

Which is why rather than an expensive cake, high performing teams stick to a different food based heuristic: The team should be able to eat two pizzas. This was popularised by Jeff Bezos as a way to say, keep your teams small. 8-10 max.

That way these teams can remain high performing without being stifled by expensive bureaucracy.

They can stay lean.

They can focus on their mission.

Look at Your Own Organisation Today

Put bluntly. Not all growth is equal. You can grow fat or you can grow strong.

Self-management offers an adaptive and resilient networked approach to growth that is far stronger than the linear scale up model which typically comes with a bust following the boom.

Are your latest recruits adding muscle to the frontline, or just putting another layer of icing on an already expensive cake?

What’s one decision your frontline teams could make today if leadership simply got out of their way?