Organisational Tipping Points: Navigating the Evolving Landscape of Growing Companies
As leaders, we celebrate the milestones of our growing companies. We toast to new clients, product launches, and expanding teams. Yet, amidst the excitement, there's an undeniable shift that happens at certain stages and a truth that we must acknowledge: companies change as they grow. It's as if an unseen hand shifts the very essence of our organisations at certain points. I call these moments ‘tipping points’ - crucial junctures where the dynamics of communication, decision-making, and even the company's shared identity undergo subtle but profound transformations.
Headcount as a Harbinger of Change
While growth is complex and multifaceted, the number of employees serves as a surprisingly accurate barometer for these shifts. Here are some pivotal thresholds I've observed:
20 Employees: The tight-knit ‘family’ atmosphere starts to dissolve. Individual relationships can't be maintained at the same level, and informal communication may need more structured support.
50 Employees: Middle management often emerges, creating a new layer between leadership and individual contributors.
150 Employees: This, (Dunbar's Number) - as anthropologist Robin Dunbar suggests - is the approximate cognitive limit for maintaining stable social relationships. Beyond this point, subcultures often emerge, and maintaining a cohesive culture requires more deliberate effort.
200 Employees: Communication pathways become more complex. It's no longer possible for everyone to be involved in every decision, and processes need to be established to ensure everyone feels heard and informed.
350-400 Employees: A distinct sense of bureaucracy can begin to emerge. Processes might become more rigid, and decision-making can slow down.
600+ Employees: The company may feel like a completely different entity than it was at its inception. The original culture may have become diluted, and subcultures may have become firmly established. As Ben Horowitz, co-founder of Andreessen Horowitz, aptly puts it, "The company you start is not the company you scale."
The Challenges and Opportunities of Growth
These tipping points are a mixed bag. They bring challenges such as:
Loss of intimacy and shared purpose: Harvard Business Review notes "As organisations grow, the sense of community weakens."
Communication breakdowns: The larger the group, the harder it is to ensure that everyone has the same information. A communications model can help…
Slower decision-making: More stakeholders can mean more opinions and potential for disagreement.
Erosion of culture: Your company’s original values and norms - the reasons many of your people joined in the first place - can get lost in the shuffle.
However, growth also presents remarkable opportunities:
Increased resources: A larger team means more talent, capital, skills, and expertise to tackle increasingly complex problems.
Market clout: Your company gains greater visibility and influence in the market - and the ability to have a louder voice.
Innovation potential: A more diverse workforce can generate a wider range of ideas, developing your product and go to market strengths.
Navigating the Evolving Landscape
To successfully navigate these tipping points, leaders must be proactive:
Intentional Culture Building: As Peter Drucker famously said, "Culture eats strategy for breakfast." Don't leave your culture to chance. Articulate your values, reinforce them constantly, and celebrate those who exemplify them.
Invest in Communication: Make communication deliberate and multi-channel. Utilise ‘town hall’ meetings, newsletters, feedback loops, and anonymous suggestion / idea channels.
Empower Middle Managers: Equip your middle managers with the skills and authority to lead their teams. Provide training, coaching, and encourage cross-functional collaboration.
Preserve Entrepreneurial Spirit: Even if the founder isn't directly involved in day-to-day operations any longer, a founder-like vision and values is essential for empowering and encouraging everyone to build the company together, entrepreneurially.
Celebrate Milestones: Each growth stage is an achievement. Celebrate them to remind everyone of the shared journey and reinforce a sense of community.
CONCLUSION
Embrace the Journey of Transformation. Remember, the goal isn't to resist change but to shape it. Embrace the evolution of your company. Eric Shinseki, the first Asian American to achieve the rank of four-star general in the US Army, said, "If you don't like change, you're going to like irrelevance even less."