Why Growth Companies Struggle With Hierarchy

The way a team works together effectively will change as the number of people in the team increases.

An organisation of 10 people acts very differently to an organisation of 200.

Getting from 10 to 200 can be a difficult journey to manage at the best of times, although in a venture-backed start-up the growth rate is often accelerated artificially such that the number of people joining the company builds the team size quicker than otherwise would be the case.  A company who relies on organic growth will not add people as quickly and the adaptation time is slower.

I've experienced this growth challenge several times.  It's not easy.  Here's why.

I like to use an anthropological analogy to illustrate the point.

A group of 4-10 people will act like a "hunting party".  Together they go out on a hunt with a prey in mind but they are very tactical, communicating in real time as the circumstances dictate.  There may be a leader and the leader emerges as being the person that all the others defer to and they are happy to be the leader.

A group of 10-40 people will act like "family huts".  Imagine that each family has a hut around a central fireplace.  Each family has a leader and these leaders and the elders will sit around the fire to share stories and make plans.  Life is relatively spontaneous.  Everybody knows everybody else, they communicate directly with each other as needed yet they spend more time with their own family than anyone else.

A group of 40-150 people will act as a "small village".  In the village everyone has specific roles and there are people in charge of various things.  Someone might be in charge of security, another in charge of energy, another in charge of the harvest.  Everyone knows everyone else to a degree but things start to get done effectively by using a light hierarchy.  Each function has a leader.  To get that function to operate effectively, you need to get the leader to instruct their team of specialists to do the job required.

A group of 150 people+ is like a "town" and the default organisation is a strict hierarchy.  Large groups like this work through the power of the hierarchy.

(See also "Dunbar's Number, Cross 150 With Caution")

There is a reason why a hierarchy works better when there are more people.

Imagine you have 10 people.  10 people communicate directly with 10 people, verbally, via email, on the phone.  That's 10 x 10 potential lines of communication open at all times.  100 threads.  If there are 50 people and they do the same thing, it's 50 x 50 = 2500 threads. 5 times as many people creates 25 times as much noise.  We can't cope with so much noise.  To organise ourselves we naturally create groups and communicate with the group leader who then coordinates the activity of his or her group.  Less noise.

The type of person that operates effectively in a hunting party may not like town life.  In fact the reason they are a good hunter is because they are not townies.  People have preferred methods of organisation and communication, learnt behaviours and default reactions to situations.

A startup might hire some great people when they are small.  These great people might not like the environment they find themselves in a couple of years later when a new mode of organisation would be more effective.  They still act like it's a hunting party.  Those new hires who are used to living in a village or a town join the company expecting things to work like a village or a town because that's the size of the organisation - but they are confronted by hunters who act in a way that they need to adapt to.

The challenge for growth companies therefore is to adapt and change whilst maintaining effectiveness as well as acquiring and retaining talent.  Simply being aware of what is happening with the group dynamics helps, as does anticipating changes that might be needed as a result of a changing group size.  Communication structures work well if adopted by the majority, that's challenging if there are different expectations within the group.

There's no magic formula, this is human nature we're dealing with.  Awareness is a great first step.

Just ask

Picture courtesy of Andrew Kidd

This morning I was asked "why" questions, one after the other. A barrage of questions about why things are the way they are. This wasn't in a team meeting or a management discussion. It was over the breakfast table with an insistent four year old.

That's the thing about four year olds, they just ask you straight up. They're not worried about what you think of them, they just want to know. It's a natural curiosity.

Some of the greatest minds in human history kept asking questions long after the age of four. Some of the best never stopped.

I recently resumed learning to play guitar after a 25 year gap. This time around I have a massive advantage because I can find the answer to almost any question straight away. How do I play a specific song? Look it up on YouTube and there are plenty of people ready with a show and tell.

There's a revolution in online learning happening right now thanks to the internet. That's the difference that the last 25 years have given us. Universities such as Stanford are putting entire courses online. Wikipedia is available almost anywhere, anytime to anyone. Put it this way, if you have a question, it's never been easier to find an answer.

The ability to ask the right questions is an underrated skill. If I were interviewing someone for a job, I am much more interested in the questions they ask than the answers they give. The ability and willingness to ask useful and insightful questions is the mark of someone that applies themselves to a problem and who will overcome obstacles.

It's never been more important than now to keep asking questions. As an adult it's a habit and skill we need to nurture. The good news is that it's never been easier to get answers.

This gives me great optimism for humanity and the world that today's 4 year olds will inherit.

It also is a humbling reminder that today like every day I need to  keep asking questions.

"If You're Going Through Hell, Don't Stop"

You start your holiday with excitement and energy.  Woo-hoo!  No more work for two weeks, we're off!

How long does that feeling last?  When do the arguments start?  Unless you're off back-packing by yourself, you'll be either with friends or family or both.

Here's typically what happens;

Day 1 - excitement, chatter, interest in other people, sharing plans, news and celebrating
Day 2 - more of the same, just a little slower but you're still all on best behaviour
Day 3 - starting to get tired, needing a little more space and time, starting to make less effort towards each other
Day 4 - the arguments start.  You can no longer maintain the being on best behaviour at all times.  You start to say what you really think.  Others do the same.  A few disagreements maybe.  Maybe a full blown out row or face off
Day 5 - you start to adjust to your real travelling companions, their needs and wants, your own needs and wants, your new environment and living space, maybe a few apologies, a few honest and frank conversations
Day 6 - now you're all just being yourself and relating to others in a truthful way, you start to find ways to enjoy yourselves together on this new level
Day 7 - you're more relaxed, start to enjoy the holiday for what it really is
Day 8 onwards - you're having a great time

Does that ring a bell?  Have you ever been in a holiday situation like that?

The pattern repeats itself whenever a new member joins the group or there is some kind of instability such as a change in environment.  You all go back a few steps until you readjust.

The pattern has a name, you might have heard it before... Form, Storm, Norm, Perform

Form - the honeymoon period, everyone is on their best behaviour
Storm - the truth comes out, friction and strife
Norm - adjusting to the reality of the group
Perform - getting the best out of the group in a truthful way

This pattern doesn't just apply to holidays.  It applies to any new collaboration of two or more people.

It applies to relationships.  Remember those first 6 months?  That's the form period.  Some people come off that 6 month period wondering what happened.  You're suddenly arguing about things you never used to argue about.  Here's the truth - it's completely normal to have these arguments (storm).  You need to get through them and accept the other person for who they truly are (norm) before you can be strong as a couple (perform)

It applies to companies.  New people join a company and go through their own form storm norm perform before they truly settle.  Some people just get out at the storm stage but others will persist and that's the route to performance.

It applies to projects.  There's always a doom and gloom middle part of the project where the project manager feels like it's never going to happen.  But it does.

It applies to sport. Setting out (form) on the path to glory (perform) requires a lot of soul searching and pain as you put the training in (storm and norm) to become the athlete you want to become.

In applies to studying.  Learning a new skill is exciting at first (form), but you realise that it's very difficult to commit and put the hours in (storm) and until you manage to do that consistently (norm) you won't succeed (perform).

I've observed this pattern many many times in life and it's helped me enormously.  When the euphoria of a new start wears off I think "hey - this is perfectly normal and to be expected - let's keep going" and it gives me strength.  My expectations are more realistic and I'm less prone to reacting badly to when things go wrong.  I had to learn this the hard way.  Simon, my manager when I was at Eurocamp said observantly, "David, you don't like it when things go wrong, do you?"  He was right of course.  That's still the case, I like to get things right first time.  Now I realise that is an ideal and the real world will hit me hard and I need to push through to see the success on the other side.

As Winston Churchill famously said, "If you're going through hell, don't stop"

Further reading....
Wikipedia Tuckman's stages of group development