2018.07.23 The Dunbar Organization

In a small startup, the organizational network looks something like this illustration.

Everybody knows everybody and all have some idea what everybody is doing, what resources they can provide, and where they belong in the local pecking order.

Humans are masters in understanding this dynamic. But even we get lost when our community is bigger than 150 people. When groups get bigger, they need some rules to guide them in the same direction.

This number came our of research by Robin Dunbar who found that the ability to understand the internal group dynamics seems to be a function of brain size - the bigger brain, the more individuals one can have a meaningful connection with. Thus, human groups can be bigger than chimpanzee flocks that again are bigger than wolf packs.

Some companies have taken the research into account when they organize themselves physically. When a unit grows beyond 150 people they try to reorganize it into two smaller units.

For startups, it seems that getting one's processes more standardized is important before the company reaches a similar size.

We all hate bureaucracy, but it is possible to make a real mess that will come back to haunt the company later if we don't accept some rules. Marc Andreessen voiced as much in this article, which referred to Uber where lack of good management practices caused widespread harassment of employees.

Andreessen mentioned all the supporting functions: Finance, Legal, HR, Marketing... But since the problem is related to number of people and HR typically are responsible for "the employee handbook", it is natural that this function is emphasized.

We may be predisposed to be more alarmed when reading accounts like the Susan Fowler letter that started the Uber scandal because as human beings we can feel empathy. Nobody should be treated like that.

We don't feel the same kind of empathy if the missing rules "only" cause monetary losses, misstated financial records, fraud, or problems with the IRS.

But rest assured that, if going undiscovered for too long, any of these problems can lead to bad outcomes for the company and/or the careers of the people responsible.