Economies of scale aren't an inevitability. It's a subject I've written about in the past, and one that I've been putting my mind to again recently.
In particular, how collaborative technologies can help alleviate the diseconomies of scale that can so often occur when a company increases its headcount. From personal experience this is the sort of thing that happens when a team gets to bigger than about a dozen people.
At less than ten, a team can be run through the busy-body dynamic… everyone knowing everyone else's business. The need for formal process is low, unless externally sanctioned by a regulator, and generally not required anyway. People might have different work approaches, but everyone can know and adjust for their colleagues' foibles.
At less than ten, administrative resource required is also generally low, and with tools commonly available these days, perfectly possible for individuals to do their own admin at relatively lite touch. As a member of what we might describe as the Outlook generation, I have never had a PA and, during the short period when I had someone else running my diary for me, found it horribly disempowering.
The final thing at play at this size of team is a general lack of hierarchy, and a sense of group cohesion that is a result.
As a group scales, these factors start to break down. The higher the number of people in a group, the less the busy-body factor can come into play. Formal process often becomes a necessity, but is difficult to implement because it is disproportionately expensive at what is still (relatively speaking)a small team. However, personal working practices that have served the individual well at a smaller scale team are clung on to, often as they are seen as the reason for the success and expansion in the first place.
Administrative resource increases, but can find it difficult to find a role when everyone has been used to a DIY approach (like me and my diary), and hierarchy (whether formal or not) emerges to start to stifle the sense of egalitarianism.
All of this amounts to an increase in friction within the team, reducing productivity. If, for example, one person on their own can produce 100 units of work on their own, a group of ten can maybe keep up that level of productivity if say one is a non-chargeable administrator (dropping net per person output to 90 units, total of 900).
Scale to one hundred people, and you've probably now got 15 administrators of one form or another. But, because of the hierarchy and busy-body factors above, there is also probably only 80 units of productivity in each of the chargeable staff – giving a total net productivity now of only 68 units per person and a total of 6800. Given that capital investment or one-off fees (like recruiting) are often required to achieve such expansion, and that for many organisations now the main cost is of their people, that sort of decrease in productivity can be the sort of thing that turns a profitable business into a shut one.
So what can technology do to help? Well, as is my mantra, of itself probably very little. If you tweet whilst I email, we miss each other's messages and the friction increases. Whilst collaboration technologies can without doubt allow an organisation to increase its productivity, it will only happen if there is consensus as to how they should be used. And that comes down to the third stage of Tuckman's now hackneyed (yet valuable) old model of group development – the norming part of forming, storming, norming and performing.
A few years back I did some work with the management group of a software development team who had about 40 people, and were split over two sites, one in the South East and one in Wales. It was obvious that there were issues in this very area, and I raised the subject, suggesting that the team needed to look at establishing rules for what collaboration media should be used when. "Oh, we don't need that. Everyone knows what they should use when!" roared one of the more up front personalities in the team. A thirty minute debate ensued…
mmitII 