This could easily have been “The other rule of 7 and 49″ if that would not have been confusing. It is another reason that as a company scales it becomes harder to manage. I will expand on it at greater length over the coming weeks so think of this as the abstract for something that could easily become a book.

• Size leads to delegation or dropped balls
• Size requires different communication channels

When you are a one man band you know everything you do. When there are two of you you know what each other are doing and cover anything either of you miss. As you scale to around ten people the communications grows slowly worse, but in a gradual and linear fashion. It is not until you get up to nine or ten people that holes and communications gaps start to appear.

People have come to rely on everyone being aware of everything that is going on in the company. It is assumed therefore that anything one person requires will not be a surprise and/or a resource/scheduling challenge to the relevant other people in the business. Sadly once you have grown beyond a certain threshold this is no longer true.

In much the same way as no one can manage more than around seven or so direct reports efficiently, enough people cannot keep up with that many more people’s jobs. Because oif this one of two things will happen, which depends on who is in the business. First, someone is not as up to date as they might be on what everyone else is doing. Whether this is because of holiday, time out or poor communications doesn’t matter. If 10% of your business is in the dark about something crucial issues can develop. The other thing that can happen is that someone fails to communicate what their area is doing efficiently. Either way now 90% of the company are unaware of things that may affect them. Either of these can cause a serious problem if not caught in a timely fashion.

Which one happens depends on who is in the business.

The same things that happen at around ten people happen in a more extreme fashion near fifty people.

Take a look at your business. If you are approaching this kind of a boundary then see if you can see it starting to happen. Look for the places you can improve your communications and see how they can be integrated into the company culture.

If you are not near one of the boundaries see if you can spot what happened when you last passed one. Is there some clearing up that needs to be done? Should preparations be made for the next level of communications?

Rufus evison

The topic of large companies versus small businesses is a big one. It is in fact too big to be covered in a single post even if the post is too long for anyone to read. I am therefore intending to be divide it into a small series of articles about the differences between small companies and large. These articles will be part of my scalability thread and will be categorised and tagged accordingly.

Both sizes and/or styles of company have advantages and disadvantages, so your objective as an entrepreneur running a business is to try and get the best of both worlds.

The series will contain (but not be limited to):

• Is yours a small company or a large business?
• Scalable businesses versus lifestyle companies.
• Specializations versus doing it all.
• My personal definition of a big company and a couple of thoughts on how to avoid the traps some large companies fall into.

 
As a taster, with no explanations until the relevant article is written, here are a couple of definitions:

• A lifestyle company is one which will support the owner in the style to which they are accustomed but which will never really grow beyond that
• A big company is one which, regardless of size, requires that employees sell to their colleagues as if they were selling to an external company

As this is another goal setting article please feel free to add comments on other areas that you would like covered or contact me directly either through linked in or through the contact page if it is live.

Rufus Evison

The insight, as I am wont to say, is in the differences and at the extremal points. Discontinuities always tell us something interesting. When looking to understand something look for where things change, don’t match up or where they end. I will discuss this in more detail in other posts but it leads to the principle that follows.

Everyone and every company has an intrinsic set of beliefs. It would be nice to think that they are what motivate us and determine what we do and how we act. In practice there are usually a few layers between beliefs and actions.

This is true of people who believe they can quit smoking any time they want to and yet are still on 50 a day. It is even more true of companies as there the beliefs may be held in one place and the actions carried out in quite another.

One way of viewing the layers surounding belief is as follows:

• Actions & Behaviours
• Intentions
• Promises
• Beliefs & Values

The beliefs and values are at the bottom because everything is based on them. It is useful to think of it as a stack. Promises are based on beliefs, or at least we should to remain consistent. On top of that are intentions as to how to carry them out (or if we are very far out of alignment how we will not carry them out). On top of that is what is actually done.

As you can imagine if we let our intentions get out of alignment with our promises there is going to be trouble. If a company does not behave in the way that was intended then problems will arise. If intentions do not match promises it is a clear source of dissonance. If the promises are based on things that are not really believed lieve then the company is unlikely to be able to fulfill them.

Looked at this way it is clear that everything has to be aligned in order for all actions to be based on what the company believes in.

When expectations are not met difficulties arise. This can happen in a lot of different ways but often the root cause is the same: allowing one layer to be out of alignement to the layer underneath.

A good principle is to check the alignment of each layer as it is embarked upon. When making promises check that they match the underlying beliefs. When formulating the plans as to how to carry out the promises make sure that they match what has been promised. When implementing the plan check the implementation matches the intended plan. As a final check at each stage compare it with the underlying beliefs.

In order to make that comparison easy it is as well to have a full statement of the beliefs that should be underlying all actions at all points. In practice this is cumbersome to do within a company and as with anything too cumbersome, it is likely to be ignored. What can be used as a short hand? The answer is the mission statement.

In many companies the mission statement is not a useful tool, but it can be! Companies benefit from mission statements that are written so that at each layer a check can be made to ensure there is a match to the mission statement. Put this way it seems cumbersome but in practice it does not have to be if the company culture requires it.

As a concrete example, let us say you are a record company and the mission is to sell more records than Virgin. That is a simple mission statement. You can look at what promises to suppliers and see if they work with selling more records than virgin. You can even look at who are chosen as suppliers and see whether they will work if selling more records than virgin. If the companmy is considering a tie up with a film company then the question to be asked is whether this will sell more records? Films can promote sound tracks but is the company moving off track? There is a clear mis-alignment here and the company needs to either revise its beliefs so the mission becomes sell more entertainment than Virgin or it needs to draw back from the partnership.

So to answer our initial question about why have a mission statement, the reason is to help people throughout the company keep alignment between core beliefs and actions.

The particular set of layers above came from two people I greatly respect. It can be applied to companies as easily as to individuals. So to finish up, thank you Simon and Edwina.

Rufus Evison