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