> The problems only start once the "tribe" grows beyond 150.
The problems also start when there's a potentially extremely large, but uncertain to happen, reward looming over the horizon. In crude terms, when there's a huge money bag that everyone could potentially snap up. Then all sorts of perverse incentives start to manifest.
I'm thinking of stereotypical Wall St. companies, and also of many Silicon Valley "startups" in recent years.
The no-leader scenario is stable when everyone is looking forward to having a regular job as a middle class citizen. It's also stable when EVERYONE is motivated by ideals other than money - great scientific breakthrough, big humanitarian cause, etc. That's when people cooperate with each other easily, there's the rule of the law, civilization as we understand it.
But when huge piles of money could potentially materialize on the table, things revert to a much more primal state.
Agreed. I've noticed that organizations that often times claim to be 'leaderless', just have other implicit ways of exerting power and influence. Truly leaderless is difficult, and requires humility from all it's members.
The actual number is a bit higher than 150 (290 according to Bernard-Killworth ), but the real cost is all the social grooming required to hold a large leaderless group together becomes an increasing drag on the organisation's efficiency.
The ideal leaderless company size is going to be a function of the efficiency gained by having increased specialisation (each person can focus on fewer things) against the cost of social grooming. Having a hierarchical structure allows the cost of social grooming to be constrained vertically rather than across the whole company.
"That's when the number of people involved is too great for the human brain to process the entire social network. Hence why formal organisations and hierarchy are now needed."
Or innovate on a divisional or matrix-style organization where it's a series of independent units or teams of teams. Not too different from how we make complex programs integrate well. Decomposing them properly with complexity in the right spots lets the integration or supervisory part be small and simple. Could be something to apply to real-world organizations there.
Maybe that's the natural size for a company and growing beyond that is simply an aberration!
I assume that your number of 150 comes from Robin Dunbar.
> The problems only start once the "tribe" grows beyond 150. That's when the number of people involved is too great for the human brain to process the entire social network. Hence why formal organisations and hierarchy are now needed.
That's an interesting claim! Can we find any places where it doesn't hold up? Yep! In fact, there's a great book called Reinventing Organizations where the author studied successful workplaces that have >100 people each. It's still a research project how to make these organizations work well, but the author and the community around that book are trying to gather working techniques because the benefits can be phenomenal (and that's empirical!)
This is also a firm that basically consists of agile priests and people who (I assume) like experimenting with organization and management.
Lindy Beige on YouTube discusses the size of military units and how it relates to that. Platoons have 30 men (with smaller squads), a Company 100 men or so but not over 150 for the same reasons.
People tend to build a small business and aren't interested in growing number but profit.
Basecamp has been about 17 years standing, and currently has just 51 people. Everyone seems happy.
I am an export in economy but most of problems companies born to solve doesn't require big size corps. At least in my country, SMEs are driving the GDP.
Still. There are 40 people companies where some people don't have the slightest idea what others are doing (anecdata: I am working for such a company at the moment).
What if you never allow it to grow over 40?
What if those bossless creatures form a swarm, with diplomats, connecting to other "tribes"?
A swarm of headless amoebas, hunting down and eating a giant.. its a mad world - we might see it.
It's worth keeping in mind that this is a company of 40 people. Half the size of most primitive hunter-gatherer tribes which had no formal organization whatsoever. At sizes that small, everyone knows each other, everyone knows what everyone else is doing, and people can make decisions through consensus after a round of informal discussions.
The problems only start once the "tribe" grows beyond 150. That's when the number of people involved is too great for the human brain to process the entire social network. Hence why formal organisations and hierarchy are now needed.
It's great that startups and small companies are innovating with different organizational styles. Many of the structures found in big corporations are overkill for small organisations where everyone knows each other. Just don't expect any success stories from these startup experiments to scale up to bigger companies though.
> you can afford to act more like a collection of freelancers who share a space
In fact, that seems closer to the actual situation than the article implied. From http://dna.crisp.se/docs/index.html :
> None of the 30+ consultants are actually employed by Crisp (although we do have a few employed office staff).
I get the impression that service companies like Crisp can get away with this kind of org structure in a way that product companies cannot. If you are simply executing on consulting contracts, you can afford to act more like a collection of freelancers who share a space. When doctors do this, it's called a "group practice".
> The DNA of having employees pay the company to work instead of the other way around?!? Of course, the BBC article wants you to think "DNA" as in "no CEO" instead of "workers paying a rent".
This is missing the point (full disclosure: I know several people working at Crisp and co-organise workshops with them in Sweden).
I remember hearing Henrik Kniberg talk about this at Oredev a while ago, and we ended up restructuring our consultancy firm quite close to their model in 2013. The idea is that you don't work for the company, the company works for you. It's applicable to consultancies, where everyone effectively goes and earns money on their own, but some shared overhead (such as accountants, paperwork, getting master-services agreements with banks and insurance certificates so you can do business) can be effectively shared by everyone under the same umbrella.
our model is not a 10% haircut, but that all shared costs are divided according to the proportion of revenue quarterly. the company also doesn't have a boss or anyone in charge (legally, in the UK, we have designated partners who are allowed to sign documents, but everyone has that right, so everyone is a boss and nobody is the Boss).
Our company is also not allowed by the statute to have any assets or own any IP, that all belongs to individuals. This is to avoid any conflict of interest and people starting to 'work for the company' in the future.
This model obviously wouldn't apply to companies trying to accumulate wealth/IP/assets and looking to create an exit by selling the company. But it works amazingly well if you want a lifestyle consulting business where everyone does their stuff.
"There's nothing wrong with that model (as another commenter mentioned doctors paying into a "group practice" for shared expenses such as an office and billing staff.)"
Another common one I've seen is hair stylists. They often rent their booth from the shop in exchange for equipment, pay processing, foot traffic especially, and so on. They get some cut of the base pricing plus tip money. Idea is they'll come out profitable on a regular basis despite paying to be there. Just another business expense really.
" If workers are the ones paying the company, it's easier for them to agree not to have a CEO manage them."
Testing the comparison again, this is also true for hair stylists. They're the ones who have to pay to be there and maximize their revenue. They'd rather be left alone to use whatever methods they can to keep customers happy, regular, and with high tips. Likewise for a consultancy where people renting space in the company would want to be flexible to maximize number of clients and revenue by targeting methods to each one's or each group's preferences. Both for hair stylists and IT consultants this take experimentation that might not happen in organizations with top-down management, esp micro-management.
May as well go to cosmetology school for a year instead of getting a CS degree if you're going to work in asinine conditions like that.
If I want to eat what I kill, I'd rather go make millions (or starve) on Wall Street. At least there's a base salary instead of a base rent.
In a typical company, earning a fixed monthly salary, you will end up paying the company the majority of the money you make for them, and the more value you produce the company, the less you earn by comparison (since in most companies your contribution is not immediately reflected in the salary and can be hard to measure).
Flat fee + 10% of earnings seems very, very generous to me by comparison.
But I do agree that was a very important detail left out of the article!
i have met some of these guys, my understanding is it is more like a group of consultants who pool together.
This BBC article is terrible and manipulates the reader via the omission of critical facts. If you haven't read it yet, I suggest you first read the company's recruitment webpage and specifically their following sentence:
- "It also means that there is no guaranteed salary. The only thing we guarantee is that you will have to pay a flat fee every month plus one-tenth of what you bill."
After making a mental note of that, go read the BBC piece. You'll notice how empty that article actually is. For example, the following sentence becomes meaningless:
- "Ultimately, the firm hopes that its way of working could inspire other companies to emulate the "Crisp DNA"."
What "DNA" of Crisp exactly? The DNA of having employees pay the company to work instead of the other way around?!? Of course, the BBC article wants you to think "DNA" as in "no CEO" instead of "workers paying a rent".
There's nothing wrong with that model (as another commenter mentioned doctors paying into a "group practice" for shared expenses such as an office and billing staff.)
However, leaving that fee structure out is incompetent journalism. If workers are the ones paying the company, it's easier for them to agree not to have a CEO manage them.
 Google's English translation of: https://www.crisp.se/om-crisp/jobba-pa-crisp
"Witches... certainly don't have leaders. Granny Weatherwax was the most highly-regarded of the leaders they didn't have."
- Terry Pratchett, Wyrd Sisters.
They've written it down -- it's the board for big things and "shared among other employees" for others. It actually sounds pretty practical to me. As people become more responsible and self-regulating, there's less need for a single person to be in charge in a hierarchical sense.
> The staff decided that many of the chief executive's responsibilities overlapped with those of the board, while other roles could be shared among other employees.
flat organization == informal hierarchies, yet to see a counterexample
I'm not sure it's that simple. Even if some people have more influence than others, it is still different from having one person, who can efficiently do whatever they please.
Someone is always in charge. They've just decided not to write down the org chart on paper, is all.
They went from $1 million or so to over $100 million during a time of hyperinflation and otherwise terrible economy. There's the objective evidence the methods produce results. Now just need to start tweaking the model in various ways applied to other companies to see which variables had what effects. I've seen companies get very far just minimizing management/executives, treating employees respectfully, letting them make most improvements, and giving above-average compensation.
It's an interesting book, I'd really like to know how accurate it is, what people on the ground thought.
Yes, similar things have been tried before. See e.g. Ricardo Semler's Maverick! book (1993). Sounds interesting and seems to have worked well for them (judging from the book).
I know this article is misleading, it's basically a consulting organization where they decided instead of having a partnership structure (where the old guys get to take a piece of the young guys billings) they are a meritocracy where everyone gets to eat what they kill. So not having admin/CEO overhead is fine, esp. when they can all agree on the value of marketing/PR and other shared cost programs.
But it's an interesting concept. I've managed up to 45 people at a time and believe giving people more authority and responsibility over their area not only better motivates them, but can lead to fantastic results. I would be really interested in how Zappos did it, since they seem to be a larger more traditionally organized business and had some turbulence implementing it.
Crisp is quite transparent in how they work and it's documented here if you want to clone it yourself:
I wonder what happens when the first trouble comes with an accusation of harassment, discrimination or some such thing. How will you defend the company, who will speak for it, and who takes the personal hit that eventually comes?
Is this just a workers cooperative, or is there a distinction I'm not seeing?
To me, the most interesting example of a similar organisation (that I see rarely mentioned) is AES (an energy supplier) under Dennis Bakke, as described in Joy at Work . As he puts it, every decision made at the top was a lost chance to delegate responsibility. He advocates the advice process: any person can make any decision, provided that they first get advice from anybody with expertise, and anybody who will be affected. Note that consensus is not required: one of the desired results is that, freed from the need to persuade others, you can focus solely on listening and understanding other points of view. You're hopefully better informed to make a decision, and others feel listened to (rather than feeling like their points aren't being heard as you're trying to persuade them).
Not only did AES have tens of thousands of employees, many of them joined by way of acquisitions of existing plants, rather than being hired by AES with their ethos in mind. That's not to say that everybody was a good fit (some people chose to leave given the choice), but that many stayed and eventually appreciated the change in management structure challenges the idea that self-management is only appropriate for a small proportion of people.
I don't believe this works well, especially in larger organisations. Groups of people naturally form a hierarchy, whether it's officially recognised or not. It's human nature.
I expect that this method works better in a consultancy (which is what the company in this article is) than in a startup that builds product. In a consultancy, the customer can be the de facto CEO. They tell you what they need and when they need it, and while actually figuring out what to build and how isn't necessarily easy, at least there's some direction. That and each project is, out of necessity, scoped from day one.
In a startup where you're making something, especially BEFORE you make something and during the dark times when you don't know if the thing you're making is something anyone wants, having a single source of vision and direction is critical.
As implemented by Twitter.
This article, as many others have pointed out, is pretty misleading. If you want to read about a company that functions mostly as a traditional business with no CEO, look into the Mondragon Corporation.
Cynical hot take: great, now everyone might have veto power over doing things, rather than just my chain of command.
they aren't alone. many boutique shops operate like this. decisions at the top are made by consensus. everyone is their own boss. salary decisions sre made by local managers and HR. if there is a ceo, then s/he is mostly a figurehead.
it makes sense for consultancies to operate this way because they don't really sell "a product" as we come to think of it. They sell services in specific areas, and growth of that business is largely contingent on the type of work they take up, how much of it they're willing to do and keeping the structure of the firm in an optimal state to satisfy those demands.
Another idea: during the Soviet perestroika just before economic collapse, the "CEO elections by employees" became quite popular in the Soviet firms.
So incase of fraud everyone goes to jail right ?
Company's salary and organization model is very similar some Finnish consultant companies. Vincit Helsinki at least.
I would like to speak with someone in charge around here?
igalia.com works in a similar fashion. No boss, some democratic global meetings per year. Their motto: 'same salary, same responsibility'.
So they basically copied Valve? But removed the CEO part.
You know that ship that has no captain ?
Yeah me neither.
Sounds like US immigration policy.
"Borg? Sounds Swedish"
Fascinating what a culture that doesn't value personal prestige can produce.
By what date will we conclude "No PRESIDENT" ?
Sweden, when Tumblr turns into a country