“Like its politicians and its wars, society has the teenagers it deserves.”

— J.B. Priestley

“Good habits formed at youth make all the difference.”

— Aristotle

“You can only be young once. But you can always be immature.”

— Dave Barry

“Common sense is the collection of prejudices acquired by age eighteen.”

— Albert Einstein   

“You don’t build a business, you build people, then people build the business.”

— Zig Ziglar

“If you can’t feed a team with two pizzas, it’s too large.”

— Jeff Bezos

“There’s nothing wrong with staying small. You can do big things with a small team.”

— Jason Fried, Basecamp co-founder

Adolescence in humans is a transition period between the two growth states of childhood and adulthood. It is usually seen as a period of years, although some individuals do not appear to make the underlying behavioral and psychological state transitions fully or in a timely manner. They key here is “growth state transition” – behaviorally and psychologically.

Organizations experience a somewhat similar period of growth state transition as they move in size from relatively small, compact, early-stage units toward what appears to be a natural upper limit to effective unit size: the “Dunbar number”. More on this in a moment.

Thinking of this transition as a kind of organizational adolescence brings up some very interesting perspectives on organizational growth and effectiveness. I have seen this transition effect in quite a few cases in both small and larger firms (with multiple business units) but for a long time didn’t fully understand why unit size – in terms of headcount – was truly, functionally, important.

Organizational adolescence is far from a new concept but it has not been directly linked to organizational unit size so far as I can find. Economists offer a typical people-deficient view:

Economists’ view of organizational unit size

The size of an organizational unit, business unit, or business as a whole, in headcount terms, is so important over their lifespan. Why? Let’s ask an economist: “Optimal size is usually expressed as the point at which production costs per unit of output are lowest”.

Despite Wikipedia’s designation of this cost minimum as being the “socially optimal firm size”, it is in practice neither social nor optimal but simply an economist’s mathematical abstraction. The real world of organizations does not work this way. Nowhere even close.

Organizations consist of people. Notoriously hard to optimize people – like me, and probably you. We are generally social beings, wars and other distractions aside. When we get together for some group purpose, the size of our group or unit largely just happens. When it gets unmanageable, or some external factors require, the unit gets broken up into two or more associated units.

The result is an almost random (from an external perspective) spectrum of unit sizes – from two people to millions of people. Enough to keep a large number of org-chart fiddlers happily busy forever.

However, when you work with organizations and businesses individually, charts often don’t matter much in sizing. What matters is the individuals involved – especially management, the type of business, geographical factors, capital intensity, financing options, and a whole bunch more. Size in headcount terms and its distribution just happens. It is an output or growth consequence.

Organizational adolescence growth state defined

TEEN YEARS. The teen years are also called the growth stage. By this point in the phases of the business cycle, you’ve got a hold on things, but nothing is set in stone. Just like a teenager, your business might be growing at a massive pace. You are establishing your role in the marketplace, and turnover is decreasing. These are all positive signs, but you’ll need to watch out for growing pains.”

“Don’t mistake your skyrocketing growth for long-term success. During the teen years, you need to be vigilant, adaptable and always planning ahead. Build up your teams with strong leaders and spend time on company culture activities. Work on creating raving fan customers. The teen years are the time to invest in your employees and to ensure you are providing the highest value to your customers. This is the only way to ensure long-term, organic growth.”

“It was exciting to grow from 2 to 6 to 20 and now 30 employees, but not everybody shares your energy and passion, and you find yourself increasingly frustrated that your growth seems to have hit a plateau long before it should. ‘I feel like the company can’t keep up. Why can’t they just get it? Why do they need me to make all the decisions,’ you find yourself wondering over and over again.”

From Go-Go to Adolescence. If you’re at all familiar with the theory of corporate lifecycles and the work of Ishak Calderon Adizes, you’ll recognize the above scenario as the perfectly natural desire to take your company from what Adizes calls ‘Go-Go’ to ‘Adolescence.’ Adizes proposes that companies, like people, move through a series of developmental stages, beginning as a gleam in the entrepreneur’s eye, moving through infancy to teenage angst and on to adulthood or ‘Prime.’

“As with individuals, each stage of the corporate life cycle involves changes that present unique challenges to the organization. The challenges arise naturally in the developmental process. The challenges are hard but natural parts in the growth of any company. Meeting them head on is critical to healthy advancement to the next stage.”

The Dunbar Number: Organizations are fundamentally social groups

Organizations are only secondarily economic or agenda-driven units – organized around a specific, externally-directed purpose or function. They differ because people in each one differ. Things that work in one may fail abysmally in another that is almost identical in purpose and structure.

Despite this fact, organizations are designed largely around external, objective factors. If people enter into the design, it seems mostly through “span-of-control” machinations much-loved by org-chartists. What I have almost never seen is a group size that is people-determined, socializing-people: Enter the Dunbar Number.

The Dunbar number is a rough measure of optimal or most effective group size  (in social terms) based on research by British evolutionary anthropologist Robin Dunbar. He claims that the optimal size of communities, and even business organizations, is approximately 150 members. If you push this boundary on size, relationships among group members tend to break down. His critical range limit was between 100 and 230  people, with an average of 150.

Dunbar hypothesized that there is a direct relationship between the size of our brain and the size of our social group. Even though we mostly live in cities now, we evolved from hunter-gatherer societies, where the average village size was about 150. The basic unit size in Roman legions (roughly equivalent to a military company today) was also 150. From the time modern humans emerged, 250,000 years ago, Dunbar’s number can be viewed as a constant from a brain-size perspective.

This is both a social and cognitive number that places an effective upper limit on how many people with which we can on average maintain stable, meaningful social relationships. Once we go past Dunbar’s number, the effectiveness of our social network drops precipitously. Organizational functioning becomes much less effective and much harder to manage.

This is why, for instance, manufacturer W.L. Gore – well-known for its non-hierarchical, team-based management structure – builds a new branch every time a branch exceeds 150. Within this limit, each member has the cognitive capacity—specifically the brain size—to process the complex data necessary to maintain stable relationships and interactions with everyone else.

For smaller, more intimate groups like teams, Dunbar found that three to five worked best for our closest associates, and 12 to 15 for the next level of group size. These feel about right to me based on my experience.

Span of control gets involved here also

Span of Control is defined as the total number of direct subordinates that a manager can effectively control or manage. It varies with the complexity and nature of the work. For example, a manager can manage 4-6 subordinates when the nature of work is complex, whereas, the number can go up to 15-20 subordinates for repetitive or fixed work.

A small business with around 50 people might therefore have a half-dozen managers, each with roughly 7-10 subordinates. As the business grows, this structure is likely to evolve into one with about the same number of managers but each now with double or triple the number of subordinates. Span of control limitations begin to create some increasingly difficult management challenges.

Coupling span of control limitations with Dunbar’s unit size limitations seems to explain why the unit size range of 50 to 150 may well be an effective practical size limit for greatest effectiveness. And, as growth moves the headcount into that size range, organizational and management problems can become significant.

As the rough span of control chart example below shows, a 150-person unit with three manager levels below the CEO is a typically flat structure today. The larger lowest level span is made possible by modern communications and computer systems. Beyond the 150-person size, the organization must deepen to 4 levels, which often presents further complexity and communications challenges.

What a 150-person organization looks like with moderate span of control.
What a 150-person organization looks like with moderate span of control.

Growth now adds adolescence problems to the mess

A growing organization will typically pass through the Dunbar and span of control size ranges at some point during its adolescence phase. The adolescence state does not itself limit size but it sure can make the size limit problems a whole lot more difficult.

Business unit adolescence involves an essential transition from the compact, hands-on management and decision-making of smaller units – under 50 people – to more distributed, hierarchical structures. Management processes also change and professional capabilities become vital.

In my experience, this stage tops out at around 150 people (although I really didn’t know why for a long while until an architect buddy, Stu Rose – who created Garden Atriums in Poquoson VA – introduced me to the Dunbar number concept). In any case, the organization, in effect, is forced to “grow up” and act like an adult. Adolescent no more.

Yet I have seen quite a few organizations attempt to ignore this critical transition and end up struggling unnecessarily against serious natural, internal limitations. A few simply collapsed. Broke up mostly, rather than failed.

Unit size limitations and challenges occur in much larger organizations

The W.L. Gore example above of managing unit sizes aggressively suggests that the “150-person” size limitation may apply equally to much larger organizations. W.L. Gore in 2019 had 10,500 employees and over $3 billion in sales. That’s big.

This suggests to me that recent efforts to organize as much as possible around “team” structures are the result of such smaller units actually being more effective. Not in theory but in practice.

Direct reports and team size – how many is too many?
Direct reports and team size – how many is too many?

David Rutter had some useful guidelines around communication complexity and “ideal team size”: “What is the Ideal Team Size?”:

“The ideal team size depends on the purpose of the team and the amount of collaboration needed between the team members. The higher the interdependence of tasks and need for team member collaboration, the more likely that a smaller team will perform better. But for most collaborative teams, the ideal team size is between 4 and 8.”

Rutter illustrated this complexity vs. team size concept with what I think is a very nice set of diagrams:

The ideal team size or direct reports of 4 to 8 people looks very sensible.
The ideal team size or direct reports of 4 to 8 people looks very sensible.

In times past, business unit size mostly just happened. Geography, production requirements, management egos, and many other factors drove unit sizes. Only recently has unit size become a concern as a social group with its own limitations on effective size. This trend has led to a huge movement toward teams in almost every kind of organization. Technology-enabled today, of course.

COVID has made business unit size central to performance

As organizations and workers have become remote and hybrid in structure and management, teams of all kinds have become the most important organizing concept. You can communicate today with almost any number of people but you can manage and collaborate intensively with only a relatively few.

From what I read, team size (“teams” being broadly defined) seems to fall into the range of 5 to maybe 15 for greatest effectiveness and agility. If span of control considerations dictate a manager’s scope of 4 to 8 teams, a 3-level unit structure gets you to around 150 people, as illustrated above.

If you are in a growing organization, especially one that is relatively new (aka a “startup”), then the struggles of organizational adolescence bring a further challenge to management. My experience suggests that these become significant as the organization or unit moves beyond 50 people, and can get very serious as it reaches or exceeds 150 people.

Note that this size constraint can occur within much larger organizations where internal units – geographical or product-specialized – grow quickly.

This makes organizational unit size of major importance in managing today. It can no longer be left to chance or fancy. Unless you enjoy living indefinitely with teenage behavior in your businesses.

Bottom line:

Does your growing organization or business (unit) have between 50 and 150 FTE employees? If yes, is it often a mess – tough to manage? If no, you may be either very smart or very lucky. This is the growing organization size equivalent of the Terrible Teen years of human adolescence. What can go wrong, will. We looked here at why is this particular size range and development stage are so important.

Related Reading

What is the Span of Control? Span of Control can be defined as the total number of direct subordinates that a manager can control or manage. The number of subordinates managed by a manager varies depending on the complexity of the work. For example, a manager can manage 4-6 subordinates when the nature of work is complex, whereas, the number can go up to 15-20 subordinates for repetitive or fixed work.”

Meaning and Explanation. The term “Span of Control” is popularly used in business management and human resource management. Because this term is related to the management and controlling of employees, the meaning of the word is the total number of subordinates that a manager or supervisor can manage.”

“In the past, one manager was capable of managing 1-4 subordinates. Because of that, there were many levels of management in one organization. In 1980, with the introduction of information technology in business, many organizations flattened their management by reducing the number of managers in an organization. After that, the span of one manager increased from 1-4 to 1-10 subordinates.”

“This was possible because of inexpensive information technology. Technology helped in easing out several middle managers’ tasks such as collection and manipulation of operation information. Because of this, a manager became capable of managing more subordinates at one time.”

“Several factors affect the span of control of a manager, such as the nature of work, capabilities of the manager, capabilities of employees to be managed, and the responsibilities of a manager. It can be of two types, such as a narrow and a wide span of control. It is considered to be narrow when a manager manages 2 to 4 subordinates.”

“Three or four levels of reporting typically are sufficient for most organizations, while four to five are generally sufficient for all organizations but the largest organizations (Hattrup, 1993). This is consistent with ERC’s survey findings as well. Ideally in an organization, according to modern organizational experts is approximately 15 to 20 subordinates per supervisor or manager. However, some experts with a more traditional focus believe that 5-6 subordinates per supervisor or manager is ideal.”

  • Britannica summarizes the organizational structure of the military into units and levels: “Military Unit: Armed Forces” that shows platoons of 20 to 50 soldiers and companies of 100 to 250 soldiers:

“Armies, navies, and air forces are organized hierarchically into progressively smaller units commanded by officers of progressively lower rank. The prototypical units are those of the army. The smallest unit in an army is the squad, which contains 7 to 14 soldiers and is led by a sergeant. (A slightly larger unit is a section, which consists of 10 to 40 soldiers but is usually used only within headquarters or support organizations.) Three or four squads make up a platoon, which has 20 to 50 soldiers and is commanded by a lieutenant. Two or more platoons make up a company, which has 100 to 250 soldiers and is commanded by a captain or a major. The function of administration is introduced at this level, in the form of a headquarters platoon administered by a sergeant and containing supply, maintenance, or other sections.”

  • Organizational adolescence as a lifecycle stage is hardly a new concept. One of its early proponents is Dr. Ichak Adizes, a Yugoslavian American business consultant and former tenured professor. From 1967 to 1982 Adizes taught at UCLA, then at Stanford, Tel Aviv University, Hebrew University and Columbia University’s executive programs. Adizes founded the Adizes Institute, which is based in Santa Barbara, California. He is well known in the corporate world for developing the PAEI management model in early 1970s, that categorizes managers into four key roles Producer, Administrator, Entrepreneur and Integrator. His adolescence overview:

“The Adolescent company teeters on the brink of both success and disaster. So long as the Adolescent company does well, investors and the Board regard the Founder as a genius with a golden touch. However, when the infrastructure collapses, sales slow down, costs mushroom or profits decline, the finger pointing begins in earnest. The Founder, accustomed to the magic of adoration, is instantly transformed into a goat who is no longer up to the task of leadership.”

“Adolescence is an especially stormy time characterized by internal conflicts and turf wars. Everyone seems at odds with everything. Sales fall short or exceed production’s estimates, quality is not up to customer expectations, and old timers plot against the new hires. Emotions are volatile and organizational morale traces a jagged line: ecstasy in one quarter, depression and dejection in another. Throughout the organization, people are busy tracking the real and imagined injustices they have suffered, which they nurse with great care. The Founder’s safe conduct through this tempest is by no means guaranteed. If these conflicts are not resolved, Adolescent companies can find themselves in Premature Aging that can lead to the early departure of entrepreneurial leadership, or the professional managers leading to pathologies called Divorce or Premature Aging.”

The Adizes 10-stages of organizational lifecycles.
The Adizes 10-stages of organizational lifecycles.