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Wednesday, December 15, 2004

As companies evolve, so do we

Are you thinking of starting a company? In the latest issue of Business World Mahesh Murthy takes you through what to expect as your company starts to grow. He posits a “rule of threes”, and says that the character of a company changes as its employee strength increases in multiples of threes. So when three guys start a company, all three are passionate all-rounders, who throw themselves into every aspect of the business. When there are nine people, they begin to specialise, and get slotted into their roles. At around the 27 mark, structured departments are formed. And so on, through multiples of three all the way past 7000 employees. Read the full thing.

I wonder if this is analogous to how communities grew in prehistory – from a bunch of families to a village and beyond. Do the roles we assume, and the nature of our interactions with others, change in society in the same kind of way as in a company? And does it tell us something about ourselves as a species? Matt Ridley, in his wonderful book, The Origins of Virtue, writes about the correlation between the size of the neocortex relative to the rest of the brain and the ability to form complex social relationships. The larger the neocortex, he says, the more complex the society in which that species can live. And humans have one of the largest neocortexes around. Ridley writes:

Indeed, so tight is the correlation that you can use it to predict the natural group size of a species whose group size is unknown. Human beings, this logic suggests, live in societies 150 strong. Although many towns and cities are bigger than this, the number is in fact about right. It is roughly the number of people in a typical hunter-gatherer band, the number in a typical religious commune, the number in the average address book, the number in an army company, the maximum number employers prefer in an easily run factory. It is, in short, the number of people we each know well.

By natural group-size, Ridley means the maximum number of our fellow species whom we can remember personally – as he says, “reciprocity only works if people recognise each other,” and reciprocity is the key to how society functions. That is why the natural group sizes of most other creatures, including primates, tend to be relatively small. It also means that sociologists and anthropologists could also possibly come up with a “rule of threes” – Murthy’s, of course, is culled from experience, and that sounds just about right to me.

Another take on the EGS

I’d blogged on this before, but I can't help pointing out an excellent piece, also in Business World, by Omkar Goswami that dissects further flaws in the Employment Guarantee Scheme.
amit varma, 1:52 AM| write to me | permalink | homepage

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