About seventy years ago Edith Penrose pointed out that, when small businesses grow, they don’t scale up but change their organisation structures so much that “we have to look on them differently; just as we cannot define a caterpillar and then use the same definition for a butterfly”, writes Prof Simon Bridge.
In the 1990s an anthropologist named Robin Dunbar explained why. He suggested that there is a maximum number of individuals who can relate closely to each other in a social or work group. For humans he suggested that was about 150 which, he noted, is the size of early human settlements, of basic professional army units not just in Roman times but still today, and even for academic sub-disciplines.
Therefore, as human organisations grow towards 150 members, they have to change their structure. A business founder can start by assembling a few associates and employees and manage them by informal personal interaction. But once the number of such people grows those methods start to break down. The boss can no longer know everyone well and more formal management is needed, for instance splitting the organisation into sub-divisions with subordinate managers and a structured chain of command.
However, while operating in small groups may seem relatively natural and easy, how many of us are prepared for the more formal arrangements required for effective management of larger organisations? Many of us may, at some time, find ourselves in such a position – but do we then just do what we see others doing without really being conscious of how such organisations operate? What are their controls and how do they work? How can they be steered and, if necessary, accelerated (or slowed down) to fulfil their functions? How can the people in them be motivated and encouraged to share the same goals?
Take a business, even a relatively small one: it needs people who can produce the product or service it wishes to offer its customers. It needs people with the marketing and sales skills to ensure it is supplying what customers want and they to persuade them to buy it. And it also needs people to manage the money without which it cannot operate. But how does it organise those people and ensure that they work effectively together to achieve the organisation’s goals, especially if they work in different departments, in different buildings or even on different sites?
There are many sizeable organisations – at local, national and even international levels: such as schools, hospitals, large businesses, government departments and international bodies like the EU and UN. But who teaches their management how to organise and control them, how to direct and coordinate them, how to inform them and how to ensure everyone is taking appropriate and consistent action? In a small group the leader may do all that but how can it be done when the overall leader does not know all the employees personally and is not in daily touch with them?
One example of where that is taught is in the Army. It has learnt that without good organisation it will lose battles – so, over the years, it and other armed services have developed staff colleges to prepare, not only future leaders, but also the staff who will be working for them as part of their control mechanisms. They are taught about organisation structures and how to arrange, resource and support them. They study how to analyse problems and develop solutions. They practice communication up as well as down – and they even learn about meetings and their control, agenda and minutes.
That may also seem sensible for businesses but is it taught by business schools – or do they just focus on functional skills such as marketing, accounts, operations, finance, economics and business law? And what about other organisations such as governments? If you are a new prime minister, or a joint first minister, how to you ensure that the departments of which you are the head operate the system well to deliver the manifesto for which your party was elected? Or, to put it another way, if you have been elected or appointed to get to an agreed destination, are you capable of driving the vehicle that might take you there?
