By Richard Nethercott, strategic advisor at Infrastar 

Most business leaders agree that people are the key to success.

The type of people recruited, and how they become a team with a shared sense of purpose and a common culture, are the things which differentiate successful businesses.

A key challenge in a small growing company is how to best organise your business to maximise the potential of your people. In such SMEs, it can become a challenge to balance the entrepreneurial spirit of the start-up with the need to formalise and organise roles and responsibilities as the company grows. After all, it is well recognised that 'people go faster alone, but further together'.

An insight into the drivers for organising human groups is provided in the acclaimed book Sapiens by Yuval Noah Harari. The book is sub-titled A brief history of mankind. In it, Harari points out that humans have evolved to live in tribes bound together by culture.

His research shows there is an optimum size for a human tribe, which is 64 people. This is the size at which human interpersonal communication works most effectively in ensuring everyone has the same message from the tribe's leaders, and the leaders can enthuse and support all of the tribe's people on a face-to-face basis. As the tribe gets bigger, the effectiveness of communication and 'personal buy-in' starts to reduce. Indeed, he states that tribes bigger than 150 start to fragment.

Interestingly, these numbers agree very well with the work of the British anthropologist Robin Dunbar, who in the 1990s postulated a link between human brain neo-cortex size and the maximum number of friends and acquaintances we can maintain in our wider social group ie people we consider we know, even if we haven't seen them for a while. Dunbar's number, as it is known, is 150.

During my career running business units in various sized companies, I have had cause to look into the organisational structure of several large multinational companies. I have found that those who are most successful have organisational structures where the maximum size of the basic units aligns well with Harari's and Dunbar's numbers.

Indeed, a couple of the more mature and well-led companies had a maximum size for a unit in their structure as 63. I am sure they had found this to be the best size through trial and error in their long histories, rather than reading Harari and Dunbar; but the fact they had this as the optimum size gives further credence to these theories.

I have found that several SMEs grow to around 40 to 70 people and then start to struggle to carry on their growth in the way they had as start-ups. The original founders of these SMEs are very good at enthusing and driving the initial smaller group of people, utilising the agility and flexibility that a start-up enables.

But then they become frustrated as the company grows in headcount past some of these key numbers of staff. Now the managers of HR, finance and other supporting functions start to want more formality and organisation in the company.

The key thing here is communication. The company has grown past the tribal size where human face-to-face interactions from a small group of leaders worked so effectively, and now additional means of communication and 'culture-projection' need to be employed. The company is no longer a small 'band of brothers and sisters' and now needs to comply with more regulation and project its vision and mission in ways it never has before.

Many SMEs try to go from small to large organisational structures too quickly, inflicting problems and pain along the way. So how do companies grow close to the maximum sustainable size for a human tribe (usually 60ish with a maximum of 150) and then make the transition to a company of several hundred people without too much pain?

It is all in the speed of the change and the steps taken between structures for small companies and organisational structures for larger companies. That is why forward multi-year business plans are important to identify the timelines for the expansion, some of which will involve areas that the original entrepreneurs may not have as a skill set.

In my next article, I will discuss what can be considered a 'Goldilocks' speed; not too fast that it breaks things, but not too slow that it loses the entrepreneurial drive.

Richard Nethercott is helping with the continuing growth of Cheltenham-based Infrastar. He has spent 38 years in the IT services industry, running several large business units in multinational companies.

For more information, go to https://infrastar.co.uk or call 01242 303720.