When it comes to startup growth strategy, entrepreneurs are generally in one of two camps. Some believe it's better to go out of the gates with the support of a large team behind them, while others swear by the lean approach for new businesses, which means launching with a smaller team. If you're trying to figure out which side of the fence you're on, let's look at some facts. According to SixSigma, going lean with small teams has been linked to improved work output, better communication, increased morale, and more satisfied customers. Larger teams, on the other hand, have been known to make group efforts more inefficient, less flexible, less coordinated, and less supportive.
At Pluralsight, we believe strongly in the power of small teams to help grow the company. We've followed a lean approach since launching the business in 2004, opting to keep our staff small until expansion proved warranted. In fact, for the first seven years of operation, our group of four founders relied solely on our own efforts--with the help of contractors--and made no fulltime hires at all. During those early years, we made huge strides with a small and focused team. When we had solid evidence through continued fast revenue growth and strong margins that we could support more staff, we gradually began hiring. As certain teams have grown larger over time, we've noticed some of the challenges mentioned above. Now, we strive to grow the company through the composition of smaller teams.
Here are three ways that we've found small teams can help make a big impact on the success of the entire enterprise:
You'll get the most out of each team member. Research dating back a century has shown that as a team's size increases, efforts from each person on the team correspondingly decrease. (This is known as the Ringelmann Effect.) A more recent study conducted at the University of Massachusetts replicated these results, and in fact found that even when people believed they were part of a larger team, their efforts diminished.
On the flip side, people increase their effort when they're on smaller teams, as they feel more responsible for the output based on their efforts. Organizing a large group into several small teams allows people more autonomy to wear multiple hats and to be more entrepreneurial (one of our core values at Pluralsight). Smaller teams also allow each person a chance to take greater ownership of the results, and to tap into their natural reserves of intrinsic motivation.
You'll increase productivity. QSM recently surveyed its database of more than 10,000 projects to determine the relationship between the size of a team and various management metrics, such as cost and defects. In QSM's research, based on 1,060 medium and high confidence IT projects, the use of small teams was found to be a key characteristic of the highest-performing projects. Best-in-class projects had only four people per team, compared to the 17-person teams that were the poorest performers.
While larger teams did have an advantage when it came to how quickly they finished jobs, their projects were found to have twice the defects and three times the cost of those completed by smaller teams. The four-person team has been cited as optimum for productivity by other experts as well, including Fortune magazine. If you incorporate lean methodology into small team efforts, the results can be even more impressive. SixSigma reports that using lean methodology with small teams can increase team effectiveness as measured by throughput up to 300 percent. Although there's probably not a magic team size that works for every scenario, this is one place where bigger definitely isn't better.
You'll keep it simple. Steve Jobs once named "focus and simplicity" as his mantras. Yet it's not always easy to keep things small and simple. "Simple can be harder than complex: You have to work hard to get your thinking clean to make it simple," explained Jobs. There's no doubt that the more people on a team, the larger the number of potential interactions, and the more unwieldy and frustrating projects can become. Smaller teams with the right combination of people can be more agile and flexible. They should consist of people who rely on each other to get things done. Doing so improves the "flow" of delivering value through experimentation and continual improvement. Focusing on the flow efficiency of a team is the key to getting the most out of lean, and ultimately improving productivity.
As Deborah Sweeney, CEO of MyCorporation.com, writes about large teams: "Anyone who has worked with a large team knows that feeling of being lost in the crowd, but that's not the right frame of mind for a fledging start-up to have." What's the right frame of mind? To remember this: while it may feel in the moment that throwing more people at a problem is the best way to solve it, additional talent does not always equal optimal talent. Instead, prioritize creating a culture that supports each employee becoming an indispensible member of a smaller team.