Consulting by numbers

Not many of us can claim to have a number named after us, but Robin Dunbar can. He’s the British anthropologist who famously linked the number of stable social relationships in a primate group with the size of part of their brain: the bigger their neocortex, the more relationships they have. Apply that to humans and you get around 150 (although estimates vary between 100 and 230): that’s the number of people you know and can stay in touch with, not simply your passing acquaintances. Go beyond this, it’s argued, and your group needs rules to stay cohesive; even at this level, a group needs a powerful incentive to stay together and more than 40% of time is given over to some form of social grooming (indeed, another of Dunbar’s fascinating suggestions is that language is the human substitute for picking insects out of our neighbours’ fur and has helped us be more productive).

What happens if we apply this thinking to the structure of the consulting firm? We know that there are two points at which a growing consulting firm struggles. The first is usually somewhere around 50 people, when its first attempts to diversify have resulted only in a distracted senior management team and falling profitability. The second – interestingly enough – tends to be when a firm gets to about 200 people, a problem I’ve always attributed to lack of investment capital, based on the number of firms of this size that are happy to be acquired. But perhaps this second transition has more to do with the challenge of moving from an environment where you know everyone and need little in the way of process or policy to maintain cohesion, to one which requires rules.

That raises two further questions.

First, what happens to a 200-odd person firm that is bought by a bigger one? What it gains on side (rules that provide it with cohesion) it loses on the other (whatever sense of cohesion it brought with it is inevitably lost). And that’s presumably why so many firms, once acquired, are never heard of again, overwhelmed by the effortless superiority of a much more organised structure.

Second, would it be better for consulting firms to be structured around internal practice groups which had no more than 150 people? Successful consulting depends on delivering a high standard of work, sharing knowledge and having a culture which puts clients’ needs first – and all the policies and procedures in the world won’t create this. It follows that the quality will suffer if your immediate team gets too big. My guess is that majority of practice areas are smaller than this, perhaps because we unconsciously recognise the issue. But some are bigger: so, if you’re thinking of hiring a consulting firm, accepting a job offer from one of them or simply taking on a management role there, you might just want to ask, how big.