How Fast-growing Companies Can Make Better Decisions

There's often a moment when founders of fast-growth ventures realize they have lost control of the decisions being made around them. Perhaps a pile of money goes missing, they hear an important customer complaint three weeks late, or a well-intentioned manager without guidance makes a hire that doesn’t fit. What’s less understood is why this happens when it does—and why it tends to strike along the same fault lines: alignment, operational complexity, financial management and oversight.

These fault lines typically emerge as the company grows, especially in retail and service, where headcount scales quickly. At around 50 employees, founders can no longer maintain real relationships with everyone. At around 80, most firms need formal structures and management systems to support operations and decision-making. Near 150 employees—known in the anthropology literature as “Dunbar’s number,” the cognitive limit for maintaining stable social relationships—formal mechanisms become a requirement.

The trouble is that in formalizing their decision-making, companies struggle to find the right balance between centralizing decisions and decentralizing them. Overly decentralized companies face multiple risks: inconsistent execution, brand dilution, coordination failures, lost economies of scale and compliance problems. CrossFit is one such case: at its peak in 2018, the fitness brand had over 15,000 independent affiliate gyms and just 60 employees at headquarters. It resisted formalizing the affiliate system almost entirely—no playbooks, no territories, no management systems.

Please select this link to read the complete article from Harvard Business Review.