“Strength in numbers” is a common belief, and while that holds in many situations, sometimes a larger group can actually slow you down.
As leaders, we often measure our success by the size of our teams. “We have 500 employees” simply sounds better than “I’m leading a team of 10.”
The prevailing notion suggests that a larger team equals more productivity and better outcomes. However, is bigger truly better?
While the appeal of a large workforce is undeniable, there’s a growing awareness that a small, well-organized team can outperform larger ones.
And as labor costs in Vietnam continue to rise in 2024, doing more with less is a reality many companies face. In our recent CEO Roundtable, worries about increasing labor costs and finding ways to optimize resources were among the main themes.
In this article, we examine the benefits of smaller teams over larger ones and provide practical strategies for maximizing the potential of a compact yet highly efficient workforce.
The research paper titled “Large Teams Develop And Small Teams Disrupt Science And Technology,” conducted by University of Chicago professor Lingfei Wu, offers valuable insights into the dynamics of team size.
Analyzing over 65 million academic papers, patents, and software products, the study finds that smaller teams are naturally disruptive, with new ideas and opportunities. In comparison, larger teams focus on developing existing concepts.
The research suggests that larger teams, leveraging recent and popular ideas, make an immediate impact. In contrast, smaller teams delve deeper into the past, exploring less popular ideas, and are consequently more disruptive, often succeeding well into the future.
A notable revelation from the analysis is that a team’s ability to generate disruptive ideas sharply declines after adding the first few members: “As teams grow from 1 to 50 team members, their papers, patents, and products drop in percentiles of measured disruption by 70, 30, and 50, respectively.”
This chart from the paper presents the disruptiveness versus team size. Despite the common perception that larger teams yield better results, the advantages of operating with a smaller team are evident.
Asana, the leading project management software company valued at over $4 billion, recently launched a “Work Innovation Score.”
In an interview, Rebecca Hinds, a Stanford Ph.D. who led the research efforts, said that cohesion (how well employees work together) and velocity (how quickly ideas and work flow through the organization) are crucial to innovation, the lifeblood of any company. And as we’ve seen from the research above, small teams are better positioned to deliver this.
And it’s only getting better, as small teams are increasingly productive due to AI. Ben Parr, the famed founder of Octane AI, said in a recent podcast that we can now real businesses with lower costs by using AI for building prototypes and improving products quickly.
He even said he believed we would see a billion-dollar company in the next few years thanks to advances in AI: “I believe that there will be a billion-dollar company built in the next five-ish years that has one to three people tops because you can automate almost everything else. It’s going to happen.”
Venture capitalist James Currier noted that thanks to AI, “Companies will be able to develop software faster and better, run sales prospecting, qualifying, and outreach with AI automated systems, and run marketing campaigns with AI optimizations.”
James rightly points out that the cost of large teams isn’t just in payroll. Secondary costs like recruiting, performance reviewing, culture building, office space, IT, and other overhead all add to the ‘cost of large teams.’ As business leaders, that will immediately impact our bottom line.
Besides this, smaller teams create benefits, including:
In small teams, managing workloads is a common hurdle for team leaders.
Managers often find themselves stretched thin as they juggle their responsibilities alongside the need to oversee and address issues within the team, something Gallup predicted to be one of the biggest challenges in 2024.
To combat this, effective prioritization and performance management are essential. Managers should dedicate time to coaching and managing team members, holding regular one-to-one meetings to address concerns and ensure the team’s overall efficiency.
Nonurgent issues can be addressed without causing constant interruptions by fostering open communication channels through regular meet-ups. When challenges persist, exploring strategies for leading an overwhelmed team is essential.
Unlike large organizations, where a dedicated employee typically fills every role, small businesses often require team members to wear multiple hats. The absence of specialized roles creates a need for effective task delegation and a strong understanding of each team member’s strengths and weaknesses.
Managers play a pivotal role in identifying and leveraging the diverse skill sets within the team, ensuring that tasks are distributed strategically. By fostering a culture of collaboration and shared responsibility, small teams can effectively cope with the challenges of less specialization.
Additionally, considering the utilization of freelancers during peak work periods can provide temporary relief, and recognizing when it’s time to recruit additional team members is crucial for long-term success.
Complementing a smaller core team of highly skilled people with fractional talent and freelance workers creates what HR Guru Josh Bersin calls a “Dynamic Organization.” In a recent podcast, Josh predicted that companies that operate with more agility will outperform their more traditional counterparts in 2024.
An essential aspect of successful small-team management is the granting of autonomy. Providing teams the freedom to make decisions and execute projects independently fosters a sense of ownership and responsibility.
Flexibility in choosing work methods, locations, and schedules can significantly boost morale. Embrace remote work options, flexible schedules, and remote-friendly tools, allowing your team the necessary flexibility. This autonomy not only enhances motivation but also encourages innovative thinking and problem-solving.
Prioritizing the well-being of small team members is a fundamental component of effective management.
Offering wellness programs, relaxation spaces, and access to counseling services promotes both physical and mental health. A culture that prioritizes well-being keeps the team motivated, reduces burnout, and enhances overall productivity.
Incorporate team-building activities focusing on health and enjoyment, such as shared workouts or breathwork sessions. Small teams can thrive and achieve sustained success by creating an environment that values the holistic well-being of its members.
An office for rent accommodating different work styles and needs, including focus work, team meetings, and creative brainstorming sessions, helps your team collaborate comfortably and work productively.
Ensure that the physical environment is conducive to individual focus and team interaction by Providing comfortable and ergonomic furniture, optimizing lighting conditions, and considering flexible work arrangements.
Additionally, encourage the personalization of workspaces, allowing team members to create a comfortable and inspiring atmosphere. A thoughtfully crafted workplace contributes significantly to a small team’s success and satisfaction.
Rising labor costs in Vietnam in 2024 present a unique opportunity to reevaluate traditional team structures. Our exploration into the power of smaller teams reveals that they are not just necessary in the face of financial constraints but also a strategic advantage.
The research by the University of Chicago’s Lingfei Wu underscores that smaller teams are more inclined towards innovation and disruption, challenging the common belief that larger teams are inherently more productive.
The integration of AI technologies further amplifies the effectiveness of small teams, enabling them to operate with greater efficiency and at a lower cost. Then, manage small teams successfully by adapting management strategies to foster autonomy, flexibility, and well-being within small teams.
Ultimately, a team’s success isn’t solely measured by its size but by its agility, cohesion, and innovative spirit that thrives in a smaller, more focused group. As we adapt to the changing economic landscape, it’s clear that smaller teams will play a crucial role in driving forward-thinking businesses in Vietnam and beyond.
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