What is the Optimal Team Size?

0:08 so let's start with the first element of 0:10 team composition 0:11 and that is size how big is your team 0:14 going to be or how small 0:16 is your team going to be let's start by 0:19 reflecting on 0:20 your current team or the team that you 0:23 worked in most recently 0:24 it could be in school could be at work 0:26 could be 0:27 a sports team that you're part of but 0:30 how big 0:31 is that team and i want you to think 0:33 about 0:35 from your perspective and your 0:36 experience what were the advantages 0:39 of that team size whether it be smaller 0:41 or large 0:43 and what were the disadvantages of that 0:46 team 0:46 size again whether it's small or large 0:51 go to the discussion forum and share 0:54 with your classmates 0:55 your own experience with team size 0:59 and what you see is those advantages and 1:01 those disadvantages 1:03 and see if your experiences line up with 1:06 or maybe even are different from those 1:09 of your classmates 1:11 and then we will go into what we know 1:14 from our research 1:16 on team size and its impact on team 1:18 functioning 1:19 and performance so start with the 1:21 discussion forum 1:23 see what your classmates have to say and 1:25 then come back 1:26 and we will proceed with trying to 1:30 understand really what the impact of 1:31 team size is 1:33 on team functioning and performance when 1:35 we look across 1:36 teams around the world 1:42 all right welcome back hopefully you had 1:45 an opportunity to really engage with 1:46 your classmates 1:47 on this notion of team size and what 1:49 those advantages and disadvantages are 1:52 so we did a survey a couple years ago uh 1:55 asking managers and executives or from 1:58 around the world really 2:00 on what their intuitions were regarding 2:03 the benefits and the cost 2:05 the disadvantages of team size 2:08 and here's what we found some people 2:10 really preferred larger teams 2:12 and the explanations that were given 2:14 were more capabilities the more people i 2:17 have the more 2:18 capabilities i have in the team to 2:19 perform the task or 2:21 the more resources that we have whether 2:23 those resources be 2:24 information or relationships 2:28 but having those more resources the 2:30 greater access to resources 2:32 the more information thus the more 2:34 diverse inputs 2:35 thus the more ideas and possible 2:38 solutions that we might have 2:40 so this is the logic or the explanation 2:42 that was given for people who really 2:44 preferred 2:45 to have larger teams in place but there 2:48 was an equal set of people that really 2:50 preferred smaller teams and their 2:52 explanation 2:53 equally valid more cohesive the smaller 2:57 the team the more cohesive or bonded 2:59 better trust within the team a higher 3:03 satisfaction in the team because we can 3:05 really get to know each other 3:06 uh really rely on one another a lot of 3:09 people will 3:10 articulate that a key benefit of smaller 3:14 teams 3:14 is that we can make decisions faster 3:18 and if consensus is required where 3:21 everybody has to agree it's a lot easier 3:23 to reach that consensus 3:25 when we have a smaller team as opposed 3:28 to a much larger team 3:30 and then the last argument that's often 3:32 given 3:33 for preferring smaller teams is 3:36 that we get more effective individual 3:38 contribution 3:39 in those larger teams it's easier for 3:41 people to hide 3:43 uh you'll recall a concept that uh maxim 3:46 talked with you about in the first 3:47 course 3:48 that we offered around uh inspiring and 3:50 motivating 3:51 individuals and the impact of social 3:54 loafing 3:55 well the impact or the possibility of 3:57 social loafing is much 3:58 greater when you have a larger team 4:02 but when you have a smaller team you can 4:04 really isolate 4:05 those effective individual contributions 4:08 so there are trade-offs there are pros 4:10 and cons larger teams 4:11 smaller teams the question i would ask 4:14 you is can both of these be true 4:17 are there certain cases where larger 4:19 teams are preferred are there certain 4:20 situations 4:21 where smaller teams are preferred and 4:23 that's a that's a question i want you to 4:25 keep in mind 4:26 as we go forward and revisit 4:30 in the discussion forum as i expose you 4:33 to some of the 4:34 latest research that we've been doing on 4:36 team size 4:37 so a good example of that is is this 4:40 study 4:41 this is a study that was published 4:44 back in 2009 and it really i think helps 4:47 build the business case for why we care 4:49 about team size 4:50 it focuses on innovation and creativity 4:52 in teams 4:53 and it looked at a number of different 4:55 predictors of 4:57 innovation in teams across a number of 5:00 different studies 5:01 specifically looking at 24 unique 5:05 studies 5:06 over 1300 teams from around the world 5:10 and what i'm showing you here is the 5:12 impact that each of these variables had 5:15 on team innovation so positive or 5:17 negative 5:18 and then the larger the positive effect 5:21 the more beneficial that 5:22 variable was for predicting team 5:25 innovation 5:26 and the larger negative impact the worse 5:28 it was for team innovation 5:30 so interestingly team size 5:34 of the variables that were examined as 5:36 part of this 5:37 meta-analysis this study team size 5:41 was the number one positive predictor 5:44 of team innovation meaning the on 5:47 average 5:48 the larger the team the more innovative 5:51 the team was and the impact of team size 5:55 that positive 5:56 impact on of team size on innovation 5:59 was stronger than job releva relevant 6:02 diversity 6:03 goal interdependence so our goals being 6:06 interdependent 6:07 task interdependence or team longevity 6:10 how long we've been together as a team 6:13 or even how diverse we are 6:16 in terms of our backgrounds as 6:18 individual team members 6:20 so again there is some evidence out 6:22 there across a number of studies across 6:25 many different teams from around the 6:27 world that team 6:28 size has a positive impact on innovation 6:32 now an important question you have to 6:34 answer is is there a limit 6:36 is there an extreme is there a limit to 6:37 how many people 6:39 are favorable for innovation 6:42 after some point does the innovation 6:47 get reduced in the team because there's 6:49 so many people 6:50 in the team and that's a question we'll 6:51 revisit 6:53 another study that i think is 6:55 particularly interesting in this regard 6:57 related to team size and and why we 6:59 should care and really building the 7:01 business case for team size 7:03 doesn't focus on team performance it 7:04 focuses actually on firm performance 7:07 and it looks at top management teams so 7:10 the c-suite of your organization 7:13 for example in tech startups in high 7:15 technology 7:17 early stage startup organizations 7:20 there's evidence to suggest that the 7:22 size of the founding team 7:25 positively predicts meaning the larger 7:27 the team the better 7:29 positively predicts how fast these 7:32 startups grow 7:33 and ultimately the positive cash flow 7:37 that these startups experience that's 7:40 interesting 7:40 a lot of times we think about keeping 7:42 that founding team small 7:44 what we actually find is that team size 7:47 positively predicts growth and cash flow 7:49 in these startups 7:50 again there might be a certain limit to 7:52 that but 7:54 positive relationship between size and 7:56 in this case firm performance 7:58 and then one of the most fascinating 8:00 studies for me at least 8:02 is this one where it looks at not the 8:04 top management team in this case 8:06 but the size of the board of directors 8:09 both for large firms and 8:10 small firms and there is a difference 8:13 firm performance here is measured both 8:15 by market-based measures of performance 8:17 so 8:18 stock returns as well as 8:20 accounting-based measures of performance 8:22 net income for example but for both of 8:25 those 8:26 measures of firm performance we find 8:29 that 8:30 board of director size the more members 8:32 on the board of director 8:34 on average the better the firm performs 8:37 both for large and small firms but the 8:40 impact of board size on firm performance 8:45 is greater for small firms than it is 8:48 for large firms 8:50 again there may be a certain limit but 8:52 on average 8:53 what we find is the bigger the board of 8:55 director the better 8:57 that firm performs very interesting and 9:00 i think counter-intuitive for a lot of 9:02 us 9:03 including my friends at amazon jeff 9:06 bezos uh 9:08 is famous for uh his uh 9:11 commentary at an amazon off-site retreat 9:15 this is an internal retreat 9:17 uh where a manager 9:20 stood up during the retreat and said 9:24 that 9:24 what amazon really needed was for 9:27 employees to start communicating more 9:29 with each other 9:30 more team communication more open 9:33 communication 9:34 and jeff bezos the current ceo of amazon 9:38 stood up at least according to reports 9:40 from this internal off-site retreat 9:43 and the quote went something like no 9:45 communication is terrible 9:46 we don't need more communication we 9:49 don't need more 9:50 team members communicating with each 9:52 other 9:54 and since i really started to think 9:55 about you know what 9:57 jeff bezos is trying to communicate and 9:59 i think what he's trying to communicate 10:00 is there's a limit to the number of 10:02 people 10:02 that can really contribute and work 10:04 together and 10:06 jeff went on to clarify his point of 10:08 view on team size 10:10 with what he calls the the two pizza 10:11 rule if a team cannot be fed with two 10:14 pizzas 10:15 then it's too large so in his mind 10:18 there's a too small and there's a too 10:20 big and somewhere in the middle 10:23 is just right and just right in his 10:26 world 10:26 is can i feed it with two pizzas 10:29 and so that's an interesting way of 10:31 thinking about it certainly depends on 10:32 your appetite 10:33 and the appetite of your team members 10:35 but at least gives us a ballpark for how 10:37 to think about 10:39 what is the optimal team size and 10:42 there's actually research 10:44 on trying to figure out what is that 10:45 optimal team size 10:47 and so let me share with you some of the 10:50 i think most fascinating studies 10:52 really trying to discern or identify 10:55 uh what is that optimal size um 10:59 in 2006 in a fortune magazine article 11:02 uh jerry useem quoted uh the original 11:05 study that was done by 11:06 richard hackman and vidmar all the way 11:08 back to 1970 on this 11:11 and it said that large team size is bad 11:14 and 11:14 um and too small is also bad and there's 11:17 an optimal number in there and the 11:18 optimal number is 4.6 team members 11:21 so i i encourage you to figure out how 11:23 you can get the 0.6 in your team 11:25 but at least gives you the ballpark of 11:28 between four and five 11:30 jerry in this case in this a fortune 11:32 article was quoting research 11:34 by hackman in vidmar in the early 70s 11:38 but that research is often misquoted 11:41 this is a report 11:42 that richard hackman wrote for 11:45 a government agency in 1971 summarizing 11:49 those findings they had back in 1970 and 11:52 the quote reads among other findings the 11:54 study suggests that group 11:56 size which leads to optimal satisfaction 12:00 of team members is between four and five 12:03 so that 4.6 number is really about 12:06 optimal satisfaction of group members 12:09 but continue reading this quote 12:11 it is not the size 4.6 12:14 is not the size which necessarily leads 12:17 to maximal 12:18 effectiveness of the team in their 12:21 original research they actually found 12:23 that teams that were smaller than four 12:25 in some cases three as well as larger 12:29 up to seven or eight team members 12:31 actually performed more effectively 12:33 than did four or five person groups 12:36 so again you really have to ask yourself 12:38 am i am i after satisfaction 12:41 or am i after effectiveness of the team 12:45 and since we've been doing a lot of 12:46 research on size and effectiveness 12:48 and here's essentially what we've found 12:51 that if you think about team 12:53 effectiveness on the y-axis 12:55 low to high and you think of team size 12:57 from 1 to 5 12:58 10 15 and so on what we find is a skewed 13:02 bell curve 13:04 that looks like what i'm showing you 13:05 here where there is an optimal amount 13:08 and it's somewhere between five and ten 13:11 and this ranges across 13:13 different situations different 13:14 environments 13:16 when we average it out what we find is 13:19 the 13:19 optimal team size is really between 13:22 5 and 10. anything larger than 10 13:26 what we find on average is that teams 13:28 begin to suffer from 13:30 increased relationship conflict process 13:33 and coordination cost 13:34 and social loafing all things that maxim 13:37 will talk 13:38 more about when we really dive deeper 13:41 into 13:41 team processes and dynamics later in the 13:44 course 13:45 but again between 5 and 10 on average 13:47 produces that optimal effectiveness 13:50 whether it's 5 whether it's 10 whether 13:52 it's 4 whether it's 11 13:53 7 or 8 ultimately is going to depend on 13:56 the task structure the environment 13:58 really what is needed from your team but 14:01 for you when you think about who's on my 14:03 team and how big should my team be 14:06 you want to start by thinking in that 14:07 five to ten range 14:09 for your optimal effectiveness if you're 14:11 after satisfaction 14:13 somewhere smaller four to five 14:15 ultimately delivers 14:17 the highest level of satisfaction five 14:19 to ten 14:20 on average the optimal level or the 14:22 highest level of 14:24 team effectiveness