Universal scalability law (org design)
Summary:
As organizations grow they become slower
The contention of shared resources
C(N) = N / ( 1 + α(N-1) )
C = Capacity
N = number of people
α = contention due to shared resources (0-1).
##### Cost of getting agreements
Coherence measures the cost of getting an agreement on what the right thing to do is.
C(N) = N / ( 1 + α(N-1) + β.N(N-1) )
β is the coherence.
It has a quadratic cost in the worst case as each person might have to make a consensus with every other person.
Resolutions:
- Delegate effectively and choose carefully the things that you do get involved in. If you do not delegrate authority you get diminishing returns from the org growth. Total output is proportional to the number of people who can make decisions.
- As the org grows, strive to keep the number of stakeholders that need to be involved in any decision down to a minimum. Refactor the org to separate out the decisions between the groups. If you do not build autonomous decision makers you will get a severe slowdown.
Similar Topics:
Kingman’s Formula (Org Design)
References:
❞ Referred In
Amdhal's law
The overall performance improvement gained by optimizing a single part of a system is limited by the fraction of time...