What are the most difficult things to scale in a growing organization? originally appeared on Quora - the knowledge sharing network where compelling questions are answered by people with unique insights.
Answer by Auren Hoffman, former LiveRamp CEO, Chairman of Siftery, started and sold five companies, on Quora.
It is really, really hard to scale cross-team communications. Managing people does not scale well. Most large companies end up having very complicated matrix organizations because communication flows through large numbers of people is really hard.
Because communication is more and more difficult the more people you have, a CEO's goal should be to have as few people in the company as possible. If you can build an amazing company with just ten people, you should. In many cases, one hundred ten-person companies are much more efficient than one thousand person company. The new CEO needs to be great at not only managing her employees, she needs to be great at managing the APIs and other resources available to her company.
Even if you have lots of people in your company, you can treat the company much like new engineering organizations treat their services-level architecture. Allow a small number (ideally less than ten) people to own a core input and output and provide the service to other "customers" within the company (and potentially even outside the company). They get graded from their internal customers on how they are being helpful.
In some successful companies, things like recruiting already work this way. Unfortunately, in most companies all of these functions are fairly broken because they were set-up where everything is top-down.
A side note: part of the reason executive compensation has risen so much is that so many of these companies are run top-down where the execs are making the vast majority of the important decisions. But the problem with these companies is that these execs become huge bottlenecks because there are just too many decisions to make by a small number of super highly paid people.
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