Why Organisations Are Switching to Smaller Teams


Traditionally, most businesses have relied on a vertical hierarchy; which is schematically represented as a pyramid. In this leadership model, important decisions are made by a few people at the top level of the pyramid; and these decisions are then relayed to the bottom via intermediate levels of management.

While this type of leadership hierarchy has served well in the past, it may not be the best way to run organisations in the present day reality of the 21st Century.

An advantage of the traditional model is that there is usually little ambiguity (if the leadership is good). Once a decision is made and appropriately communicated to everyone, there can be little doubt about what needs to be done.

However, the disadvantage of the traditional leadership model is that almost all creativity, and all novel impulses, must come from the top; while the bottom levels are just there for implementing them.

A changing environment requires new leadership models

Compared to the past, our modern world has become increasingly complex and globally interconnected; and continues to evolve rapidly.

Faced with such a dynamically changing environment, modern organisations must be able to do one thing that was less important in the past: they need to be able to change themselves rapidly to keep up with changing times.

And it’s becoming increasingly clear that the creativity of just a few individuals at the top is not enough to enable such dynamic organisational change.

The creative power of small teams

Many companies and organisations are discovering that the best way to tap into the creative abilities of their workforce is by organising them into small teams, and then to integrate those teams into a larger network.

There’s plenty of research showing that people are more engaged, and contribute more actively, when they work in small teams. The larger a team becomes, the more some people start to hide in the crowd; while others start to dominate.

Jeff Bezos’ famous “Two Pizza” rule states that a team that is too large to be fed by two pizzas, is too big to be productive. Indeed, research has confirmed that the optimal size of a group for effective decision-making is close to 5.

Improved communication and accountability in small teams

One of the greatest benefits of small teams is improved communication. It’s relatively easy for everyone to be in constant contact with each other; and for all voices to be heard regularly.

In addition, the role of every team member can be clearly defined; and individual contributions are easy to track for everyone in the team. This means there is more transparency and accountability in small teams, compared to large ones, where an individual’s role can easily get lost in the crowd.

Finally, in a small team, it’s possible for an individual to make a contribution that has a large impact, and to be recognised for that by other team members. In contrast, in a larger group, individual achievements are more likely to go unnoticed or remain anonymous.

Restructuring large companies into a team-based model

How can this principle be applied to large companies? When organisations grow, their hierarchical structure tends to get more and more complex; and increasingly less transparent.

The best way to deal with this issue is to organise the entire workforce into small functional teams of 4-9 people, and then to integrate these teams with each other in a larger network.

When setting up teams, one of the most important factors to consider is that each team must share a common goal that is quite specific. This goal helps to unite the team even if they have very different roles and expertise.

A clearly defined goal for each group also helps to make the role of that group more accountable within the larger organisation.

Integrating a network of teams

As you divide your workforce into functional groups, the next challenge becomes integrating them into a larger whole.

If you succeed in setting up a strong team culture, you might be faced with autonomous teams that perform at a stellar level, but don’t align well with each other. In some cases, this doesn’t matter, but in other cases, alignment and coordination between teams are critical for company success.

A great example is sales and marketing. Many companies separate these into different teams, but modern inbound marketing often requires a close integration between the two.

So the first step is to identify all potential team integrations and rank them from “absolutely critical” to “not really important.” The more teams you have, the more potential interactions there are; and the more important it is to focus on the really critical ones.

Secondly, appoint team leaders that are not only responsible for the performance of their team; but also for specific alignments with other teams. Then set up regular meetings and communication channels between team leaders.

If team leaders have a strong connection, it’s easier for them to coordinate their teams with each other.


Reorganising organisational culture from a traditional hierarchical model to a team-based one is highly challenging, but also highly rewarding; as it will generate the versatility and adaptability your organisation needs in the modern world.

The role of top-level executives in this model becomes one of monitoring and defining the evolving roles of teams, and helping to integrate teams with each other from a high-level perspective.

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ChangeLauren Ryder