Posted by: alok | August 30, 2006

Onam Boat Race and Organizational Behaviour

Onam is around the corner (5th September, this year) – no I am not a Mallu or for that matter remotely close to any state in South India. But what i like most about the festival other than the usual rangoli, harvest pooja, traditional dance and all is the boat race. (Can’t pronounce or spell the way it is called). This post is not about Onam (there are many more learned people to talk about it), but about how I compare the traditional boat race with organizational behaviour of a big company.

How fast can a team of 100 rowers row a boat? Choices – as fast as the fastest rower, as slow as the slowest rower, or just the average. Don’t know eactly, but probably it would be as fast as the average rower. So if I pick a random 10 rowers from the ‘large boat’ and put them in a small boat (which would be around 1/10th the size of the larger boat) and ask these guys to race against the bigger boat – which boat will win?

Statistically these 10 rowers selected at random can row the boat at the same average speed as the larger boat. So the race should end in a draw.

But wait there lies a catch – there is very high likelyhood that a slow rower (or underperformer) can be noticed in a small boat than in a much larger boat – so just to avoid getting noticed, he is more likely to perform better. Further, a fast rower in a big boat knows that his efforts alone cannot drastically improve the speed of the boat, which is rowed by 99 other men. However, he can see a perceptible improvement in the speed of a smaller boat if he performs to his full potential. So my feeling is the smaller boat is likely to win the race.

Isn’t the same with big companies – how fast can big companies grow – around the same average rate as the industry at a broader level. So a smaller company formed with a group of people selected at random (not just the super-heroes of bigger companies) can grow at a much faster rate.

This thought has some even more deeper connotations – So if I have to start a company, shouldn’t I start with a team of average performers from bigger comapanies? But offlate, I observe, most of the startups try to recruit a few highly talented guys – the justification being, a startup can’t afford any mediocre performers, becasue of the high burn rate. (Race towards Event horizon as Jim Clarke founder of Netscape puts it). The startups are ready to pay exhorbitantly high salary to recruit the bright guys (you need to pay much more to compensate for ‘frills’, ‘brand name’ etc. that bigger firms can offer) – so isn’t the burn rate (or cash drain) higher? The only caveat being – a startup should probably go for ‘out-performers’ only if they are developing something ‘state-of -the-art’ and requires people with high intellect, ready to slog for any length of time. Or if you are going to launch a new product, and time not money is your constraint.

I have no experience in working for a startup – so the thoughts are just my conjectures. I invite readers who started their firms or have experience working in startups to share their views and enlighten me.

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Responses

  1. Some comments on the analogy:
    your thoughts assume that most people are not performing to potential in the bigger boat, but will do so in the smaller one. That’s not necessarily true. Quite a few big companies enable performers to rise to their potential. Plus, in a race situation, the incentive to not perform to your best seems low.

    Another argument: the average works fine for large samples, because then, the actual expected value is close to the average. But with a small sample (10), the actual value might vary a lot. So you could end up losing the race…

    In general, I think you just have to hire for the role, and create a balance. If you hire all stars, you better be sure there is enough to go around for all of them. Can you really afford to pay everyone what will make sense for them ( either as cash or equity?) I think all organisations need all kinds of people. Often, one or two really great people can pull a team of 4-5 ‘average’ people along with them.

  2. […] Alok has an interesting question. An ‘average’ person is more likely to perform better in a small team. […]

  3. Ankur,
    I see you are subtly missing the real issue. So here are my 20 cents. 🙂

    First, I don’t see any prima-facia assumption being made that people in bigger boat are not performing. They are performing – alright. But we are observing another fact – that from this bigger boat if we take an average person, he will have reasons to perform even better in a smaller boat. Hence its being deduced, not assumed.

    Also, I think when you talk about the small sample (10) and actual avg value being low, you are missing the point being made. Its not about observing the sample of 100 and the sample of 10. Its about observing the ‘same average guy’ in two situations – 100 and 10. In smaller team that person will see that his contribution makes a significant difference and hence will put in more efforts (given the same cause-worthiness).

    Third, its also not abt the outcome, its about the efforts put in before the outcome. Who ‘wins’ the race? The bigger or the smaller boat – I don’t know. But in which case will a guy put in his best effort? More likely when he is racing alone!

  4. Well, I largely agree with the general point you are trying to make. But don’t like the analogy 🙂

    We could go into finer points of why the analogy is not good, but then, we will be losing sight of the main point of your post.

    I talked about results, because you focussed on that in your post – you asked in bold: which boat will win!
    Also, you say “smaller company formed with a group of people selected at random (not just the super-heroes of bigger companies) can grow at a much faster rate.”.
    Again, results!

    I agree there is a factor increasing the efforts (and therefore, outcomes) from these random set of people from what they were doing in a large organisation, but there’s the statistical factor which is weighing you down, so in balance, which way it will go is subjective: I believe the net result is more likely to be down than up.

    And one more point: hiring only the best performers reduces risk. A large organisation or large boat can afford one or two low performers, but a small one cannot. So one reason to just hire the best is that you can’t afford to take the risk of a bad hire, which is always possible with ‘random’ average hires.

  5. Ankur,
    Your point well taken. Oraganizational Behaviour, or employees performance, are huge subjects in themselves, and we all understand there are several other nuances.

    The point that the post intends to make is –
    1. People tend to perform better when they get noticed, or when their reputation is at stake or when they can feel/see some perceptible results of their efforts.
    2. A smaller company very likely gives more opportunities for all of the above mentioned.

    The essence of ‘randomness’ comes from the fact that if you go to Monster or Naukri or consultants, you will get all sorts of people – outperformers, avarage and laggards. Though it would be skewed towards laggards, but your recruitment process will bring the average close to that of a bigger organization.

    Also, the post points out that – “if TIME is your constraint and not Money, then you go and hire the best resources – get the best architects, best developers, the best testers, the best sales guys – give them twice their current salary, and if you can bind them together – viola you can launch an OS which can beat Windows in all aspects.

  6. Overall an interesting post nawab,

    now how about taking a random, casual walk (and dropping a few lines here and there) through the chambers of our it9604? 🙂

  7. Wow !! Nawab.. a nice analogy..liked the point you are making here.

  8. late i am everywhere, but that doesnt stop me from appreciating.. excellent post, loved the analogy and affirm it too. cheers!


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