To ensure efficient organizational operation, it is suggested that businesses with annual profits not exceeding 10 million should limit their team size to under 30 people. This is not only key for profit growth, but also a core strategy for risk control.
Looking back at 2021, that year was extremely perilous for our company. At that time, the company had 50 employees, and up to half of the total GMV (Gross Merchandise Volume) was consumed by labor costs. For a labor and knowledge-intensive organization, this was a very dangerous signal. Prepaid GMV means a high amount of reserves, and facing a major crisis or ban could result in the collapse of the company. GMV is not the real standard of income, but should be based on the actual income confirmed on a daily and monthly basis.
Facing industry challenges and the transformation of e-commerce patterns, we quickly downsized to avoid resource depletion. In management, we encountered three main problems:
- Financial cash flow faced an extreme crisis.
- Deep in management difficulties, despite attempts at mechanisms, performance, and management strategies, the end result was financial distress.
- The team was oversized for the work available, with incentives performing unsatisfactorily and costs being too high.
I realized that I am not a management talent. According to the Human Design, my personality traits are closer to those of a “manifesting generator,” full of vitality, often proving my intentions through actions. However, these traits are far from the stringent management philosophy, which emphasizes predictability, cost reduction, and efficiency improvement. On the contrary, I tend towards spontaneity and innovation.
I was deeply influenced by Peter Drucker’s saying that “culture eats strategy for breakfast” – since then, I have decided to focus on fostering corporate culture rather than management. It also made me realize that joining the herd and being sought after can lead to inflation of the ego, while avoiding involvement and retreating to a secondary position is the wiser choice.
I believe that when a company grows beyond 30 people, the following problems may arise:
- The increase in company personnel becomes a fixed burden, forming continuous rigid costs.
- It is difficult to effectively transmit cultural ideas to every employee, resulting in weakened cohesion and influence.
- Further increasing team size will lead to the formation of interest groups and power blocs, increasing internal friction, requiring additional roles to coordinate and resolve these issues.
Therefore, to maintain innovation and flexibility, I firmly believe that maintaining a lean and efficient team size is crucial.
In the early stages of a company, most CEOs and founders choose to wear multiple hats, mainly because only founders can fully undertake the coordination work essential to the business. This role blends the multi-faceted demands of authority, corporate culture shaping, and business capability. However, I do not aspire to be in such a role, as the mundane daily affairs management bores me.
For me, building a super-individual company is my career goal for the phase. An enterprise that achieves an average annual profit of 10 million is certainly a very high standard. The goal of netting 10 million after taxes is fraught with difficulties. Especially when managing numerous employees, the challenges multiply, making it even more difficult to maintain core competitiveness and create profits.
The future of super-individuals should not be limited to the growth of a single individual, but rather, on this basis, incubate more super-individual alliances capable of operating independently within the system. Such alliances are not confined to the entrepreneurial environment within a company, but also include active interactions with the outside world, and could even be serendipitous encounters in the industry. By constantly cultivating experienced operational experts and granting them independence, they contribute value to society, and form an interconnected organic entity with society.
During this developmental process, the metabolism of the organization is critical, which does not mean constant expansion in size, but maintaining a lean and efficient team. My goal is to keep the team size around 30 people, which is not only the optimal state for my workshop but also my Liu Siyi boundary. By locking the team size and costs, maintaining the team’s metabolism and continual self-evolution, we can bring about an enhancement of the team’s overall capabilities and a rich cultural heritage.
To this end, we should bid farewell to the blind faith in large teams. I typically share 10 posts on my Moments about travel, business cases, traffic operations, entrepreneurial resources, etc. I welcome everyone to follow my personal WeChat, and send an introduction to connect.
