The most valuable insights in an information deluge are the ones that seem to consistently recur across multiple disciplines and fields. The pact I make with you as a reader is that I’ll primarily focus on these ideas, in return for your valuable time.
Here’s an insight inspired by Genghis Khan, but increasingly relevant in our accelerating age.
“Mongolian Horse Swarms”
[8 minute read]
“In American terms, the accomplishments of Genghis Khan might be understood if the United States, instead of being created by a group of educated merchants or wealthy planters, had been founded by one of its illiterate slaves, who, by the sheer force of personality, charisma, and determination, liberated America from foreign rule, united the people, created an alphabet, wrote the constitution, established universal religious freedom, invented a new system of warfare, marched an army from Canada to Brazil, and opened roads of commerce in a free-trade zone that stretched across the continents. On every level and from any perspective, the scale and scope of Genghis Khan’s accomplishments challenge the limits of imagination and tax the resources of scholarly explanation.”
- From Genghis Khan and the Making of the Modern World by Jack Weatherford
Genghis Khan Monument, Mongolia. Source: Getty Images.
In an enjoyable and insightful recent podcast with Aravt’s Global’s Yen Liow, he argued that Weatherford’s history of the Mongols is one of the most important business and investing books ever written. It’s certainly fascinating and definitely challenged my minimal knowledge and preconceptions of Genghis Khan. My wife got very bored of me starting sentences with “did you know the Mongols…” when we were on vacation.
The Mongols conquered 10 million square miles with just 200,000 cavalry. “Whether measured by the total number of people defeated, the sum of the countries annexed, or by the total area occupied, Genghis Khan conquered more than twice as much as any other man in history.” Khan formed small units of ten men (an aravt), which were then multiplied up in factors of ten to make larger divisions. Each member of an aravt bore the same liability for one another’s actions. The units were focused on maximum mobility, with widespread use of archers on horseback. The Mongols’ unprecedented swarming tactics repeatedly humiliated armies looking for traditional pitched battles. A common ploy was to feign retreat, wait for the chasing column of heavily-armoured horses to become dispersed and exhausted, then turn around and wipe them out.
Khan employed a mixture of unorthodox thinking and psychological warfare. His army would sometimes appear unexpectedly, through a mountain pass that was assumed to be impassable. Or they would let the citizens of previously conquered cities escape to their neighbours, where they would bring tales of terror and stress their resources. Like all great generals, Khan’s aim was to win a battle before it had been fought.
Joshua Cooper Ramo is one of the few thinkers who seems to have a deep sense for the kinds of systems and mindsets required to adapt to our modern day disruption. He draws a direct parallel between Mongolian horse swarms and contemporary business strategy. In The Age of the Unthinkable he uses the example of Brazilian company Semco to illustrate his point.
Facing an extremely stale corporate culture, Ricardo Semler divided his company up into small units of 150 people (Dunbar’s number, AGAIN!). Then he gave those units unprecedented autonomy and responsibility across almost all areas of the business. As of 2018, Semco had grown at an average rate of 47% for 20 years with less than 2% employee churn.
It’s always dangerous to assume individual case studies or anecdotes are applicable across multiple fields, or that they might represent anything other than survivorship bias. Stories like these are best used as illustrations, not as proof. But Semler makes some interesting points about what not to do.
He calls the typical management pyramid “the cause of much corporate evil” because the tip is too far from the base. “Pyramids emphasize power, promote insecurity, distort communications, hobble interaction, and make it very difficult for the people who plan and the people who execute to move in the same direction.” Instead they picked a “circular” model with thin management layers and independent teams.
Like the Mongol aravt, the individual business units had much more skin in the game. The Semco compensation model is really quite radical. Twice a year 23% of after-tax profit is distributed to each unit. They then conduct a simple majority vote on how it’s to be allocated. It typically ends up being an equal distribution. Thus the janitor can be paid as much as the division partner.
The key point to consider- for business owners or investors- is the importance of the right size and cohesiveness of unit sizes in an organization. It’s one of those things that’s always been important, but is going to become increasingly so. Business is increasingly a knife fight between disruptive mobility and competitive moats. Cooper Ramo argues that agile organizations need to operate more like immune systems or swarms. The right size for effective swarms seems to be roughly Dunbar’s number.
Why does Dunbar’s number, or that 150 person unit, keep showing up over and over again? The research claims it’s a rough cognitive limit of the number of friends we can have. Like anything else, its precise accuracy is debated, but I’ve found it constantly appears across unrelated areas like online social networks, church congregations, military companies and hunter-gatherer tribes. Safhi Bahcall’s research found that it was the optimal size for a business unit optimizing for high innovation and low political infighting.
Why? Dunbar has claimed that as much as 65% of human conversation could be defined as “gossip.” Far from being idle chatter, gossip helps us inhabit the minds of other people in our group. It teaches us who is trustworthy and ensures that bad behavior is punished with (often historically fatal) social exclusion. That 150 person limit isn’t only about how many people we can each know one-to-one, but how many people in the tribe can effectively know each other. If you pair off two of your good friends, you’ll have a sense of how they will interact. Numerous attempts to debunk Dunbar’s number have missed this key insight: it’s about the quality of relationships, not the absolute number. In fact, Marissa King’s book Social Chemistry (insights here), makes the point that large social networks often correlate with depression: all quantity, no quality.
Simulating the minds of others is incredibly cognitively demanding. It’s also time-intensive, especially now. Dunbar found that we each have an average of 3.5 social hours per day, or 1 minute 45 seconds per friend. But it’s not evenly distributed; 40% of this social time is devoted to the 5 people in our innermost social circle, and 20% to the 10 additional people that make up our closest support group. Philosopher Alain De Botton makes the delightful observation that we only tend to sulk with very close partners or friends. The implication is that we’re so upset because that person should know how we are feeling, but doesn’t. We don’t sulk when a stranger wrongs us. We trust people we understand, and we understand people based primarily on the time spent interacting directly with them. Until there are more hours in a day, this is likely one of the increasingly rare hard limits in an ever-changing world.
Organizations can’t cooperate effectively if the group is too large, or the communication channels between them are too narrow. But the right group size allows for cohesive units, rapid reactions, and aligned incentives. Based on an abundance of evidence, if I was running a business, investing in one or even considering my own social circle, Dunbar’s number would be in my head at all times.
Some additional reading on today’s topic:
- Read: Five ways to strengthen your company’s immune system in Dark Matter Matters (12 minute read).
- Why read: A quick summary of the basic thesis from Cooper Ramo’s Age of the Unthinkable.
- Read. Dunbar’s Number is Quadratic by Johnny at Generativist (24 minute read).
- Why read. A complex and clearly super-smart post on Dunbar’s number. I wish I could say I understood more than 50% of it. But what it did reinforce was that it’s not a dyadic 1-1 relationship that’s important in that 150 number- it’s how many people know each other.
- Read. The Tail End in Wait But Why (7 minute read, mostly pictures)
- Why Read. [This article won’t be for everyone. It contains profanity]. A friend of mine once joked to me (at least I hope he was joking), that my posting of this article ruined his life. Essentially it’s a sobering visualization of the time we have left with the people we love. Think about how often you see your parents, and how many years they might live for. Even in his 30s, the author Tim Urban realizes he is already in the last 5% of time with his parents, relative to the lifetime total. Ugh. I try not to give advice, but if I could: get someone to interview/record your parents’ memories. My late father’s memoirs and oral history of the Blitz is quite literally priceless to me. When they’re gone they’re gone.
Have a great weekend,