Price's Law

What type of organization do you want to work with? Are bigger organizations necessarily better?

We’ve all heard of the Pareto Principle, this is sometimes called the 80/20 rule. 80% of the revenue comes from 20% of the customers. 80% of the complaints come from 20% of the customers. 80% of the wear on a carpet happens on 20% of the surface area. There are countless examples.

It’s not a rule, or even a law, but something that occurs with enough frequency that it’s got to be more than coincidence.

A less known rule is called Price’s Law. This speaks to the productivity in an organization. It says that 50% of the work is done by the square root of the total number of people in the group.

So if you have four people in the group, then 50% of the work will be done by two people. Seems pretty efficient so far.

If you have 100 people in the group, then only 10 people in the group will be responsible for 50% of the output, and the remaining 90% will contribute to the remaining 50% of the output. Now either the 90% are really awful, or the other 10% are extraordinary.

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Host: Victor Menasce

email: [email protected]