By now we’re all familiar with examples of small and lean digital companies popping up out of nowhere and outcompeting larger, established companies. Insurgent startups, such as Instagram and Snapchat, manage to operate with far fewer resources than legacy companies in the same industry in the “pre-digital” era. Instagram had only 13 employees when it sold for $1 billion to Facebook in 2012, and Snapchat has approximately 350 employees. Compare that with Kodak, which at its peak employed over 60,000 employees.
But what’s even more notable is that these digital companies are staying small and keeping headcount low, even as the business scales. Look at WhatsApp, which had 55 employees (35 of them engineers) and reached more than 450 million users when it was acquired by Facebook in 2014. Today, while the number of users has doubled, its engineering workforce has grown only to 50. In the digital world headcount growth for growth’s sake is no longer prized. What matters is how lean a company you can create while still getting the maximum return on your assets. Smart headcount growth that optimizes technology is essential. Throwing headcount at a problem is not.
Digital companies are rewriting the rules of how to grow a company by using technology to scale and minimizing headcount growth. This not only allows them to make more money using fewer resources, but also gives them the strategic and cultural advantages that come with being a smaller company. In fact, as companies grow profit-wise, they may even end up shedding employees as technology advances.
Technology allows them to reach consumers and partners faster than ever before and to continually experiment with new ways of communication and information sharing. All of this allows digital companies to scale faster and create the connections with customers that legacy companies took years to build. As such, digital companies are able to bypass some of the traditional blockers to growth — such as expanding org charts, bloated layers of management, proliferation of systems and processes, and burgeoning bureaucracy — that used to bog down legacy companies. The irony for them was the more you grew by adding headcount, the harder it became to grow.
Read more : https://hbr.org/2016/02/why-digital-companies-grow-without-adding-headcount
