Working in a software services business means working with customers.
Customers means people making decisions.
One thing we know about people is that our abilities and capabilities are limited. Different people might have these limits at different points, but we are all limited.
Dunbar’s number is a suggested cognitive limit to the number of people with whom one can maintain stable social relationships — relationships in which an individual knows who each person is and how each person relates to every other person.
The most commonly cited number for this limit is 150.
Some companies, such as Gore-tex, have limited the size of the teams in any one location. Whenever the number of people working in one factory passed 150, they would open a new location and split the team. They are doing this to reduce the negative side-effects and lost productivity that happens when too many people work together and social ties are becoming weaker and weaker.
Customers for software services
When it comes to the commercial side of running a software services company, there 3 important areas that can help improve business results:
- Strategy and the use of customer segmentation
- Value based pricing
- Value selling
All have one thing in common: the need to understand customers very well.
What customers need.
What customers are looking for.
How customers make buying decisions.
What prices customers are willing to pay.
Sometimes you have to rely on market reports, online research and other types of third-party documentation to understand your customers.
In other cases, working with professionals who have a long experience within a particular field might be good enough to get meaningful insight into what customers want.
But nothing beats spending time and talking with actual customers.
This is where Dunbar’s number becomes relevant.
Entrepreneurs and managers of software companies spend most of their working time with:
- Team members
- Peers in their social circles
- Peers in professional organizations
- Former colleagues
- People from government institutions
- People from NGOs
What is missing from this list?
Time spent in sales calls with potential customers doesn’t really count. People usually have their guards up in sales meetings, so anything you learn from them is already filtered and biased.
WHAT THIS MEANS FOR YOU
If you are in a role with commercial responsibilities, devote as much time as possible meeting with people similar to your target customers.