Team Management

How the Two-Pizza Rule Can Make You a Wildly Effective Business Owner

Jeff Haden Inc. columnist and small business management expert 

Amazon founder Jeff Bezos famously loves small teams.

Amazon Marketplace started as a small team project. So did many early refinements to Amazon’s ecommerce site. (Like for a time, placing everyday items—toilet paper, cleaning supplies, etc.—at the bottom of the page to encourage buyers to think of Amazon as a place where they could buy pretty much anything.)

So did Amazon Web Services, a multi-billion-dollar business that accounts for 10 percent of Amazon’s overall revenue.

Think about the best teams you’ve been a member of. Think about the teams that have achieved the most, and made the biggest difference for your business, customers, or employees.

I’m willing to bet those teams were small.

People work better—developing strategies, testing ideas, implementing changes—in small teams. That’s why Bezos says, “We try to create teams that are no larger than can be fed by two pizzas. We call that the two-pizza team rule.”

Simple time tracking that syncs with payroll.

Jeff Bezos’s two-pizza rule, explained

If you want your team to be different—and to achieve differently—it must be small.

The two-pizza rule says that no team can be larger than five to seven people. 

Science backs up Bezos’s simple rule. In one experiment, four-person teams took 16 minutes longer to build the same Lego person than two-person teams. Plus, the larger teams always underestimated how long the task would take.

But the rule goes much deeper than that.

Small teams feel a greater sense of autonomy and independence simply because there are fewer cooks in the proverbial kitchen. Less oversight. Less layers. Less real—or, more likely, perceived—supervision. Small teams feel greater freedom to work the way they work best, which means that team is much more likely to succeed.

How to create your own version of the two-pizza rule

The two-pizza rule may sound simple, but there’s some work that goes into making it successful at a small company. Here’s how to apply Bezos’s approach to your business.

1. Find your unique pizza number

Every company has a take on the two-pizza rule. It’s simply your answer to this question:

How many people do I really need to make [X] effective?

So if you have four employees, maybe your business has a one-pizza rule that helps you make meetings more effective, meaning:

  • You don’t have meetings that are larger than two to three people. Because meetings larger than that aren’t as productive.

Then take it beyond just meetings. How many people do you need to be involved to make any business situation more impactful? 

Let the number of pizza servings serve as a mental note for when you start going over or under board with getting input. Maybe:

  • You don’t hire employees without having them interview with two to three team members.
  • You don’t make big decisions without running it by two to three people.
  • You don’t roll out a new product or service without testing it with two to three current customers.

Determine how many people you want to bring in at various moments, and then hold yourself to it.

2. Know how much your employees’ time (and yours) is worth

Think about the last meeting you attended. Add up the hourly cost of every person in the room. That is, the amount everyone makes per hour, regardless if they’re salaried or hourly workers.

Then factor in the opportunity cost for what every person in the room could be achieving instead of listening to Skip from engineering talk about groundbreaking new advances in conveyor technology. That is, the revenue people could be generating by working on new projects, turning leads into sales, and fixing problems that reduce costs.

Then imagine—which shouldn’t be hard if you’re a business owner—that you write the check for that meeting.

Now how does it feel to have all those people attend that $500 meeting?

Smart small business owners embrace the inverse-square rule of meetings:

The more people in the room, the less actually gets done. (And the most it costs to get less done.)

Small teams cost less. That lets you experiment more. That lets you try more things. That lets you explore more (seemingly) crazy ideas.

For the time and cost of one large team, three small groups can test, implement, revise, and optimize three cool new ideas.

So cancel that meeting. Instead, you can:

  • Send an email with the main points and everyone’s action items.
  • Have a stand-up meeting over Slack.

Or have the meeting if an in-person interaction is essential. But only if you follow your own version of the two-pizza rule.

3. Make sure your employees have complementary skill sets

Having more people on the team naturally creates the potential for greater diversity, right?

At face value, yes. More people should equal greater diversity in backgrounds, experiences, and perspectives.

But no. Because the more people on a team, the less impact those different backgrounds, experiences, and perspectives can make. Do the math—If I’m one of twenty, it’s hard for my voice to be heard.

But if I’m one of five people, my opinions can be heard. And my skills truly matter.

That’s why you need to create small teams with people who possess complementary skills.

  • One person might be a great team player who is technically weaker on their own.
  • Another might be a relative loner who is an outstanding problem solver.
  • Another might be relatively inexperienced but has incredible hustle and drive.

While you probably can’t afford to have more than one of each “type,” you definitely need one. Keeping teams small means each person’s unique skills, talents, and perspectives will not only be heard but also valued—and utilized.

4. Know the signs of groupthink and loafing—and stop them

Groupthink

Seeking input is natural. Most of us were trained to actively solicit opinions, bounce ideas off others, and run ideas up proverbial flagpoles to harness the incredible power of a group—all of which will help us make better business decisions.

Except for this: Larger groups are more likely to fall prey to groupthink, which is when the urge to reach a consensus overtakes common sense. Groups grind away the edges and the sharp corners. The larger the group, the more likely people are to think of reasons why something won’t work.

Which means that after all of the input, feedback, and devil’s advocacy, what remains is the middle ground: Safe. Secure. Similar.

You don’t want that.

When a small team makes a decision or tackles a project, the outcome is much more personal. Their passion, motivation, and sense of responsibility are on the line.

Which means they’ll try harder, if only to prove themselves right.

Social loafing

Small teams also result in significantly less “social loafing,” a term used to describe the discouragement that results from feeling lost in a crowd.

Researchers found that output per person decreases as the size of the group increases. “When groups get larger,” they wrote, “you experience less social pressure and feel less responsibility because your performance becomes difficult, or even impossible, to correctly assess amidst a crowd.”

In short, members of small teams care more than members of large teams. You want that.

Small teams are way better for every part of your business

So embrace the two-pizza rule for your teams.

You—and your employees—will be glad you did. They’ll be more engaged. They’ll feel a part of something bigger than themselves. They’ll know they’re making a real difference—in your customer’s lives, in your employee’s lives, and in their own lives.

And your business will naturally benefit from all the wisdom contained inside those small teams—and those two pizzas.

Updated: August 29, 2019

Jeff Haden
Jeff Haden Jeff Haden is a writer, speaker, small business management expert, and Inc.’s most popular columnist. He's the author of The Motivation Myth: How High Achievers Really Set Themselves Up to Win.

Comments

  • Mark Tweddle

    “In one experiment, two-person teams took 16 minutes longer to build the same Lego person than four-person teams. ”

    I think you got this the wrong way round. The 2 person teams were faster.

    Reply
    • Gusto Editors

      Hey Mark, thanks for pointing this out! We’ve updated the article to accurately reflect the study results.

      Reply

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