Why every road in a company leads to one person

There are towns that grew up around a mine. The hill was dug out for ore, a settlement was built around the ore, and when the ore ran out the settlement emptied. And there are towns that grew up at the crossing of trade routes and are still alive centuries after the reason for meeting there was forgotten. Organisations pass through the same fork. At the fourth stage of growth it becomes visible which road yours has taken.

This piece continues the series on how organisations grow from one node to holacracy and covers the stage where a company acquires a centre, with a Russian angle at the end.

A hub is a saving on distance

By this stage the group already has people, roles and a culture that nobody designed. What it does not yet have is a single point where everything arrives at once. Then that point appears: a few heavily loaded nodes through which the largest share of resources, social contact and information starts to pass at the same time.

The logic is plain and slightly unglamorous. Instead of everyone travelling to everyone else directly, people meet halfway. That is a saving on transaction costs: less time spent agreeing things, less energy spent working out who does what, fewer losses at the joints between people. A scattered web of direct links turns into one concentrated point that carries the main flow.

Ronald Coase described the firm itself as a way of avoiding the cost of transacting on the open market. The hub inside a firm does the same job one level down. It exists because going through it is cheaper than going around it, and it lasts exactly as long as that stays true.

Mining town or crossroads

Two types of hub exist, and the difference between them is the whole point of this stage.

The first is a settlement around a resource. A single-industry town that grew for one kind of ore and is doomed to fade when the ore runs out. Inside a company this is the department or the person who exists for one specific task and loses all meaning the moment the task is closed.

The second is the transaction hub proper: a major junction of flows that is tied to no single resource and holds up the process of exchange itself. Such a node outlives its original task, because the value sits in its position at the crossing of routes rather than in any one thing that travels along them.

From the outside the two look identical. Both are busy, both are the person everyone messages first, both appear indispensable. The difference only shows when the original reason disappears. One keeps being the place where roads meet. The other becomes a ghost town with a job title.

The model runs in both directions

The model is symmetrical, and it would be a mistake to fix one direction of growth as the only correct one. You can move from the bottom up: from a single node towards a hub, accumulating load and trust until more and more of the flow starts to run through you. Or you can move the other way: take a resource node, carve out a functional specialisation, go into hierarchy, fix the roles, and gradually arrive at a dominant position, meaning unconditional leadership in that one function.

The difference is where the movement starts: from trust accumulated towards the status of a hub, or from a clear function towards the status of the dominant player in that function. The two need different things: a hub built on trust is starved by anything that cuts its contacts, a dominant function by anything that blurs its remit.

The super-node sets the fashion

Something else is born with the transaction hub: an information and analysis system. The centre through which most flows pass becomes the transmitter of standards. Standards of language, the way people here are expected to talk. Standards of analysis, how data is handled before it counts as a fact. And, less obviously, standards of fashion: what is currently considered appropriate, correct and modern.

A tendency arises in the super-node and spreads outward through the network. The wider the network around that node and the lower the resistance in the channel, the faster and cleaner the tendency travels. Mark Granovetter’s work on weak ties describes the same physics for whole societies: what spreads is decided by who sits at the junctions.

In practice the person or department that has become the hub starts, without noticing, to shape taste as well as process. Which words are used in the deck. Which numbers count as serious. What “how we do things here” actually means. All of it comes from the point where most contacts pass.

This gives a direct handle on managing the environment. To manage the ecology around a hub is to manage access to it. Narrow the access and you have created competition for the place next to the centre and set the other nodes against each other. Widen it and you have removed that competition and given everyone a more equal chance to reach the centre directly. Both are levers, and most managers pull them without knowing it.

Two ways to grow, and how an investor reads them

Against this background you can see the two paths by which an organisation arrives at its present shape. The evolutionary path goes through every step in order: environment, contact, the three types of group, expansion, transaction hub. Each stage is worked through and absorbed before the next. The situational or crisis path skips steps: the organisation abruptly acquires structure or scale without organic maturing, paying for the shortcut with accepted risk or very large cost.

It is the second path that a venture investor evaluates when deciding whether to fund a company. The investor looks at strategy through the lens of market demand and makes one of two moves. Either they balance: give exactly enough resource for the company to walk through the missing steps organically. Or they flood: force growth with money while regulating the brakes that would have slowed that growth to a healthier pace under natural conditions.

Why Russian companies run on hubs more than Western ones

Everything above is general theory. Here is where the Russian market bends it.

In a Western company the flows that a hub would carry are often already carried by systems. The CRM knows the client history, the wiki knows the process, the ticket queue knows who owns what. The person at the junction is still there, but much of the traffic goes around them through tooling, and the company survives their departure with a few bad months.

In Russian business practice the junction is far more often a person. Decisions are personal. Agreements are made in a Telegram chat rather than in a signed brief. The working relationship with a contractor, an advertising platform or a category manager on a marketplace belongs to whoever built it. The Yandex Direct account was opened under someone’s login. None of this is a defect of the culture. It is the same saving on transaction costs, taken further, in a market where trust in a named person is still cheaper than trust in a procedure.

So the fourth stage arrives earlier and hits harder here. A Russian company reaches it with a person in the middle, and the two questions of this article stop being theoretical. Is that person a crossroads or a mine? And whose language is the whole company now speaking without ever having decided to?

If you sell into Russia from another country

For a foreign company the picture is sharper still, because the entire Russian operation is usually one hub by design. A distributor. A licensed partner. A country manager with a small team. An agency that runs the advertising and answers to one person at head office. The company did not grow that hub along the evolutionary path. It bought it, which is the crisis path with all of its risks.

So the first thing to establish is which kind of hub you bought. If the partner’s value is one large customer or one supply contract, you own a mining town that empties when the contract ends. If the partner’s value is their position at the crossing of routes in the market, the buyers they know, the platforms they can call, the vocabulary they speak, then you own a crossroads, and it will keep working after the first reason for the deal is gone. The second is worth investing in. The first is worth planning around.

The second thing is fashion. Your Russian hub is transmitting standards into the market on your behalf: the tone of your brand in Russian, the claims your ads make, what counts as a serious number in a report. If nobody at head office reads Russian, that transmission is unsupervised. Worse, it flows back: the hub’s version of the market becomes the only version head office ever sees. This is why I insist on independent research into Russian customers before anyone agrees a positioning through a partner. A super-node’s picture of the network is never neutral.

The third thing is access. Manage the ecology around the hub by managing the routes to it. Keep the Yandex Direct, Metrica and VK Ads accounts registered to the company, with the partner added as a user, so that the routes exist even if the person leaves. Have a second contact at every platform and agency. Make sure someone at head office can read a Russian report without an interpreter. None of this replaces the hub. It stops the market from becoming a ghost town the day one person resigns. A planned entry into the Russian market builds the crossroads before the traffic, instead of discovering after the fact that all roads ran through a person who has just left.

Will this hub outlive its task

If you are looking at a company that has clearly grown around one person or one department, ask one concrete question. Is this a transaction hub that will outlive its original task, or a settlement around a resource that stops existing when the resource runs out? The answer decides whether to invest in the resilience of that node or to prepare for its decline.

And the second question, no less practical. If you are yourself such a node, whose language, whose taste and whose unwritten standards are you now passing down the network, simply because most of the conversations pass through you? Fashion in an organisation does not come down from above by order. It seeps out of the point where the most roads meet.

Frequently asked questions

Sources

• Russian version of this article on belokrylovo.ru: Почему все дороги ведут к одному человеку в компании