Hermès and the magic number

In a recent interview Axel Dumas, the 44-year-old sixth-generation family member who became CEO of French luxury brand Hermès in 2014, said that the firm has created 15 new leather workshops in France over the past year, to keep up with demand. However, they are careful not to make them too big. “We try not to have more than 250 people [in each] because above 250 people no one knows each other and then it becomes a factory,” he said.

This is a very interesting number. Back in the 1990s British primatologist Robert Dunbar studied the size of chimpanzee social groups, which he found correlated to the size of their brains. The bigger the neocortex, the bigger the group. Using this information, he extrapolated to humans and calculated that the optimum size of a human grouping was about 150. This is known as “Dunbar’s number”.

As Malcolm Gladwell wrote in his book The Tipping Point, family-owned firm Gore (inventor of the waterproof fabric Gore-Tex) had through trial and error determined that the best size for teams in its business was – you guessed it – 150. Having heard about Dunbar’s research, the Swedish tax authority reorganised into 150-strong offices.

Later anthropological studies have calculated the optimum human group to be slightly bigger. One said 231, another 290. Language might play a part in helping us befriend more people than other primates can. It doesn’t seem totally crazy to suggest about 250 as the size of the ideal human social group.

The number might also have special relevance for Hermès. As everybody knows, over the past few years the business suffered a severe shock. Between 2010 and 2014 it was engaged in a fierce battle with Bernard Arnault’s luxury group LVMH which had secretly built up a share in Hermès. Many people thought that he was going to try to buy out the family.

The family, though, circled the wagons and determined to stick together, and they agreed not to sell their shares to outsiders for 20 years. There are 60 Hermès shareholders. Assuming that each has a partner, and the average number of children in Western Europe of two-and-a-bit, and that there have been a few divorces and second families, the core shareholder group at the company probably totals around 250.

This suggests two things. One, if the family had been any bigger it might not have been able to come together to withstand LVMH’s attack, and two that Dumas is now building the business in the family’s own image. And that immediately raises two intriguing question: do families tend to create businesses that resemble themselves? And should they?