Cells instead of departments
If the value creation structure is what matters, the next question is practical: how do you cut an organization into pieces? Not by function, and not by hierarchy level — but by who touches the market. This article holds the most concrete rules of thumb in the entire field.
A peach, not a pyramid
The pyramid puts the important people on top and the market at the bottom, farthest from power. Cell Structure Design turns that on its head with a simple image: a peach. A thin, living layer on the outside that touches the world, and a core inside that supports it.
🍑 Periphery
- Has direct market contact — customers, suppliers, partners.
- Earns the money and learns from reality.
- Holds decision-making power, because it holds the information.
- Typically 80 to 90 % of all cells.
⚪ Center
- No market contact — serves the periphery.
- Provides services the periphery buys, at cost.
- Makes neither profit nor loss.
- Has no authority to direct the periphery.
The crucial subtlety: this is a distinction between roles and functions, not people or seniority. A managing director who visits customers acts in the periphery in that moment. A salesperson writing an internal policy acts in the center. The board is not "the center" — it is a role like any other.
What a cell actually is
A cell is a small, functionally integrated team that works like a business within the business. Not a department that owns one process step, but a unit that can deliver something whole — with its own profit and loss.
Small enough to know each other
Five to seven people is the target, eight the tolerable maximum, and fewer than four rarely works. The limit is social, not economic: beyond roughly nine people, a group stops being one conversation and starts needing coordination overhead.
It divides instead of growing
When a cell reaches nine or ten people, it doesn't add a layer — it splits in two, like a cell dividing. The team designs its own split, and neighbouring cells adjust their agreements. Growth happens by multiplying units, never by deepening hierarchy.
It is meant to last
A cell should stand for at least 18 months. Constant restructuring destroys exactly what makes cells work: familiarity, trust, and reliable agreements with neighbours. Temporary cells exist, but they are the exception.
It sees its own numbers
Each cell has its own profit and loss — income from customers or from other cells, and the contributions it received. Not to be judged against a budget, but so that the people doing the work can see the economic consequence of their decisions.
The rules of thumb, in numbers
Cell Structure Design is unusually concrete for a management model. These figures are starting points for a design conversation, not laws of nature — but they are specific enough to argue with.
| Question | Rule of thumb |
|---|---|
| How large is a cell? | 5–7 people, max. 8 |
| When does it divide? | at 9–10 |
| How many cells do we need? | headcount ÷ 7 |
| How many of them are periphery? | 80–90 % |
| How long does a cell stand? | 18 months minimum |
| How many services does a center cell offer? | 5–7, often 2 at the start |
A worked example: a company of 210 people needs roughly 30 cells, of which about 25 sit in the periphery and 5 in the center. That is a very different picture from three divisions with seven departments each — and it is usually the moment the conversation stops being abstract.
How the center earns its keep
The hardest part of the model is not the periphery — it is what happens to IT, HR, finance and legal. In a pyramid they hold budget authority and issue rules. In a cell structure they become service providers with a price list.
This is where the model bites hardest, and where most implementations stall. A central function that has always set the rules now has to convince someone to buy what it offers.
The honest objections
Is the internal market real? Gerhard Wohland calls internal markets theatre: without genuine mutual choice — the possibility of walking away — there is no price, only role-play. The counter-argument is the no-purchase-obligation rule above. But the criticism has teeth, and it is worth checking whether your internal market survives it.
What about careers? If there are no positions, there is no promotion ladder. Zappos lost roughly 18 % of its people after adopting a comparable model, and the missing career and salary logic was a major reason. Cell structures answer the question of who decides — they do not automatically answer the question of how someone advances.
Is the blueprint itself the problem? Dave Snowden warns against any single target state for all contexts, and Wohland argues that transferable structural recipes are precisely the wrong instrument for living systems. Read the numbers above as a starting point for your own design, not a template to install.
How BetaOS uses this
Cells are the central entity in BetaOS, not a label on a folder. Each one carries whether it sits in the periphery or the center, which market it serves, which roles belong to it, and which services it delivers — plus its own profit and loss, computed from real transactions.
The product also checks the rules of thumb: it flags cells that have grown past the comfortable size, cells that are too small to be viable, and cells with no members at all. Deliberately as an observation, not a score — the numbers are there to start a conversation in the team, not to grade it.
Sources
- Niels Pflaeging, Silke Hermann: Cell Structure Design. Betacodex Publishing, 2020.
- Niels Pflaeging, Silke Hermann: Cell Structure Design Patterns. BetaCodex Network White Papers No. 19 and 20, 2023/2024.
- Niels Pflaeging: Organize for Complexity. BetaCodex Network, 2012.
- Gerhard Wohland, Matthias Wiemeyer: Denkwerkzeuge der Höchstleister. 2012 (on internal markets as theatre).
- Buurtzorg: teams of up to twelve, splitting as they grow — the largest live example of the same principle in nursing care.
More from the Beta Library: betaos.org/library