Robin Dunbar proposed the figure in the 1990s from a relationship between the size of the neocortex and typical group size across primates. Extrapolated to humans it gives roughly 150 — the number of people with whom somebody can maintain a stable relationship, meaning they know who each person is and how each relates to the others.

The number is contested and the error bars are wide. What is more robust, and more useful, is the layered structure inside it.

The layers

Roughly 5 people in the innermost circle — intimate relationships requiring frequent contact. About 15 close friends. Around 50 in a wider group. Then about 150 at the outer boundary of stable relationships, beyond which are people you recognize but do not track.

Each layer is roughly three times the one inside it, and each requires less contact to maintain. The constraint is time rather than affection: relationships decay without contact and there are only so many hours.

Where the limit bites in an organization

Around 150 people, informal coordination stops working. Below it, a company runs on everybody roughly knowing everybody. Above it, people no longer know who does what, and process has to replace memory. Firms that grow through this point without introducing structure get the symptoms — duplicated work, decisions nobody can trace, new people who cannot find anything — and usually diagnose them as culture problems rather than arithmetic.

Your client list has the same ceiling. A genuine relationship with a client means knowing their business, which is a relationship in Dunbar's sense. Past some number they become accounts, handled by process, and that transition is a real change in what you are selling.

Teams have inner layers too. The 5 and 15 boundaries show up as the sizes at which a team stops needing meetings and starts needing them.

The use

It is a reason to expect a transition rather than a number to manage to. When coordination that used to be free starts failing, the population has usually crossed a layer, and the answer is to build the structure that replaces the informal knowledge rather than to ask people to communicate better.