Recent attempts to analyze organization problems in a scientific manner were stimulated by the classical economic theory of the firm (Walrus, Marshall) and by the newer theories of statistical decision functions (Neymann, Wald), the theory of games (von Neumann and Morgenstern), and the theory of communications (Wiener, Shannon). The Office of Naval Research, and especially its Logistics Branch, has encouraged this development. The task is big and can be carried out only step by step. The first step has been to study a particularly simple form of organization which we call a team.