This goes back, in many ways, to the great bit from "Forbidden Knowledge: The Gap Into Vision" by Stephen R. Donaldson that do so love to quote. It's long, but this is my blog, so there:
For convenience, history is often viewed as a conflict between the instinct for order and the impulse toward chaos. Both are necessary: both are manifestations of the need to survive. Without order, nothing exists: without chaos, nothing grows. And yet the struggle between them sheds more blood than any other war.
The instinct for order is an expression of humankind’s devout desire for safety (which permits nurture), for stability (which permits education), for predictability (which permits one thing to be built on another)—for equations of cause and effect simple enough to be relied upon. Indeed, without resistance to change, growth itself would be impossible: resistance to change creates safe, stable predictable environments in which change can accumulate productively.
The instinct for order is therefore aggressive. It actively opposes any alteration of circumstance, any variation of perspective, any hostility of environment or intention. It fights to create and defend the conditions it seeks.
The impulse toward chaos is a manifestation of humankind’s inbred knowledge that the best way to survive any danger is to run away from it. This instinct focuses on the resources of individual imagination and cunning, rather than on the potentialities of concerted action. Its most common overt expression involves an insistence upon self-determination (freedom from restriction), individual liberty (freedom from requirement) and nonconformity (freedom from cause and effect). However, such insistence is primarily a rationalization of the desire to flee—to survive by escape.
Therefore the impulse toward chaos is also aggressive. The very act of escape breaks down systems of order: it contradicts safety, avoids stability, defies cause and effect. Like the instinct for order, it fights to create and defend the conditions it seeks.
Nevertheless stability and predictability themselves would be impossible without chaos. Chaos exerts the pressure which requires order to shape itself accurately. Without accuracy, order would self-destruct as soon as it came into being.
For these reasons, the struggle between order and chaos is eternal, necessary—and extremely expensive.
Maybe corporations don't scale well because they are top-down, with an over reliance on order (management). Cities grow bottom-up, through chaos (craziness not just tolerated, but nurtured). Crazy = chaos. Management = order. Too much of either, you get no growth. Too much crazy = anarchy. Too much order = stagnation. Maybe corporations start out somewhat chaotic (at the level of entrepreneur), but order ends up being imposed on them both internally -- as we fight to maintain some kind of status quo -- or externally, as outside forces such as laws, competition, market changes and time push us into more rigid forms.
So... the question may be less, "Why don't corporations scale well?" and more, "How are cities different than individuals?"
It may be that looking at a corporation may be more like looking at any individual in a city. One person (or many) may (will) fail, fall sick or die in the process of a city's growth. We don't say, "The city is bad because it killed one person." And people (as animals) don't scale well. Maybe in this metaphor, the entire industry or the market or an entire economy is the city. And corporations are doomed to live and die, succeed and fail, more as individuals.
So... how do cities differ from individuals? Sounds like an odd question, but if corporations are more like people (and we call them corporations, eh?), maybe understanding the city vs. person dynamic would help corporations grow better/happier.
Perhaps cities scale better because they are made up of many more individuals with very different overlapping, intersecting goals. And those purposes touch/influence each other. In "Emergence" Steven Johnson talked about places like the salons of Europe and scientific coffee houses of the early Industrial Revolution; places where very diverse ideas got a chance to rub up together. Emergence -- that is, major intellectual growth -- needed a hothouse where very different types of thought had to jostle each other. If you read any of James Burke's books ("Connections" is a good start), you'll find that many great inventions were built out of odd, dissimilar mash-ups of ideas.
Which makes me wonder: would a company that did a few (or many) very different things end up doing them all very badly, or get remarkably better at some/all of them? And by very different, I mean like a software company also bottling fruit juice. Or a hospital also running a baseball team.
As long as I can remember reading about businesses, I've heard it accepted as God's truth that you shouldn't (as a company) try to do to many things. "Stick to your core competency," is pretty much gospel. And, "Pick one thing and be great at it." But what if you want your "one thing" not to be product, service or industry-specific... but passion-specific? Or artistic stance-specific? Or metaphor specific?
I read recently (can't remember where; sorry, would love to cite) that the reason Apple has done so well is that it didn't define itself as a "company that made computers," but as a "company that loves to please customers with great industrial design." OK... well... sure. And that's why they could make iEverything and do OK, because people went to that well for one thing -- good, human-centric design. Which could be manifested in desktop computers, laptops, phones, MP3 players, tablets, etc. You're not buying i[Thing]. You're buying design.
What if your company's main product was laughter? Or peace? Or (alternately) fear? Or relaxation? Let's take that last one for a spin...
If I wanted a company that produced relaxation, where would I start? Would I buy a successful bed or furniture company? Or license/produce some really mellow music? Or look into what foods are conducive to relaxation? Or which exercises/meditations work best? Well... I'd probably do all of those things. Eventually. Or work to tie together companies that did them in a way that increased relaxation for all their customers (who wanted to relax, that is). I would probably end up doing lots of very different things, from an industrial standpoint; but if everything I did helped my customers to be more relaxed... we all win. And maybe that would scale better, because it wouldn't rely solely on building more efficient beds or better/cheaper IP lawyers, or working with specific insurance companies. What we used to think of as specific products/services would become part of a more meta (sorry, you can't get a post this long from me without a "meta" thrown in) supply chain with something much less tangible, but much more... important?... vital?... interesting?... at its core.
Maybe corporations don't scale because they make their core competency a *thing* and not an *aspiration.* I do not mean this in any kind of soft-hearted, wishy-washy, hippy-dippy way. I'm not talking about "let's build a joy factory!" I'm talking about a hard-heated approach to a business where the main product... the main metrics... are more about an effect than a widget.
Maybe that's why Starbucks and Disney do so well. Starbucks is mostly about coffee, sure. But it's really about treating yourself to a mini vacation. So you can also get expensive little cookies there and off-beat CD's. And Disney isn't about any single product: it's about fun. Whether that's at the movies, the theme parks, the TV shows or through toys and games. Disney sells fun.
If that's the case, then many corporate metrics are measuring the wrong things. Efficiency is great (in the case of a city), when you're thinking about your commute. Good, fast, safe, short route. Lovely. But when it comes to... dating? Dining? Entertainment? Shopping? Architecture? Friends? Civic spaces? None of those things are judged in terms of efficiency.
In short, maybe corporations are cities made only of roads. Easy to measure, easy to understand. But way less likely to attract tourists, artists, bands, and newlyweds.
Thanks, JP. I haven't blogged in a long time. This was an interesting topic to think-out-loud about.