A firm will tend to expand until the costs of organizing an extra transaction within the firm become equal to the costs of carrying out the same transaction by means of an exchange on the open market or the costs of organizing in another firm.
What we’re talking about today is not marginal fluctuations in transaction costs but almost a complete collapse. That’s why a terrorist group that has made almost no effort to organize can function at least comparably to the most powerful army in the world. Or blog can sell more books a month than a medium sized bookstore as a secondary revenue stream.
I can’t really tell you what it is that I do because I don’t have job descriptions. I’m not even formally employed by two of the people I work for – if I was it would create more problems that it would solve. Which is why the idea of hustling is so important. You have to be able to function independently or you’re not worth anything. So the whole notion of scalability is being turned on its head because what you do might not need to be scaled – you might be enough.
But that takes time, effort and constant experimentation.
Other reading:
The Rule of Five – John Robb (blog post)
Dreaming 5th Generation Warfare (blog)
RMMB: John Boyd 2.0 (discussion)
Here Comes Everybody: The Power of Organizing Without Organizations – Clay Shirky
The Starfish and the Spider: The Unstoppable Power of Leaderless Organizations – Ori Brafman
Charlie Wilson’s War: How the Wildest Man in Congress and a Rogue CIA Agent Changed the History of Our Times – George Crile
The Cathedral and the Bazaar: Musings on Linux and Open Source – Eric S Raymond
