Isaac Su / 2017.06.26

City Scaling

How does an organisation scale out?
Like a city.

How does a city scale out?
Good question.

How does one run an organisation like a city?
The market is a defining trait of a bustling city.
Exchanges, transactions.

Why go to a city?
To trade. To exchange goods and services with others.

The city is where buyers and sellers gather.
The market is a concentration of buyers and sellers.

So, run an organisation like a market?
Not just a market, but a sufficiently large organisation will need some form of market structure to sustain growth. Otherwise, some other sub-optimal structure will form anyway.

What defines a market?

Enterpreneurship is the business of finding new patterns of specialisation and trade.

Firms are formed to lower the cost of transaction. A firm derives a portion of profit simply by being able to transact more cheaply internally than on the open market.

When intra-firm transaction becomes less efficient than transacting on the open market, the structure of a firm becomes a liability.