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Is the Company Destructive to Productivity?

I found a very interesting reflection on work and the relative merits of working within a corporation in an old issue of “Wired (February 2010)” that I had lying around. The topic uner discussion is what impact the rise of cheap 3D-printers will have on the maufacturing sector on page 105.

“In the mid-1930’s, Ronald Coase…[asserted that]…companies exist…to minimize ‘transaction costs.’”

“Bill Joy…revealed the flaw in Coase’s model, ‘No matter who you are, most of the smartest people work for someone else…’”

“With the Internet…[Joy’s proposition] turned Coase’s law upside hown. Now, working within a company often imposes higher transaction costs than running a project online. Companies are full of bureaucracy, procedures, and approval processes, a structure designed to defend the integrity of the organization. Communities form around shared interests and needs and have no more rpocess than they require. It’s built around small pieces, loosely joined.”

It would seem that a company has a drag coefficient. I suggest that an optimal group size (s) can be identified such that for a given organization it is the optimal size to engineer a project with an expected return on investment (R). This relationship should be a simple ratio and should naturally self-organize to this number. A disruption factor (F), a fraction, should also be identified which explains the overhead a given organization’s processes and effectively increases the headcount on the given team, thus pushing it ouside s’s optimal range.

Open-source MBA idea.