How to Grow: More or Bigger?

As an employee I have always had a preference for working in small organizations, because it is much easier to make a difference in small-business environments. And, in a small company, it also much easier to annoy the CEO, because he actually knows who you are. On the other hand, I did have some trouble working in the smallest of all organizations: the one-person company. Despite it being the most natural environment for making a real difference, it also means that, no matter how you choose to do your work, you can only annoy yourself. Therefore everyone, even those who work on their own, are always looking for opportunities to grow and work with other people. But how? Software developers already know that you basically have just two options for scaling a system: scaling out and scaling up.

Scaling out is the concept of producing many small systems. The size remains the same, but the system grows by producing more of them. Biologists have found that, for many species, it pays to scale out. Large coalitions of male lions are known to be able to take over a pride of females, which is something a single lion can never achieve. A swarm of bees can kill a human being, while the sting of an individual bee usually only hurts a little. And among pups of sea lions much lower mortality rates are found when they are raised in groups, while the pups born to solitary mating pairs die far more easily.

However, organisms have not only found the benefits of economies of scale by working together in groups. Many species themselves have also grown bigger over time:

The 19th-century paleontologist Edward Drinker Cope […] noticed that animal lineages tend to get bigger over evolutionary time, starting small and leaving ever bigger descendants. This process came to be known as Cope’s Rule. – James O’Donogue

Scaling up is the concept of one system (or descendants of it) growing bigger over time. Being big has evolutionary advantages. It makes it harder for predators to win an attack, and it is easier to fight off competitors for food or mates. And there’s a much better chance of being popular and looking intimidating in a museum.

But there’s a downside as well. Big species consume more, and they breed slower, which means that they have greater problems when times are tough. They are therefore more vulnerable to extinction. Another reason for ending up in a museum.

It appears, for species in nature and organizations in an economy, that the positive feedback loop of getting bigger (with reduced vulnerability) is ultimately negated by the negative feedback loop of becoming slower (with reduced adaptability). The economies of scale are thus pushed down by diminishing returns.

And so it appears that scaling up is a more troublesome strategy than scaling out. In fact, when we consider the total biomass in the world, we must recognize that bacteria, plants, ants, and Antarctic krill all have a total mass on earth that far exceeds that of any of the bigger species, like humans and cattle. We humans like to believe that we are dominating the earth, but by sheer weight the impact of ants is still between 10 and 100 times higher! From a complexity perspective scaling out is definitely better than scaling up. A group of many small systems is more adaptable, and less prone to extinction, than a group of just a few big systems. It seems that Antarctic krill are happier swimming around alive than floating in a jar in a museum.

(photo: Jan van Franeker)

This article will be part of the book Management 3.0: Leading Agile Developers, Developing Agile Leaders. You can follow its progress here.

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  • Pawel Brodzinski

    I think the value is in finding a strategy which works for you and your organizations. Actually humans are a pretty good example – they’re neither purely focused on scaling out nor on scaling up yet at the moment we rule the world.
    There were times when scaling up was a winning strategy (dinosaurs anyone?) and I guess there were times when world was ruled by scale-outers. Most of the time one of mixed approaches seems to work best.
    And one more thing, depending on your niche different strategies are optimal. If your goal is longevity (as a specie) probably scaling out is the way to go. If your goal is to get to museums scaling up raises your chances significantly. And if you want to write yet another book on management being a human looks like a pretty damn good idea.

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