Why Big Organizations Are Broken

In Ronald Coase's The Nature of the Firm ... the function of a firm was to reduce transaction costs, especially information costs, and that firms would grow until the increase in organizational costs canceled out efficiency gains...


Today, however, we live in an information economy. Competitiveness is no longer determined by how efficiently we move around men and materiel, but in how we connect to informational resources... Technology has minimized transaction costs, while organizational costs have become a heavy burden. Nimble startups can access access manufacturing resources, talent, financing, computing power and just about anything else you can imagine and still be price competitive with the big guys...


Now that access to resources has become nearly universal, leadership is more important than authority. So we need to shift our mental models from getting people to do what we want, to inspiring them to want what we want.