Cities vs Companies

Cities and companies are both human constructs: different ways of arranging people.

But why is it that we can raze a city to the ground, and within a few decades it can recover… but all companies die?

The answer seems to be built into something about the way they are organised. Both follow natural, scientifically-measurable ‘power laws’ in the way they are arranged.

But if you double the size of a city then numbers like wages, GDP, crime, patents, … per person will all go up, systematically, and the pace of life increases. But double the size of businesses and they match the pattern that is found in nature: bigger animals are more efficient in their energy usage than smaller animals, and so are bigger businesses.

Cities are dominated by innovation. But companies are dominated by economies of scale and bureaucracy. The catch is that in order to avoid inevitable collapse, businesses have to innovate faster and faster. But that is not how they are organised.

What if we could design a business to operate like a city? To grow larger, to recover from shocks, to survive for longer?

As the speaker hints, it involves mimicking nature’s networks. And as he also hints, it is not possible from within our current paradigm for companies.

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