This concept relates to a thought that I've had for a while regarding why large organizations always seem so inefficient and tend toward stagnation. In a small

This concept relates to a thought that I've had for a while regarding why large organizations always seem so inefficient and tend toward stagnation. In a small group, formal rules and processes exist as layers of abstraction built on top of a substantive social context established by the complex interactions among the individual members. All of the cues, feedback mechanisms, and communication channels inherent in human nature are in full effect, and these usually generate appropriate and efficient responses to changing circumstances in real time. But once you've gone beyond a certain level of scale, those mechanisms no longer function, and the more natural, emergent social context no longer forms a consistent substantive base layer. The rules and processes that originally existed as an abstraction layer instead become the lowest available level of complexity; and since these rules are the product not merely of design, but of design that originally took place within constraints that are no longer present, the formal rules are usually quite insufficient as a substitute. Even those who recognize this problem at this point can do little about it, because there's no longer a workable context in which to generate and implement a solution. It may only be possible to avoid in advance by being very deliberate in the process of scaling, and building the organization as a 'confederation' of smaller groups divided along natural functional 'seams'. This phenomenon may actually be more evident in politics than in business.