This struck me an interesting, and very pertinent.
Why are corporations so fleeting? ... Bettencourt and West discovered that corporate productivity, unlike urban productivity, was entirely sublinear. As the number of employees grows, the amount of profit per employee shrinks ...The graph reflects the bleak reality of corporate growth, in which efficiencies of scale are almost always outweighed by the burdens of bureaucracy. “When a company starts out, it’s all about the new idea,” West says. “And then, if the company gets lucky, the idea takes off. Everybody is happy and rich. But then management starts worrying about the bottom line, and so all these people are hired to keep track of the paper clips. This is the beginning of the end.
Its important because the more employees a companies has, the more overhead it has, in the form of salaries, and in the services to support the employees, healthcare, etc. The company also loses its ability to iterate quickly, to rapidly respond to change etc. This would be fine, if revenue was to increase proportionally, but if this does not occur (as the article found) then companies are more susceptible to market changes, and its easier to lose more faster. Its the "beginning of the end" as the article put it.
Why are corporations so fleeting? ... Bettencourt and West discovered that corporate productivity, unlike urban productivity, was entirely sublinear. As the number of employees grows, the amount of profit per employee shrinks ...The graph reflects the bleak reality of corporate growth, in which efficiencies of scale are almost always outweighed by the burdens of bureaucracy. “When a company starts out, it’s all about the new idea,” West says. “And then, if the company gets lucky, the idea takes off. Everybody is happy and rich. But then management starts worrying about the bottom line, and so all these people are hired to keep track of the paper clips. This is the beginning of the end.