The Scale paradox: Paradoxically, the pursuit of economies of scale in itself increasingly undermines the natural economies of scale. There is a natural upper bound to the effective size of a firm, wherein the marginal cost of the machinery required to pursue economies exceeds the marginal benefit to be gained by realising them. This is a kind of Schwarzschild radius. It has two consequences:
One, it operates as a kind of event horizon; a point of no return wherein a critical mass of the organisation’s resources have become so personally invested in cost cutting that the remaining heft of the organisation is powerless to stop them. Even while rainmakers look on, legions of bottom-line reducers will be furiously hacking through branches, cables and retaining walls on which they are sitting, draining them of vital fluids so they become anaemic, emaciated, cadaverous — no longer possessed of the basic energy needed to resist the canker of official MBAs sawing away on the organisation's few remaining branches — on which they are all sitting.
Two, at an unobserved point, the organisation will suffer a final collapse in on itself, undone by the sheer mathematics of its density. This may not be obvious to outside observers because its own gravity is now so dense no new information can escape, and that which does will be so distorted by the weft of management-speak in which all public announcements from the organisation have been infused. This is believed to have happened to Deutsche Bank in 2009.
