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| :(d) The Firm<br> | | : |
| :::(i) Rebuttable presumption: this is the purest form of reaction to the {{risk|market}}. This will thrive in the absence of rules Evolutionary advantages for firms (not individuals)<br>
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| ::::(1) Scale leverage and continuity – <br>
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| :::::(a) accrues largely to the firm, not to individuals in it – so a natural limit. <br>
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| ::::(2) Responsibility diffuser <br>
| | (e) The Individual <br> |
| :::::(a) Accrues exclusively to individuals, so a stronger evolutionary advantage to one that accrues to the firm itself (and only indirectly to individuals) <br>
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| :::(ii) Limits on evolutionary advantages:<br>
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| ::::(1) Cross cutting interpersonal relationships<br>
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| :::::(a) Good and bad relationships <br>
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| :::::(b) Between individuals at the firm <br>
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| (i) relative to positions in firm hierarchy <br>
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| :::::(c) Between individuals at different firms <br>
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| ::::(2) Scale opportunities bring their own natural costs <br>
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| :::::(a) The larger the firm the greater opportunity to wring economies from its scale. There are inflection points <br>
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| ::::::(i) The point where the scale opportunities are large enough to go from passive scale management to active scale management <br>
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| 1. Passive: obtaining natural benefits that flow from the simple fact of size (eg adding another user to a flat fee all-you-can-eat licence automatically reduces the per-user cost of the licence) <br>
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| 2. Active: diverting firm’s resources and personnel towards manufacturing scale efficiencies that don’t arise by themselves (eg negotiating law firm panel arrangements, outsourcing, offshoring <br>
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| ::::::(ii) The point where the firm is justified in deploying specific resources solely to leveraging scale. It may engage management consultants, middle managers and eventually a chief operating officer (not to be confused with head of operations – the COO is a separate function, and other departments may have their own COO Groups. Indeed the operations department could have a coo and probably only doesn’t through its own inarticulate chutzpah) <br>
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| ::::::(iii) The point where the scale – leveraging organisation is itself so complex that there are opportunities to leverage its scale. So consolidating all the diaspora of COO groups into a single function, distinct from operations and the main COO function, and now big enough to have its own COO function. <br>
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| :::::(b) The larger the firm the more complex it becomes. <br>
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| ::::::(i) A sole trader is salesman, receptionist, janitor, legal and operations.<br>
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| ::::::(ii) At a point it becomes necessary and desirable to hire dedicated personnel to carry out these roles.<br>
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| 1. Some (sales, trading) are risk-taking, revenue-generating roles.<br>
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| 2. Some (legal, operations, risk) are revenue-absorbing, risk-reducing roles. These are incentivised by means of cost reduction not revenue generation. Incentives are markedly different from sales and trading roles. <br>
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| ::::::(iii) There is a geometric relationship between number of components and their possible configuration. The more configurations the more scope for complexity. The more complexity the more confusion. The more confusion the more scope for fear. See below <br>
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| ::::::(iv) The COO Function in itself is a source of complexity. <br>
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| :::::(c) Paradoxically, the pursuit of economies of scale in itself increasingly undermines the natural economies of scale. <br>
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| ::::::(i) There is a natural upper bound to the effective size of the firm beyond which marginal economies drop to/below zero. <br>
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| :::(iii) Firms as the vessel for the gene – an extended phenotype for the individual<br>
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| :::(iv) Firms as individual responsibility expungers. <br>
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| :(e) The Individual <br>
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| :::(i) Motivations:<br> | | :::(i) Motivations:<br> |
| ::::(1) FEAR. This is the chief motivating factor for any individual. <br> | | ::::(1) FEAR. This is the chief motivating factor for any individual. <br> |