We built functional organisations to leverage the benefits of specialisation and economies of scale, but modern internet economies are built on code. Code scales indefinitely, without delay. Welcome to economies of speed.
In the industrial age, designing, producing, and delivering physical goods was much more cost efficient when done in large scale. Unit cost optimisation was necessary to keep up with the market and beat the competition. Scaling production required huge investments and a lot of time.
By contrast, modern internet economies are built on code and code scales indefinitely without delay. A service produced by a small team can be distributed globally with negligible delay or increase in production costs. Scaling is practically free. Learning by delivering new value increments in fast cycles and getting the feedback from the real customers is far more important than just efficiency. It enables us to keep solving the most relevant problems in the best possible way.
Efficiency should not be neglected, of course, but we should prioritise speed of delivery and learning. Instead of large functional departments and centralised capabilities, we should build compact, autonomous and multidisciplinary teams, and give them the freedom to choose the best tools for the job and the most suitable ways of working. Autonomy will produce some waste, in the form of overlapping work, but in environments where digital disruption is taking place, the flexibility and the gained speed is much more valuable. It allows us to learn faster and evolve. Scaling is no longer the hard part - finding the right problems to solve faster than others is.
The only way to gain speed is to prioritise it higher than efficiency in all levels of organisational design and daily practices.
Economies of speed have replaced economies of scale.
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