Bigness, Too Big To Scale: How Companies Change With Size

Too big to scale is a phenomenon where a company has passed a threshold that makes it much more fragile to scale. In short, an additional level of scale instead of creating growth efficiency generates at best diseconomies of scale. At worse congestion and collapse.

Understanding the implication of Scale and Size

For years, Facebook’s founder’s — Mark Zuckerberg– motto has been “move fast and break things.” This motto helped the company scale from a single computer in a dorm room to one of the largest tech companies in the world.

Yet, back in 2017, that motto changed to “Move fast with stable infrastructure.” This is a paradigm shift from both a technical and business standpoint and it might fool you into believing that the decision to change its motto came centrally, from Mark Zuckerberg.

However, the key lesson I want you to bring home is that as Facebook size reached a certain threshold, the company completely transformed. And this transformation was not the consequence of a drafted plan, written down and executed. But instead, it was the consequence of size.

In short, as Facebook grew and scaled, it automatically changed as an organization. If at all, as the Facebook executive team realized that, they had to change its motto to fit this new reality.

Breaking things was no longer an option for Facebook. Indeed, the cost of breaking something at Facebook’s scale was so high (not only for the company but for society) that keeping this mantra would have resulted in the company’s collapse under its own size.

Just like an ant, that turns into an elephant, Facebook had transformed. Scale had changed it all.

Thus, a software bug, that once was not expensive to fix, with billions of interactions through the platform, that same bug would have meant a huge effort from the engineering team to fix it. Together with the reputational and legal risk coming with it.

When that level of scale is achieved, where size makes the company a potential burden to society, the company loses its ability to experiment fast (as each of those experiments carries a too high potential negative cost to society), and it becomes a market monopolist.

Size prevents quick experimentation, also the pace of innovation is significantly slowed down. Therefore, the Too Big To Scale player’s only option is to limit competition in the market, by means of acquisitions, bad business practices (like knock-offs, or copycat products), and lobbying.

As we’ll see here though, not all scale is bad, and scaling to a certain size might actually help the business become more effective.

What scale does to companies?

While scale and size might seem two separate things at a first sight. In reality, scale and size move in an infinite loop, that determines a sort of “science of growth.” As we move within complex systems, scale can help that system grow, yet as the system grows it changes, it becomes something new.

Business people that have transformed companies from startups, to scale up, mature, and (in some cases) monopolies know that well.

In his book, Scale, Geoffrey West gives an incredible account of how scale changes things, from physical to more complex things (like cities and companies). Some of the key points of this study highlight how things scale in most cases in a non-linear fashion.

In short, they fall under what we know as power laws. Growth is analyzed as a mechanism between incoming energy + the energy required for the organism’s maintenance (Geoffrey West divides it into repair and replacement) + new growth.

From this simple equation, we can determine how growth looks like.

Thus, the metabolic rate (or how the metabolic energy is distributed across maintenance of existing cells/physical structure and the creation of new ones) can increase sublinearly or superlinearly.

This will trace the difference between sublinear (thus bounded) and superlinear (unbounded) growth.

Bounded vs unbounded growth

In biology, as organisms increase their size, something interesting happens. As a reminder, growth in biological terms can be seen as the difference between metabolism (the energy generated by the organism) and maintenance (that needed for regenerating).

As size scales, metabolism scales sublinearly. It, therefore, slows down, and it’s not able to pick up with the energy needed for maintenance, thus creating over time (as size increases) a situation of growth stagnation.

In the opposite scenario, where metabolism scales superlinearly, it’s able to pick up more quickly with the maintenance needed, and therefore has the potential to keep growing, as size increases (one of such examples are cities).

In a scenario of unbounded growth, the underlying mechanism is superlinear scaling. In short, the underlying organism that scales superlinearly, could, in theory, keep growing forever.

These examples that Geoffrey West gives in the book “Scale” are enlightening. In short, according to the research of the book, the metabolic rate of companies is stuck in the middle, where they do grow quickly as they first scale. This is why younger companies – if investing back their resources into the business can quickly gain traction.

There is a stage in which, a large, mature organization stops growing altogether.

As we’ve seen companies do grow quickly as they are young, and small in size. Yet, as they become large and mature, there is a point in which growth might stop altogether.

Size, fragility and decentralization

Let’s plug another piece of the puzzle here. In his book series, Incerto, Nassim Nicholas Taleb gives us another important piece.

In a lecture, on “Small is Beautiful” Taleb highlighted:

We use fragility theory to show the effect of size and response to uncertainty, how distributed decision-making creates more apparent volatility, but ensures long term survival of a system. Simply, economies of scale are more than offset by stochastic diseconomies from shocks and there is such a thing as a “sweet spot” in optimal size. We show how city-states fare better than large states, how mice and small species are more robust than elephants, and how the canton mechanism can potentially solve Near Eastern problems.

As Taleb also highlighted in a tweet “What works on a small scale almost NEVER expands to large scale.”

How monopolies negatively affect markets

Conventional economics attributes to economies of scale, thus size, the ability of companies to become so efficient to build so-called “moats.” Or along with lasting economic advantage. This belief has led to the creation in many industries (since the 1980s) of massive monopolies, that do look like states.

However, the reason why monopolies developed is the opposite. They developed because market concentrations were not only allowed, but also favored in many industries. Yet, the overall effect of monopolies on marketplaces lead to:

  • Reduced competition.
  • Reduced innovation.
  • Negative externalities.
  • System fragility.
  • Higher overall costs for consumers.

How do you scale without turning into a monopoly?

  • Place bets.
  • Create independent spin offs: do not try to align cultures across companies
  • If you stay small keep control, if you become large flat up the organization: we’re used to the opposite scenario. Where companies that are big are pretty much beurocratic, centralized and follow a gerarchic decision-making structure. Instead, while it’s fine to keep tight control as the company is small, after a certain size it should be decentralized.

How do you enter a market dominated by a monopoly?

What might seem a strength of the monopolist, that of encompassing a whole market. It’s in reality a weakness, as it creates the opportunity for new companies to create value with a Blue Sea Approach. And we’ll see how the Strategy Lever Framework can be used to enter a market dominated by a monopoly.

Read: Business Scaling, Developing A Business Strategy.

Related Market Development Frameworks


A total addressable market or TAM is the available market for a product or service. That is a metric usually leveraged by startups to understand the business potential of an industry. Typically, a large addressable market is appealing to venture capitalists willing to back startups with extensive growth potential.

Niche Targeting

A microniche is a subset of potential customers within a niche. In the era of dominating digital super-platforms, identifying a microniche can kick off the strategy of digital businesses to prevent competition against large platforms. As the microniche becomes a niche, then a market, scale becomes an option.

Market Validation

In simple terms, market validation is the process of showing a concept to a prospective buyer and collecting feedback to determine whether it is worth persisting with. To that end, market validation requires the business to conduct multiple customer interviews before it has made a significant investment of time or money. A transitional business model is an example of market validation that helps the company secure the needed capital while having a market reality check. It helps shape the long-term vision and a scalable business model.

Market Orientation

Market orientation is an approach to business where the company focuses more on the behaviors, wants, and needs of customers in its market. A company will first target a niche market to prove a commercial use case. And from there, it will create options to scale.

Market-Expansion Strategy

In a tech-driven business world, companies can move toward market expansion by creating options to scale via niches. Thus leveraging transitional business models to scale further and take advantage of non-linear competition, where today’s niches become tomorrow’s legacy players.

Stages of Digital Transformation

Digital and tech business models can be classified according to four levels of transformation into digitally-enabled, digitally-enhanced, tech or platform business models, and business platforms/ecosystems.

Platform Business Model Strategy

A platform business model generates value by enabling interactions between people, groups, and users by leveraging network effects. Platform business models usually comprise two sides: supply and demand. Kicking off the interactions between those two sides is one of the crucial elements for a platform business model success.

Business Platform Theory


Business Scaling

Business scaling is the process of transformation of a business as the product is validated by wider and wider market segments. Business scaling is about creating traction for a product that fits a small market segment. As the product is validated it becomes critical to build a viable business model. And as the product is offered at wider and wider market segments, it’s important to align product, business model, and organizational design, to enable wider and wider scale.

Strategy Lever Framework

Developing a successful business strategy is about finding the proper niche, where to launch an initial version of your product to create a feedback loop and improve fast while making sure not to run out of money. And from there create options to scale to adjacent niches.

FourWeekMBA Business Toolbox

Business Engineering


Tech Business Model Template

A tech business model is made of four main components: value model (value propositions, missionvision), technological model (R&D management), distribution model (sales and marketing organizational structure), and financial model (revenue modeling, cost structure, profitability and cash generation/management). Those elements coming together can serve as the basis to build a solid tech business model.

Web3 Business Model Template

A Blockchain Business Model according to the FourWeekMBA framework is made of four main components: Value Model (Core Philosophy, Core Values and Value Propositions for the key stakeholders), Blockchain Model (Protocol Rules, Network Shape and Applications Layer/Ecosystem), Distribution Model (the key channels amplifying the protocol and its communities), and the Economic Model (the dynamics/incentives through which protocol players make money). Those elements coming together can serve as the basis to build and analyze a solid Blockchain Business Model.

Asymmetric Business Models

In an asymmetric business model, the organization doesn’t monetize the user directly, but it leverages the data users provide coupled with technology, thus have a key customer pay to sustain the core asset. For example, Google makes money by leveraging users’ data, combined with its algorithms sold to advertisers for visibility.

Business Competition

In a business world driven by technology and digitalization, competition is much more fluid, as innovation becomes a bottom-up approach that can come from anywhere. Thus, making it much harder to define the boundaries of existing markets. Therefore, a proper business competition analysis looks at customer, technology, distribution, and financial model overlaps. While at the same time looking at future potential intersections among industries that in the short-term seem unrelated.

Technological Modeling

Technological modeling is a discipline to provide the basis for companies to sustain innovation, thus developing incremental products. While also looking at breakthrough innovative products that can pave the way for long-term success. In a sort of Barbell Strategy, technological modeling suggests having a two-sided approach, on the one hand, to keep sustaining continuous innovation as a core part of the business model. On the other hand, it places bets on future developments that have the potential to break through and take a leap forward.

Transitional Business Models

A transitional business model is used by companies to enter a market (usually a niche) to gain initial traction and prove the idea is sound. The transitional business model helps the company secure the needed capital while having a reality check. It helps shape the long-term vision and a scalable business model.

Minimum Viable Audience

The minimum viable audience (MVA) represents the smallest possible audience that can sustain your business as you get it started from a microniche (the smallest subset of a market). The main aspect of the MVA is to zoom into existing markets to find those people which needs are unmet by existing players.

Business Scaling

Business scaling is the process of transformation of a business as the product is validated by wider and wider market segments. Business scaling is about creating traction for a product that fits a small market segment. As the product is validated it becomes critical to build a viable business model. And as the product is offered at wider and wider market segments, it’s important to align product, business model, and organizational design, to enable wider and wider scale.

Market Expansion Theory

The market expansion consists in providing a product or service to a broader portion of an existing market or perhaps expanding that market. Or yet, market expansions can be about creating a whole new market. At each step, as a result, a company scales together with the market covered.



Asymmetric Betting


Growth Matrix

In the FourWeekMBA growth matrix, you can apply growth for existing customers by tackling the same problems (gain mode). Or by tackling existing problems, for new customers (expand mode). Or by tackling new problems for existing customers (extend mode). Or perhaps by tackling whole new problems for new customers (reinvent mode).

Revenue Streams Matrix

In the FourWeekMBA Revenue Streams Matrix, revenue streams are classified according to the kind of interactions the business has with its key customers. The first dimension is the “Frequency” of interaction with the key customer. As the second dimension, there is the “Ownership” of the interaction with the key customer.

Revenue Modeling

Revenue model patterns are a way for companies to monetize their business models. A revenue model pattern is a crucial building block of a business model because it informs how the company will generate short-term financial resources to invest back into the business. Thus, the way a company makes money will also influence its overall business model.

Pricing Strategies

A pricing strategy or model helps companies find the pricing formula in fit with their business models. Thus aligning the customer needs with the product type while trying to enable profitability for the company. A good pricing strategy aligns the customer with the company’s long term financial sustainability to build a solid business model.

Additional business resources:

Case studies: 

About The Author

Scroll to Top