Coda Hale's "work is work" is my favorite analysis of this topic, because of its focus on axiomatic mathematical upper bounds on productivity and how you can avoid hitting them:
The solution, as mentioned by other comments already, is for leaders to ruthlessly focus on keeping work efforts as independent as possible:
> When presented with a set of problems which grow superlinearly intractable as N increases, our best bet is to keep N small. If the organization’s intent is to increase value delivery by hiring more people, work efforts must be as independent as possible. Leaders should develop practices and processes to ensure that the work efforts which their strategies consider parallel are actually parallel. Shared resources should be continuously managed for contention, and where possible, the resources a group needs should be colocated with that group (e.g., if the work involves a lot of design, staff a designer to that group). Combined arms doctrine isn’t just for soldiers.
> But you will end up with different divisions trying to solve the same problems in ways that either confound each other or the customer.
That's the tradeoff.
You either allow teams to work independently and lose some efficiency through work duplication. Or, you centralize the work and you lose efficiency through centralized bottlenecks.
For small to medium orgs the centralized approach works better. But as the org grows, the bottlenecks become worse and you're forced to switch to the independent approach which is more scalable.
* The guidance is to allow teams to do work independently in parallel, not give them no direction or strategy of what to work on. Without small discreet teams that can operate without a bunch of external blocking approvals or manual processes, you simply will not get work done as the org scales because your productivity will quadratically approach zero.
* He addresses the cost of coherence (both its creation and its absence) in the post, which is worth reading in full. He also talks about how to structure a product portfolio in order to avoid the “confounding competing solutions” scenario.
In short, you’re not wrong, but the downside you outline is tractable—centralization of decision making is not.
Eh, personally I prefer eight rats in a trenchcoat to the kind of sclerotic bureaucracy that seems to dominate most midsized companies. I might be confused about why the rats are doing different things, but at least they're doing things.
Nor is such a company productive when looked at from the outside.
Google might be a good example of this. Each team likely seems productive internally because they come up with new products quickly but customers wonder why the company is producing 4 different chat apps, 3 video services, and nothing seems to work together.
Google's multiple public facing apps that do the same thing are a unique issue. What's not unusual is for a company to have multiple internal tools, vendors, processes that are duplicative.
That becomes a branding issue. Many large companies own many smaller brands that are kept independent. You see this a lot in food also with mobile where each smaller brand can focus a smaller group. This gives customers choice but keeps profits with the entity.
That seems like it would be an alienating environment to work in. I'm much happier working in a collaborative environment instead of one where everyone is just working independently on their own thing.
Factoring work into independent modules that are owned by teams does not preclude active and vigorous collaboration. It just means you don't need a giant list of approvals or manual actions from people all over the company in order to ship something or make a decision.
https://codahale.com//work-is-work/
The solution, as mentioned by other comments already, is for leaders to ruthlessly focus on keeping work efforts as independent as possible:
> When presented with a set of problems which grow superlinearly intractable as N increases, our best bet is to keep N small. If the organization’s intent is to increase value delivery by hiring more people, work efforts must be as independent as possible. Leaders should develop practices and processes to ensure that the work efforts which their strategies consider parallel are actually parallel. Shared resources should be continuously managed for contention, and where possible, the resources a group needs should be colocated with that group (e.g., if the work involves a lot of design, staff a designer to that group). Combined arms doctrine isn’t just for soldiers.