Mother Nature does not like anything too big… Mother Nature does not limit the interactions between entities; it just limits the size of its units.
… But there is another reason for man-made structures not to get too large. The notion of “economies of scale” – that companies save money when they become large, hence more efficient – is often, apparently behind company expansions and mergers. It is prevalent in the collective consciousness without evidence for it; in fact, the evidence would suggest the opposite.
Yet, for obvious reasons, people keep doing these mergers – they are not good for companies, they are good for Wall Street bonuses; a company getting larger is good for the CEO. Well, I realized that as they become larger, companies appear to be more “efficient,” but they are also much more vulnerable to outside contingencies, those contingencies commonly known as “Black Swans” after a book of that name. All that under the illusion of more stability.
Add the fact that when companies are large, they need to optimize so as to satisfy Wall Street analysts. Wall Street analysts (MBA types) will pressure companies to sell the extra kidney and ditch insurance to raise their “earnings per share” and “improve their bottom line” – hence eventually contributing to their bankruptcy.
Charles Tapiero and I have shown mathematically that a certain class of unforeseen errors and random shocks hurts large organisms vastly more than smaller ones. In another paper, we computed the costs to society of such size; don’t forget that companies, when they fall, cost us.
That was from Nassim Taleb’s book, The Black Swan. The line of argument doesn’t only work for mergers and acquisitions of major defense firms, like the upcoming deal between Lockheed and Aerojet Rocketdyne. More importantly, it applies to these monolithic weapons programs.
The larger the weapons program, the more “efficient” it is in terms of system unit cost, but it is also more fragile to uncertainty. A problem in technology development, or a change in combat environment, or advances in enemy countermeasures — all of these could throw a major system into irrelevance. And since the program took so much time and effort, military operations as a whole suffers dearly from a lack of alternative means.
Notice that first part: “Mother Nature does not limit the interactions between entities; it just limits the size of its units.” That construct sounds a lot like JADC2, where you have a variety of single-function or disaggregated systems that have a variety of ways of interacting and recomposing to deliver military effects. That means as the force structure is stressed in combat, capabilities degrade gradually as there are a multiplicity of ways to affect outcomes. With monolithic platforms performing multiple roles, if an enemy counters one platform then the whole concept of operations could grind to a halt.
Interesting insights, however, I don’t think these findings are directly applicable to large defense programs. It seems to me that most large defense programs are large because they are procuring a complex system that is expensive to design, build, test, and produce. The comparison to mergers implies that perhaps we would be more efficient if we disaggregated large programs into smaller pieces—in most cases I don’t think that would work well. Someone has to coordinate the procurement of the system to ensure it functions properly—having separate programs for the powertrain, vetronics, chassis and weapons package would not make a tank program more efficient.