With intellectual labor; the effectiveness of an org scales roughly logarithmically with the number of people in it. This means 1000 people may only be 2x more effective than 100. And a company of 10,000 people can actually be 25x less effective than 100 companies of 100 people.
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The 5th generation fighter jet example is provocative but also a bit turbulent for me! The aero industry seems to universally feel the f22 and f35 programs were boondoggles. Maybe would have been better with something more distributed?
Distributed small orgs work best when each one can occupy a niche for which there is a reasonably-sized market. So you could build billion-dollar highrises with small orgs. You need a big org when you're building very large systems made of components for which there is no market.
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The key thing here is the importance of infrastructure and long term investments. I don't think this has to be bankrolled inside of giant companies. What if we taxed SW companies to fund public open source the same way we tax people to fund roads?
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I think this might sort itself out: all big companies rent out their datacenter to smaller companies to do cloud computing on them. Also big companies contribute to open source in various ways already (financing, code-contributions, support, etc).
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