The fundamental enabler of large-scale organization is not management; it's communication. Starting on a small scale, any 2, 3,4, or n people can only organize and coordinate their actions if they can communicate with each other. The limit on the scale of organizations is the limit on how effectively people can pass information around. Hierarchical management structures are a solution to the problem of overcoming the natural spatial, temporal, and cognitive limitations on how effectively any individual can connect with a group of others. They represent a social and cognitive technology for facilitating communication, which uses extra people as components to make connections. Because people are very expensive pieces of equipment, hierarchical management is limited in how many connections it can support. This limit can only be overcome when you realize that the real problem is not how to manage more effectively; it's how to enable more effective communication.
This is why information technology is so important. This is why the internet is so socially disruptive. It is an alternate approach to amplifying the ability of an individual to communicate with large groups of others without the need to use other humans as components in the system. At both the smallest scales and the largest, it makes management obsolete. To reduce costs and build large-scale organizations, just replace your managers with switches and routers.
This Post Inspired by Here Comes Everybody.