Yesterday's PSG debacle shows the danger of misunderstanding the uses of investment capital.

The main obsessions of contemporary business strategy are people and scale: get the best people, scale up their impact, and sit down to reap the outsized rewards. If this is so, how to explain then, both in business and in sports, the fact that very often the organizations with the deepest pockets fail at their most ambitious endeavors? After all, you can buy scale, and with a large enough paycheck you can get almost any talent you want.

And still Amazon, PSG, SoftBank, Apple, Hollywood studios, Barcelona, NFL teams, (never mind the largest militaries in the world) often find themselves having to write down, with various degrees of face-saving, huge investments that gathered world-class talent in huge systems and then fell short of their goal.

The problem lies neither on scale nor talent, but on the interaction between both. In short, the largest your scale, the larger the relative influence not of your people's talent but on the system that mediates between each other and with the rest of the world. It's a commonplace in sports, where "scale" has a much lower bound of impact, that having a bunch of great players it's not the same as having a great team. This becomes exponentially a larger factor when organizations can grow by orders of magnitude. The performance of a tennis player on the court (if we put aside their previous work, which always involves a team) is pretty much determined by their talent and training. But put eleven players on a soccer field, or even five in a basketball court, and the way they interact with each other becomes at least equally influential.

Put a thousand or ten thousand people together in a company and a bad system will bring down even the best talent.

That's not exactly unknown. More of a dirty secret is that large-scale management, much like large-scale software, is far from a solved problem. On either field there are untold numbers of books, articles, and blog posts, everything from short videos to full PhDs, but the long and short of the matter is that there's no known reliable way to set up a large organization or execute a large software project on time and budget from scratch (PMs and managers, being by self-selection optimists, might argue otherwise, although often from biased sampling; every developer as their career moves forward comes to know and, with luck, accept this). Somewhat effective large organizations, like somewhat useful large programs, are always scaled-up versions of smaller systems that worked well. This is simply a reflection of the current limits of our collective knowledge and intelligence — perhaps with focused research and better cognitive tools this will change. Right know, we can attack the small-scale system with some hope of success. Then we scale it, and hope that the rewards of scale outweigh the unavoidable losses of performance.

Money, by itself, should help this immensely. Money doesn't just get you talent, it can buy you time. Time to make it right before you have to make it big. Time to figure out the technology before the marketing. Time to work on your soccer team without the pressure of having to win championships.

It could, but say that to Mauricio Pochettino! That's the rub: large investments, in sports and in business, often come with the twin demands of both fast scaling and quick results, and that's precisely the combination that you can't buy. Sometimes it works out, reinforcing the intuition of it being a sure thing, but more often it doesn't — and sometimes the reaction to this is to assume that more money, scale, and expensive people would have prevented that.

This isn't to say that Real Madrid or Tesla are or were ever scrappy and underfunded. The point is that you can buy instant scale and you can buy instant performance, but you can't buy instant performance at scale.

How much of a problem is this? I don't have or manage a large pile of money, so it's not my problem (although for suitable compensation it could be). In fact, I find it a reason for optimism: over the short term the advantages of scale can look (and be) overwhelming, but focused innovation can, over the long term, beat any incumbent. You just need to be ambitious and patient enough to focus on getting better (much better - incremental advantages won't cut it) without it having immediate rewards. That's organizational rewards. From the point of view of the individual, scaling up, even if the result is mediocre, can lead to the greatest rewards.

Whether you're an investor or an entrepreneur, either path is equally valid: buy fast scale and hope it doesn't fall apart, or pay for the slow development and growth of something better than the best-in-class. You just have to choose which result you're aiming for.

But if you want a relatively uncontested field of the strategy space — very patient money is the almost untrodden path.

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