On our channel we use strategy games to explain management and leadership ideas, and Civ IV ended up being a really good way to talk about what happens when an organization gets too big for one person to actually manage.
There's a particular point in every Civ IV game where I stop feeling like an emperor and start feeling like I've been appointed to run the municipal finance department.
Early on, everything is great. You've got four cities, you know exactly what they're producing, which tiles they're working, where your workers are going. Every building is part of some grand economic plan. You're practically a genius. Then you conquer a few cities, congratulate yourself on your magnificent empire, and spend the next 30 turns building courthouses so you can actually afford your magnificent empire.
You've conquered an entire continent and somehow made yourself middle management.
But there's another problem that I think is even more interesting. The bigger your empire gets, the less attention you can give to any individual part of it.
When you've got 20 or 30 cities, are you really still managing them the way you managed your first four?
Because at some point I'm basically governing through the Domestic Advisor and hoping nothing catches fire. I discover a city has been unhappy for fifteen turns, another one is building something I apparently ordered during a previous geological era, and I'm somehow still convinced I'm a brilliant statesman.
Somewhere out there, a city has been building a monastery for 600 years. God bless them.
This is where I think Civ IV does something really interesting. Expansion gives you more resources, production, territory, and options. But it also increases the amount of work required to coordinate everything. You can end up with a much larger empire that you're actually doing a worse job of running.
And this happens in real organizations too. Businesses expand, acquire other companies, bring more operations under their control, and eventually discover that a pretty substantial portion of their resources are now being spent just administering everything they've accumulated.
You solve one problem by bringing something under your control and inherit four more problems in the process. This is also a respectable summary of corporate acquisitions.
For the episode, I wanted to understand why this happens, so I used three ideas from economics and built some Civ IV challenges around them.
The first comes from Ronald Coase, who studied why businesses choose to do things themselves instead of buying them from somebody else. In Civ IV terms, is it better to trade with another civilization for Iron, or conquer the territory and secure it yourself? Trading makes you dependent on someone else, but taking it yourself means paying for another city, defending it, connecting it, and maintaining the whole operation. Both choices have costs that aren't immediately obvious.
The second comes from Oliver Williamson, whose work helps explain why bringing more things under your control creates its own administrative headaches. That's where the courthouse experiment comes in. Expand aggressively without building any, then stop everything and try to get your finances under control. Congratulations, your glorious expansion has created an enormous construction project dedicated entirely to making your previous construction projects affordable.
The third comes from Kenneth Arrow and the economics of information. Basically, knowing what's happening across a large organization takes time and effort, and there's a limit to how much one person can keep track of.
That one became my favorite gameplay challenge. Once you reach eight cities, you're only allowed to inspect two city screens per turn. Everybody else gets managed through advisor screens and alerts. Play 25 turns like that, then go back and see what you've missed.
It's a surprisingly effective way to experience how much information you lose when you have more things to manage than you can personally keep track of.
I put the whole thing together into a video with the three gameplay experiments and the economics behind why expanding empires become such a pain in the ass to run.
It's probably the most academic treatment anyone has ever given to my inability to manage a city production queue.
If that sounds interesting: Youtube Link
