Seth Godin had a recent post about how organizations tend to go from crisp to soggy over time.
While I agree with his points, I think that there's a better analogy to explain why companies need processes as they grow. I call it the principle of the elephant and the ant.
Hollywood horror movies nonwithstanding, you can't scale up an ant to the size of an elephant. The mechanisms that work so well for a one-gram ant don't work for a 10-ton elephant.
The ant is like a startup: It's small, nimble, and surprisingly strong for its size. When you're that small, you don't need a lot of internal structural elements--a thin exoskeleton more than suffices. It doesn't even need lungs to breathe, relying instead on its surface area to allow oxygen back and forth.
Similarly, startups don't need a lot of internal processes or documentation. When your entire company consists of three people in a single office, everyone and everything in your company is in touch with the outside world. If something comes up, you just poke your head over your laptop and fix it. An "all-hands" meeting consists of nudging the co-founders to your left and your right.
But as your company grows (which is almost always necessary if you build a successful business), that approach doesn't scale. You don't see 1,000 person companies being run like a 3-person startup for the same reason you don't see ants the size of Volkswagens.
(Be glad that we don't!)
Instead, your company begins to resemble the mighty elephant. The lightweight exoskeleton is replaced by a thick endoskeleton. All sorts of internal structures like lungs are required to support life. And you can bet that an elephant can't scurry at a rate of 5 times its body length per second, or lift 50 times its own weight.
Big companies need endoskeletons to function. Yes, these processes impair flexibility, and force you to trade in the elegantly slender legs of the common ant for the stubby tree-trunks of the ponderous pachyderm, but the alternative isn't pretty. A 10-ton ant would instantly collapse and die under its own weight, unless beaten to the punch by asphyxiation.
And there are benefits to being big. You may not be able to run as fast or lift as much on a relative basis, but an elephant can definitely cover longer distances than an ant, and no ant in the world can lift an entire tree with its trunk.
Both elephants and ants have their place in this world, just as crisp and soggy do. The trick is making sure that your approach is appropriate to your situation. There's a reason why invertebrates are smaller than vertebrates, but mice are smaller and faster than lobsters--only you can decide what the right answer is for your company.
P.S. One final alternative to keep in mind: While a single ant can't move a rubber tree, an army of them certainly can (or at least decimate the village where the tree is planted). To what extent can your company act like a swarm of startups, rather than as single elephant?