> Splitting a system into subsystems allows each team to focus on their piece of the puzzle while minimizing the amount of peer-to-peer coordination.
This does not happen at all. When you break a system into subsystems, all the previous connections that get remapped to new connections between subsystems still need to happen, in order to solve the fundamental problem that the system solves — except now instead of just making the connection directly, there has to be a "cross-functional" meeting between teams and a complicated communication layer between the systems. And if somehow you find a breakdown that requires minimal connections between subsystems, then those connections wouldn't have existed in the original system either, and the N² problem doesn't exist.
This does not happen at all. When you break a system into subsystems, all the previous connections that get remapped to new connections between subsystems still need to happen, in order to solve the fundamental problem that the system solves — except now instead of just making the connection directly, there has to be a "cross-functional" meeting between teams and a complicated communication layer between the systems. And if somehow you find a breakdown that requires minimal connections between subsystems, then those connections wouldn't have existed in the original system either, and the N² problem doesn't exist.