I'm trying to increase the maximum z-scale value so that the topography is compressed and thus the topography is displayed in fewer colors.
you can stretch the z height of the image using Display Settings > General > Height Scale but you can't change the maximum z value.
As bbotters has indicated, you cannot change max z, but you can change or constrain the color scale. For instance, click on "Color Scale" and select "Manual Mode". Then either enter the Min and Max values directly, or click "Interactive" to view the effect on the image as you drag Min and Max until you achieve the height range you are interested in.
Hope this helps!