Management gurus and consulting moguls have always been high on scale. Scale, they argue, reduces costs and increases efficiency. Venture capitalists, thought to be the third rail of the economy, mumble the two magic words - “scale” and “exit” in deep sleep, for without it, they cannot be interested in investing. Business schools teach every budding manager and entrepreneur, the magic of scale – how profits can increase exponentially and how wealth can be maximized under the spell of scale.
Scale is a misguided notion from the industrial revolution, when it was indeed valid. Modern companies are unable to break the shackles of the past – as their managers are educated in the same ideas and their financiers are still left with limited brain cells. The analysts of the street, with wisdom that cannot be measured with any modern techniques, analyze and reanalyze how scale is helping their fledgling companies as they stuff supply chains to dress up next quarter’s earnings. Accountants jump up in sheer joy as they witness numbers add up horizontally and vertically in spreadsheets and they are driven to orgasm when they actually tie everything together for everybody to see and enjoy. Scale, still, is the driving notion of business success.
It is time companies seriously considered descaling as a strategic need (1). Contrary to popular opinion, size does not really matter in the information economy.
1. Flexibility : Flexible Companies for the Uncertain World
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