10.06.2015

Object to Scale

I have been working for almost 20 years now. 

I spent my first decade at The Enterprise Center, helping minority-run businesses grow to scale so as to help business owners go from simply employing themselves to being job creators.  I continue to believe in the importance of that work in transforming communities of color through entrepreneurship and employment opportunities. 

I have spent my second decade and counting at Econsult Corporation and now Econsult Solutions, scheming about how to grow my own company to scale so as to extend our core competencies over broader business lines and geographies.  I see this as the best path to maximizing not only my personal enjoyment (because I like what I do and enjoy seeing how things play out in new places) but also my wealth-building capacity (because I would like to eventually retire and so am trying to grow the business as a monetizable asset on my personal balance sheet).   

So I believe in scale.  Scale is good.  Scale gets you the ability to do bigger things, can unlock efficiencies, and is something worthy of striving for as a means to these ends.

But scale is not everything.

In fact, sometimes scale is not good.  Or, more correctly, sometimes scale is less good and small is better.

Let me give you three examples. 

In business, both on the supply side and on the demand side, people are choosing small over scale.  Some business owners don’t want to grow.  They like being small and would loath getting big, both in terms of personal enjoyment and in terms of what would become of their customer interactions.  Similarly, some consumers prefer to do business with small guys.  It is a value they want to live by in the abstract, and in the specific they like the kinds of relationships they get to have. 

In certain kinds of social services, programming power does not easily scale up.  Some things achieve economies of scale as you get bigger, but other things get you further away from true impact.  Said another way, some small-scale social service providers are really good at what they do, and would be less good if they had ten times, a hundred times, or a thousand times more throughput.

In arts and culture, it’s great for a region to have big hulking institutions, but it’s also great for a region to let a thousand flowers bloom.  Creative vitality needs both, not just because patrons desire a wide range of offerings but because both big and small entities enrich the overall cultural milieu in different, necessary, and complementary ways.

The challenge of being small and staying small – whether a mom-and-pop store, a storefront human services entity, or an art and culture shop – is that many pressures have conspired to make small harder.  For example, in the food manufacturing space, more stringent food safety regulations ramp up the need for costly equipment and processes that are more difficult for smaller food manufacturers to bear.  Regulations intended to protect the most vulnerable among us have the effect of making serving those populations more costly, complicated, and time-consuming.  

Funders and peers often, subtly or blatantly, pressure small entities to get to scale, under the presumption that naturally bigger is better and therefore we must figure out how to bulk you up.  And, indeed, there are aspects of each of these kinds of entities that would benefit from scaling up.  But how do you scale up where it makes sense while simultaneously not scaling up where it would be bad to?  Or maybe you don’t even think it is possible to ask this question, so engrained is the “bigger is better” mantra.

Well, in fact, there exist entities in this region and around the country that are helping people do just this.  Shared food manufacturing facilities, like the Center for Culinary Enterprises run by The Enterprise Center, help smaller manufacturers play with the big boys without themselves having to bulk up on equipment and processes.  And fiscal sponsors like Urban Affairs Coalition and CultureTrust Greater Philadelphia let smaller-scale human service and culture entities tap into their scale economies in back office functions like HR, accounting, and IT.

To be sure, at all of these places and others, if you want to grow these can be great settings to do so.  But, if being small is your competitive advantage and personal preferences, places like this make it possible to do so while capitalizing on the efficiencies that are needed to survive in today's realities.  

Maybe what I'm saying isn't super-revolutionary.  After all, today's young'uns get the sharing economy.  Why own a residence, car, and staff, when you can Airbnb, Uber, and Task Rabbit?  Fractionalized consumption of what you'd otherwise have to bulk up to have all for yourself makes perfect sense to this generation.  

Still, I suspect the drive to scale is so engrained that you may need to pause to get your head around the fact that (1) big isn't always better and (2) there is help out there so you can stay small and tap into all the good in that.  Would that we pause to think about what size makes the most sense, and be thankful that resources abound to help us be as big or small as we think is best.  
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