Greater economy of scale = less innovation

Having an economy of scale means having uniformity across processes, products, and services.

This means a reduction of variation, of diversity.

There is a reduced need, and therefore ability, to think outside of the norm.

And hence a reduction of the ability to innovate.

3 comments on “Greater economy of scale = less innovation”

1. Craig said:
   

   Sometimes you don’t want variation & diversity – sometimes they can make life very difficult. I am currently trying to create standarised processes because the variety of processes is killing the company’s ability to deliver quality. However, in saying that, the ability to innovate must also be taken into account and this is why it is important to embed a culture of continual improvement to avoid processes becoming “old”.

   
   2 October 2008 at 1:40 pm
2. Tanneke said:
   

   Zern – normally I accept and appreciate where your mind goes, but in this instance I would challenge your cause and effect equations. Reduction of variation does not HAVE to lead to reductions to thinking outside the norm or in the ability to innovate. The uniform processes and products still need to be developed and improved, and good businesses will still reward those who bring the ideas to the table. And that doesn’t even start the whole conversation about sectors where uniformity can be an absolute necessity (I want each tablet I swallow to have the same quanity of medication inside)and the fact that many markets are becoming more and more segmented, so mass-production is no longer happening on the same scales!

   
   2 October 2008 at 1:52 pm
3. Zern said:
   

   You are both absolutely correct. Uniformity and the necessary chaos of innovation are both necessary sides of any business.

   You cannot have quality and predictability without uniformity. That is where we don’t want “what if” situations. It would mean one batch of pills will be different from the next. And today’s tooth filling may fall out while yesterday’s was fine…

   The problem comes when businesses see only the process/uniformity side and forget the need to try out new things (out side of the day to day oprtations/processes!)

   The focus on quality can foster and feed risk aversion across the entire organisation. This is not healthy.

   
   5 October 2008 at 9:52 pm

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