Monday, October 20, 2008

Economies of Scale vs Alignment

Is it easier to align five people or five hundred?  There's an old Dilbert cartoon which discusses how to determine the IQ of a meeting.  Start with 100 and then subtract 5 for every person added. [Editor: I subtract 10 for you.]

Everytime someone is added, complexity is added.  Agreement, understanding, shared vision, the ability to communicate effectively all become more difficult as more people are added.  If less is so obviously more, why do we continually add people?

Economies of Scale
The industrial revolution and the 20th century demonstrated the benefits of economies of scale.  It costs $3,000 to make 100 of Adam Smith's pins, however it only costs $4,000 to make 1,000 pins.  The price for each pin goes from $30 to $4.  

Where fixed costs are high and you have to build factories and assembly lines and have marketing departments and sales teams, economies of scale make a lot of sense.  Is that the world we face?

Less is More
In a world where you can outsource manufacturing, marketing, legal and accounting functions and focus only on the real areas you know, do you need the extra departments?  Do you need the headachs finding, hiring, training and aligning all those people?


Josh said...

An excellent topic. All communication should be focused like a laser, only including the people it needs to and to the point in content.

I've written a few related posts, the most recent one is Help Your People Escape Meeting Hell.

Josh Nankivel

Josh said...

Another rant.....I absolutely HATE it when managers talk about OVER-COMMUNICATING as if it is a good thing. Excessive communication is bad. It is confusing. It is wasteful.

Ah, thanks for letting me get that out off my chest!

Josh Nankivel