Godin on the “Economies of small”

Seth Godin has advice for the little guy. Like small business or even a small state.

Economies of scale are well understood. Bigger factories are more efficient, bigger distribution networks are more efficient, bigger ad campaigns can be more efficient. It’s often hard to defeat a major competitor, particularly if the market is looking for security and the status quo.
But what about the economies of small? Is being bigger an intrinsic benefit in and of itself?
If your goal is to make a profit, it’s entirely possible that less overhead and a more focused product line will increase it.
If your goal is to make more art, it’s entirely possible the ridding yourself of obligations and scale will help you do that.
If your goal is to have more fun, it’s certainly likely that avoiding the high stakes of more debt, more financing and more stuff will help with that.

The marketplace has changed: the ability to produce, market and sell to smaller groups of consumers has been made easier with technology. Consumers minds have changed along with it–we expect flexibility and the ability to get just what we want when we want it at a decent price. It doesn’t have to be the cheapest price, so long as we see value in the quality of the product. Economies of scale still do work, but maybe not always.

I think we embraced scale as a goal when the economies of that scale were so obvious that we didn’t even need to mention them. Now that it’s so much easier to produce a product in the small and market a product in the small, and now that it’s so beneficial to offer a service to just a few, with focus and attention, perhaps we need to rethink the very goal of scale.
Don’t be small because you can’t figure out how to get big. Consider being small because it might be better.

In many ways, Rhode Island really doesn’t have any other choice but to embrace its “smallness.” We’re not going to get geographically bigger and our population has stayed the same seemingly forever. The argument around here has been focused on the efficiency that can be gained by embracing the concept of economies of scale by consolidating government services, say, at the county level. But we’re not holding our breath, are we?
We have to get leaner in government–“less overhead”–and consolidation still makes sense (despite my pessimism that it will ever happen). Less waste can free up money to deliver those government services that the majority of Rhode Island citizens desire–“more focused product line”–like an efficient DMV, good roads/infrastructure, etc.
So how do we do it? By “ridding [ourselves] of obligations and scale.” More on that later.

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Warrington Faust
Warrington Faust
10 years ago

I would like to have something more constructive to say. But, no one who has spent any time in a government office doubts that some “reduction in force” is possible.

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