In a recent Harvard Business Review blog Maxwell Wessel wrote a thought provoking piece on the commoditization of ‘scale’. Wessel argues that a major bastion of industrial revolution competitive advantage the ‘economy of scale’, where very large organisations gain advantages in the market due to their large size (scale), effectively creating a barrier to new entrants and smaller players in the market is becoming commoditized and therefore no longer confers competitive advantage due to advances in technology which enable any size of company to access the advantages of scale. He asserts “in today's world, you don't need to have scale to enjoy scale”. For example even micro companies operating out of a residential garage can access the global market over the internet for very small outlay, compared historically with the need for expensive distribution channels a physical presence in each country and expensive advertising to reach the same market. This will radically change the nature of competition in the economy and lead to hyper-specialisation. Wessel’s blog is well worth reading.
The commoditisation of scale is just one of many ways emerging technologies are revolutionising businesses and economies, it also illustrates just how disruptive these changes will ultimately be. Technology has already enabled the ‘global supply chain’ with outsourcing to the lowest cost market, the internet has radically changed digital distribution especially audio, print and visual media and 3D printing is set to revolutionise many areas of production to name just a few. It is indeed an exciting time.
This is leading to many commentators to call for fundamentally new ways of organising and managing businesses, one Australian forum ‘Building the Organisation of Tomorrow” on linked-in provides a fascinating forum on the changing nature of organisations. It is well worth monitoring for the latest thinking on organisational change.
Exploring the value of IT to organisations
email: david.gwillim@optusnet.com.au
No comments:
Post a Comment