Why We Need to Build Human-Scale Organizations

 You walk down your high street. What do you prefer to see there? The economist will say: Walmart, Best Buy, the Gap. Scale economies — cheaper prices — better for “consumers”! But the human being will say: an independent cafe, a good bookshop, a boutique clothing store. Why? Because they offer many things that mega scale organizations don’t.

Human scale institutions strive for optimum scale. Not mega scale. The point at which maximum quality can be attained. Their purpose is not to maximize profitability. It is to maximize well-being. Whose? Everyone’s. 

When I was in grad school, the unstated assumption in most of what we were taught was that the sole point of a business (or any institution, really) was to grow. To grow, grow, grow, to as large a scale as possible. To build an empire, take over the world. My classmates — tycoons in waiting — lapped it up. “Lifestyle businesses”? Nah! Those were fo... See more

Only we’re not in the industrial age anymore. But our businesses, institutions, and organzations — in fact, our whole economies — are still run for, governed by, this obsolete, macho principle of achieving ultra huge mega scale.

Well, what do organizations lose as they grow in scale? They seem to lose their capacity to innovate. They lose the ability to feel, to care, to act responsibly. They stop serving people — and start serving themselves. As they grow in scale, so they grow in power, and in obligation — and so their purposes come unhinged from their founding rationale... See more

So. Where does the assumption that every business should grow to mega scale really come from? Well, it’s a relic of the industrial age. Back then, a business had to be as big as possible, to accomplish economies of scale. One factory — a hundred widgets. One factory — a million widgets. The second scenario wins — it pays off the fixed costs of the ... See more

So as organizations grow in scale, the result, as many of us feel intuitively, is the concomitant loss of creativity, flexibility, curiousity, and humanity. Mega scale organizations are not, generally speaking, very nice places to work at, shop at, or do business with, are they? That is why they are always fighting their very own inertia. Like any ... See more