The folly of scale

摘要

People in Whitehall say 'economies of scale' are a 'no-brainer'. The service factory concept, they assume, must be cheaper. And outsourcing activities to low-cost providers obviously makes sense.But these ideas contain dangerous, misleading assumptions, and the consequences are, all too often, ever-rising costs and worse service.The folly of scale thinking has been learned in the private sector. Let's start with call centres.About 15 years ago, banks took 'telephone work' out of their branches and gave it to less-expensive people in new call centres. Beyond cutting the costs of staff, the idea was that more phone calls would be picked up, as call centres got around the problem of resourcing to meet variable local demand.However, and despite careful planning, the banks experienced more calls than anticipated. It should have been a signal. Instead of understanding the signal, managers added resources - more people; specialised peoples' work - to cut down training costs; and standardised procedures.