Why we need to rethink scale

In an increasingly digitized world, it may not be as important as it used to be.

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In 1966, Bruce Henderson, the founder of the Boston Consulting Group, articulated what would become one of the most influential ideas in the history of business strategy: the experience curve. Its origins date back to T. P. Wright’s original 1936 paper, “Factors Affecting the Cost of Airplanes.” Wright discovered a relationship between the cumulative production of a physical good and the costs associated with producing it. The breakthrough was that you could predict your future cost structure in a way competitors couldn’t.

In 1966, BCG did a major study for a semiconductor firm and made a similar discovery. As Martin Reeves describes it, they found “that a company’s unit production costs would fall by typically 20 to 30 percent in real terms for each doubling of “experience,” or accumulated production volume. This had a profound effect........

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