Too big to fail?  The political pundits at work trying to answer this one . . . conservative, liberal and everyone in between.  I’ll attempt to stay away from a political answer although I am sure that all things will get politicized no matter what I say.  So here we go.

For years now we have been taught and utilized the thinking around “economies of scale.”  “Bigger is better”, “grow or die”, “the more we make, the cheaper they are” have become cliche . . . or have they?  Locked in a battle over minds is the accounting and finance mentality around “fixed costs” that diminish as we produce more.  All well and good until Taiichi Ohno came along and showed us that cost was not in scale, but in the flow.  John Seddon coined the phrase “economies of flow” to replace the prevailing thinking around “economies of scale.”  What this tells me is that bigger is NOT necessarily better and after the round of spanking we just out of our economy you wonder if maybe smaller is better.  Would multiple banks have made the same mistake if there wasn’t a Merrill Lynch, Citi, Bank of America and the like?  Some maybe . . . but would we have had the same crisis?

Taiichi Ohno showed us in the Toyota Production System that batching of products was ineffective and inefficient . . . counter to economies of scale.  He was able to see that costs were in the flow.  This leveled the playing field for Toyota to compete against the Big 3 automakers that had all the advantage.  He found a better way because they had to find one.  One would suggest if a country as resource poor as Japan can compete against the resource rich US then a small bank (or organization) could compete against a large bank (or organization).  Even in sports other countries are finding that “team play” in basketball is superior to “individual play” that the US team aspires to as they have been able to compete as a team vs. a team of stars.  They certainly have made up a lot of ground and leveled the playing field.

So, necessity makes us look at a problem differently.  You would think that maybe we ought to be looking at things differently.  This may require “economies of thinking” where organizations need to find new ways to compete, because just as large organizations may not have the advantage they once had . . .  being small does not guarantee the ability to compete.  New thinking is in order, and for service, systems thinking gives the advantage to service organizations no matter what the size.  The important part is that the small can compete with the large in service with better thinking and methods.

Tripp Babbitt is a speaker, blogger and consultant to service industry (private and public).  His organization helps executives find a better way to make the work work.  Download free from “Understanding Your Organization as a System” and gain knowledge of systems thinking or contact us about our intervention services at [email protected].  Reach him on Twitter at or LinkedIn at