One of the commonly-cited benefits of scaling-up an operation is to enable individuals to specialise
Adam Smith famously argued that a pin factory, where each worker focused on specific step of the pin-manufacturing process, far more pins could be made than if each worker made whole pins on their own.
This example has become one of the key doctrines of classical economics. But I find the example disingenuous.
Firstly, because it is not like before Adam Smith came along there were halls full of pin makers unproductively making pins on their own. More likely, there were people who could make pins — and they could also make a host of other ironmongery — because they skilled in metalwork and a broad range of related skills.
Life doesn’t just need pins.
Second, his pin factory only works under a specific set of conditions.
To make the most of each specialised worker, there must be no bottlenecks from one step to the next. Workers must work in shifts to maintain flow. There can be no variation in output. Input materials must be reliably supplied. Environmental conditions must be tightly controlled. And there must be a constant supply of customers, all buying pins.
But meeting all of these requirements, this now large-scale enterprise starts to exert a gravitational pull of its own. It shapes when, how and for how long people work. Like a giant magnet, supplies of iron are sucked into it. And it shapes what people consume — more pins.
Scaling up does enable specialisation. And specialisation can increase productivity. But we mustn’t leave the wider costs of specialisation out of the denominator on the productivity equation.
The regenerative designer asks, not how can I scale up, but how can I find the scale of operation that enables the most parts of the system to benefit?