Burgess COMMENTARY

Peter Burgess

Why We Need to Build Human-Scale Organizations Or, Why Mega-Scale Organizations Can’t Do Tomorrow’s Work



Bigger, bigger, bigger. Better, right? We’ve lionized big, mega, huge-scale — businesses, institutions, organizations — over medium, small, and tiny. So much so, that for example, American legal and economic thought tends to favour the hugest monopolies, the playing field tilted way, way against small-scale organizations, because the idea is that the biggest scale gives people the lowest prices (hence, a nation where Walmart is the largest employer, and where every industry is ultra concentrated into monopoly, whether Comcast or Google or Nike.)

Ah, but. That is not all large-scale organizations give people, is it? They also seem to bring with them a host of problems, too — like mistrust, greed, the replacement of social values with market values, inequality, pollution, conformity, staleness, and a kind of soft authoritarianism, a kind of corrosion of the spirit that results from huge power imbalances (you will do it our way! submit!!).

So. Was privileging mega-scale organizations a wise choice? Or should we strive now to build economies upon what I’ll call human scale institutions? To explain what that means, I’ll start with a little story.

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 for wimps, has-beens, wannabes — not swashbuckling masters of the universe. Nope. Build the hugest organization possible. Sell it at the highest price possible. That was the attitude to have.

Only the problem was I didn’t have that attitude at all. In fact, I scorned it. I thought of the businesses I knew best and loved most. And it seemed to me that most of them operated by a very different principle. Reach the right scale. The optimal scale. At which the highest degree of quality could be provided. Just that large, and no larger. And when that scale was reached, such businesses, or institutions, instead of selling out, carefully ceded control to the next generation of owners. Sons and daughters, cousins, employees. Or maybe, having accomplished their mission, they just folded up, and became something even more creative and interesting and cool.

What are some examples? There are still many with us. You can think of the last few genuine luxury goods makers — Hermes or Fendi, maybe. Or you can take one of my passions, synthesizers —one of the famous vintage synths is called a Prophet 5. The guy that created it, Dave Smith, founded a company called Sequential Circuits in a garage in San Jose (literally), created something radical and new, went bankrupt in the late 80s as the Japanese entered and undercut, and in the early 2000s, started making Prophet synthesizers again. Now, as before, he’s not trying to be mega-scale — he’s staying relatively small, trying to provide quality, innovation, creativity, taking risks. That’s an example of operating at human scale.

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 factory faster.

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.

Let me put that to you very differently. 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.

What are those things? 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 rationales. Maybe now the only goal left is profit, for detached, robotic hedge-fund shareholders. And now there is a selection for the most ruthless, cunning, and calculating — not the most courageous, intelligent, and wise.

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 kind of bloated empire, they end up ridden with politics, run by fiat, sclerotic, ossified, serving only their own purposes.

So mega scale organizations, at this juncture in human history, might just be too costly to get the jobs they are supposed to be doing done anymore — and they might not be able to do tomorrow’s work, which is about creativity, empathy, and wisdom, at all.

Now. What is curious about that list is that those are many of the problems in the economy, too, aren’t they? Irresponsibility, inflexibility, carelessness, cruelty, a lack of real innovation, a lack of creativity and curiousity, kind of blindness to anything that matters, self-serving greed, egotism, and calculation. But that’s hardly a surprise — we built an economy according to industrial age rules, rewarding organizations to strive for mega scale, tilting the playing field against smaller ones, and so we end up with an economy of such dinosaurs. But such an economy is also a lumbering, stagnant, and predatory one.

And all that is why we need human scale organizations. The goals and principles of human scale institutions are very different than mass, industrial-scale institutions. Now that I’ve explained what I mean by human scale institutions, let me make those differences clearer.

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. Customers, employees, managers, suppliers, etcetera. To maximize well-being, just like that independent cafe or bookshop, they aren’t governed by command-and-control military style heirarchies, but by flexible networks of experts and creators. Nor do they simply approach the problem of improving human lives cynically and blindly, trying to flog the lowest common-denominator at the highest price, but try consistently, genuinely, and radically, to innovate, serve, create, build, dare, imagine.

Remember Dave Smith and the Prophet? That was a human scale organization. He made less than ten thousand Prophet 5s in the end. Walmart probably sells more chairs in one minute. But no one will remember the chair they bought at Walmart. Yet everyone that has a Prophet 5 treasures it — and is a little amazed by how beautiful it sounds — every day.

That’s the difference. This economy needs more of that. The good stuff. The stuff that makes our lives count. Beauty, truth, wisdom, grace, courage. But those are the things we lose at a mass, mega scale. Those are the things that happen best and most at a human scale. Industrial age mega scale organizations are never going to be able to provide those things for us — and thus they cannot, and are not, really elevating our quality of life anymore. And hence, we must pioneer at organization a more human scale.

Remember the attitude I was taught at grad school? If it’s not going to be huge, gigantic, mega-scale one day, then why bother —it’s for losers? How wrong it was. How foolish it was. How obsolete it is. We forgot, for too long, that the price of bigger too often is better.

Umair May 2018