Advantages and Disadvantages of Scale

Challenges to Legacy ScaleScale of Distributionamp160With directtoconsumer marketing enabled by the internet and platforms like Shopify widespread retail distribution is no longer as effective an advantage Clearly distribution matters but there are ways to route around the big stores by going direct and creating demand that forces buyers to stock your productScale of Communicationamp160New media behaviors by people particularly search and social are leading to communication channels where spending power is no longer a competitive edge as it was in television or print where marketers cornered key inventory at advantageous prices Platforms like Facebook enable millions of small businesses with personalization and targeting capabilities to discover customers and to be discovered As content supported by advertising declines to less than a third from nearly two thirds hello Netflix HBO Max Amazon Prime scale of spending while still being important is losing its potencyScale of Manufacturingamp160The quoteverything as a servicequot platforms from Amazon Web Services to Foxconn allow smaller companies to gain the edges of scaled manufacturing distribution and technology without any of the legacy disadvantages of sizeScale of Peopleamp160From IBM to GE to Unilever to Walmart there are hundreds of thousands of employees and therefore the ability to recruit and grow a range of talent and offer career advancement Scale of people continues to be important to execute complex and large tasks but there are also new ways to reaggregate talent And a generation of talent wants to work in smaller and more entrepreneurial environments In the postCOVID world as we move to unbundled workplaces there will be far more ways to build teams both globally and in real time than ever beforeLegacy scale still matters in most industries and is critical in quite a few like semiconductors In fabricating advanced chips a new fabrication plant can cost over 4 billion dollars and there is no way around scale Today TSMC Taiwan Semiconductor Manufacturing Company dominates due to its scaleHowever while we can never underestimate legacy scale there are new forms of scale that every smart company recognizes and is expanding intoThe Rise of New ScaleWhile there is a diminishment of legacy scale there is also a rise of new types of scale that are becoming increasingly importantScale of Dataamp160Increasingly companies are realizing that collecting refining and leveraging data is what is driving the modern fastgrowing and highly valued companies from Amazon to Google to Uber Data enables a new form of scale which is that of mass personalizationScale of Networksamp160On the internet network effects play a dominant role in creating winners Dominant platforms such as Facebook Netflixamp160and Tencent WeChat enjoy flywheel effects of more users attracting more users and therefore marketers and businessesScale of Influenceamp160Today individuals have tens of millions of Instagram followers or leverage Twitter to reach hundreds of millions of people with single posts and tweets If you look at scaled entities on social media they are individuals People are seen as authentic and certain folks like Elon Musk can move marketsScale of Talent and Ideasamp160One of the lessons of history is that every advance in technology places a premium on superior talent Technology is a lever and when married with great talent a company can enjoy major scale effectsA vivid example of how the new scale works is Kylie Cosmetics Kylie cosmetics was launched by Kylie Jenner to sell lipstick In less than two years Kylie Cosmetics sold 900 million dollars of product making the 21yearold the fastest billionaire ever Kylie Cosmetics had less than 50 fulltime employees It outsourced manufacturing to Seed Beauty a contract manufacturer and all ecommerce and fulfillment to Shopify The single media channel besides PR that Kylie Cosmetics used was Kylie Jenner39s Instagram account with 120 millionplus followersamp160That39s more than the ratings of the top 10 prime time television shows combinedThis era of New Scale began to emerge in 2007 when the smart phone and social networks came to be With mobile search Facebook Instagram Twitter You Tube Shopify Amazon Web Services and lots more the ground was laid for the massive disruption of business in marketing today which has further expanded via enabling technologies from Square to Stripe to Paypal to Etsy among many othersIf we look at how Dollar Shave Club and others took on Gillette it was through a combination of YouTube advertising contract manufacturing directtoconsumer sellingamp160and leveraging word of mouth on social media Procter and Gamble39s secondtonone expertise in brand building distribution at Walmart and spending scale on television did not stop doubledigit share declines when new approaches and mindsets were needed PampampGamp160soon built and learned these skills but it did result in an 8 billion write down for the Gillette acquisitionThe scale that many of today39s successful marketers enjoyed were the old scale which are not only diminishing but are seen as disadvantaged because not only are they not agile due to size but less authentic as a zone of control world is being replaced by a zone of influence world and less customized as they struggle to use modern data communication and manufacturing techniquesSo now they are aggressively buying the new companies as much for their expertise and talent as for the revenue and brands they have spawned Coty spent over a billion dollars for half of Kylie cosmeticsamp160Now new and legacy scale mergeBut many companies that enjoy legacy scale and now incorporate data and network scale sometimes forget one other scalable element talent and the influence and ideas talent begetsScaling YourselfYou are talentWe are all gig workers with some of us having longer and better paid gigs as the workplace becomes unbundled companies work to manage variable cost labor halflives of skills shorten and measurement increasingly becomes real timeTo thrive you need to play the scale gameHere are some suggestions on how to scale your talentaamp160Plan your career over a longtime scale most college graduates will work for fifty years until they areamp16070 and therefore work to remain relevant and reputable in the long run If you are 50 you have 20 years of work ahead of you and threeamp160to four significant shifts in the workspace so stop thinking quotI will be retired soon and not have to deal with this new nonsensequotb Scale up your skill set by setting aside time to learn investing in education and raising your hand to new opportunities and assignments Change sucks but irrelevance is even worsecamp160Scale your reputation recognizing that truth will out and so do the right thing be generous do not take short cuts and only burn bridges that allow poisonous snakes to cross Today you can only use PR and gameplaying to polish a rotten apple for a year or two before the rotten core thrusts through for all to seed Scale through other people by helping teaching and encouraging people Nothing is as scalable as a unified team or people that believe in an idea People are networks as much as any technologybased network And when people you work with or you have helped grow you scale in ways you yourself would never have scaled aloneIn the end scale happens when you think beyond yourself beyond your existing mindset and beyond the boundaries of your categoryPhoto at top courtesy of Rishad TobaccowalaClick the social buttons to share this story with colleagues and friendsThe opinions expressed here are the author39s views and do not necessarily represent the views of MediaVillagecomMyersBizNetamp160

SUBSCRIBE FOR FREE MEDIAVILLAGE CONTENT | BECOME A THOUGHT LEADERSHIP CONTRIBUTOR

Advantages and Disadvantages of Scale

Author

Publish date

Channel

Rishad Tobaccowala

FEMA and the Ad Council Encourage AANHPI Communities to Enhance Disaster Preparedness in New PSAs - Ad Council InSites

More Videos:

SUBSCRIBE FOR FREE MEDIAVILLAGE CONTENT | BECOME A THOUGHT LEADERSHIP CONTRIBUTOR

Advantages and Disadvantages of Scale

Enjoying This Commentary? There's More to Love

Rishad Tobaccowala

Stay in the know with more from MediaVillage

TAGS:

FEMA and the Ad Council Encourage AANHPI Communities to Enhance Disaster Preparedness in New PSAs - Ad Council InSites

Cookies