RUBRIK HIER The ideal SIZE What‘s the ideal size for a company? There‘s no single answer to this question; it depends on the individual context. These days, small companies can quickly get big, and vice versa. 30 <strong>THINK</strong> <strong>ACT</strong> SEPTEMBER 2011
REPORT: THE MODULAR ECONOMY been organized in an increasingly modular way because the cost of working with other businesses has become so low. Count the components of your cell phone, and you’ll find out how many suppliers were involved in its production. Battery, microphone, antenna, display, chip, SIM card; each comes from a hidden champion in one particular industry. In a modular world, interfaces are increasingly well defined: technological, logistical, legal, and administrative. Hard disks fit any laptop, products and parts arrive on time, and contracts and processes are standardized. Transferring money between almost any two countries on Earth is no longer a barrier to trade. At the same time, companies can now rely on business-to-business providers for almost any stage in their production process. A company with half a dozen workers like Teekampagne can become the world’s biggest seller of Darjeeling by outsourcing nearly all of its processes, including its call center, accounts, packing and dispatch – all done by outsiders. In the networked world, Davids can have their cake and eat it. It’s never been easier to supply modules such as cell phone antennas to the Goliath ecosystem, and you can even assemble the modules yourself as medium-sized locomotive builders do. If you play your cards right, and are sufficiently flexible, you can often be extremely competitive with an overweight Goliath. David Teece, director of the Institute of Management, Innovation and Organization at the University of California, Berkeley, says that in the modular economy, a clever David can orchestrate a network. It can score points with its dynamic capabilities and its ability to respond to market change, but it can also get knocked out. These capabilities, Teece believes, are the key to a business’ success or failure. The ideal size Take a few steps back, and it’s clear that the debate about big or small, insourcing or outsourcing, hierarchies or networks, has been going on since long before the Internet was invented. “The issue of the ideal business size crops up more and more often,” observes management scientist Stefan Kühl. “Sometimes the management pendulum swings one way, sometimes the other.” <strong>THINK</strong> <strong>ACT</strong> SEPTEMBER 2011 31
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