---
title: Bad Strategy and Economies of Scale
description: Bad Strategy and Economies of Scale
---

[Blog | Brainzooming ](https://www.brainzooming.com/blog)

# [Bad Strategy and Economies of Scale](https://www.brainzooming.com/blog/when-scale-economies-lead-to-bad-strategy)

 Written by [Mike Brown](https://www.brainzooming.com/blog/author/mike-brown) | May 18, 2011 9:50:50 AM

**Everybody wants[ economies of scale](http://www.investopedia.com/terms/e/economiesofscale.asp).** They **signal **you’ve achieved a **sufficient size so you can do** things, deliver benefits, reach markets – **all sorts of good things – with a disproportional level of **operational and financial **efficiency **smaller competitors can’t match. That's what economies of scale are all about. That's why they're really great.

<https://www.brainzooming.com/hubfs/Imported_Blog_Media/Head-in-Hands-3.jpg>But **economies of scale can also be really detrimental** and** lead to bad strategy** when your strategic view is flipped around. They become problematic **when you start thinking about** how they allow **small cost reductions** to be **multiplied into large absolute cost savings**.

When you start your analysis this way, **you wind up with**:

- Orange juice which **shaves several ounces off **of how big a half gallon is.
- Quick service restaurants which **stop providing napkins** in to-go orders.
- A hotel with **only 1 wastebasket** in a very large room.

All these **changes seem subtle. But** they’re** really annoying **when you run out of orange juice, don't have a napkin to wipe your hands, or spend 5 minutes trying to find where to throw something away.

In all those cases, **scale-oriented savings make brands seem really cheap** . . . and not cheap in a good way.

**Coupling economies of scale with a “They’ll Never Notice” attitude leads to bad strategy.**

**Why?**

Because **when **your **grocery store turns out half its lights, you notice**. -* [Mike Brown](https://www.brainzooming.com/?page_id=1197)*

[***The Brainzooming Group***](https://www.brainzooming.com/?page_id=1188)*** helps make smart organizations more successful by rapidly expanding their strategic options and creating innovative plans they can efficiently implement. Email us at *****[*brainzooming@gmail.com*](mailto:brainzooming@gmail.com)***** or call us at 816-509-5320 to see how we can help you devise a successful innovation strategy for your organization.***

[View full post](https://www.brainzooming.com/blog/when-scale-economies-lead-to-bad-strategy)

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