Shownotes Transcript
This is a finance term, we will not be trying to explain finance in this episode because as everyone knows we are not experts in this subject. Rather we are going to explore how the idea of economies of scale informs other facets of our lives inside and outside of business. Economies of scale primarily refers to the connection between the costs of production as a company grows. In layman’s terms this is the advantage that you or a company may have by increasing production. If we are planning for success which we always should be we have to be looking down the road a little bit to see what’s on the horizon.
If we are lucky enough to see that we are going to have to increase production efficiency in order to continue growing at the rate that we want to, then we have achieved economies of scale. As we grow, someone who has been there before is used to producing at a higher clip than you are. This could be as simple as balancing work and family, like a parent with ten years experience. This could be something like completing a homework assignment much quicker due to more resources than yourself. The worst thing that could happen is output goes up but average costs per unit does as well.
To avoid diseconomies of scale in our lives we have to work on communicating early and often. If others around us know that we are growing and thus need help, have less time etc. it makes them aware of your change in behavior. We must also trust in others around us to help carry the weight as production increases. Ultimately you are one person and your limits do exist. By trusting the people around us this drives average cost per unit down in our life as a whole. With another set of hands we are able to move quicker, faster and farther than we ever would have been able to by ourselves.