Diseconomies of Scale

Companies can get too big. There is such a thing as diseconomies of scale, which occurs when companies get less efficient after reaching a certain size.”
Chris Mayer

In the agrarian age, a vendor typically had a small, local, loyal tribe.
In the industrial age, “factories” dominated creating vastly more product more efficiently and was able to reach a much larger tribe.
In the information age, barriers to entry are reduced, allowing cottage industries to deliver niche innovations to a small loyal tribe that now has global reach unlike the local reach of the agrarian age. They can do so from a low cost base because overhead costs can be negligible with the right business model.

A niche that was not viable in the agrarian age due to low numbers in a local area are now feasible when taking the global marketplace into account.
As we move further through the transition into the information age, it seems apparent that the industrial-age giants are now becoming too hamstrung by bureaucracy and procedure to cope with the rapidity of change and innovation. The old economies of scale now deliver less profit per employee than the nimble cottage innovator.

The CSPs “factories” still hold certain barriers to entry (eg monopolies generated through spectrum rights). However, the cottage Over The Top (OTT) industry is increasingly providing a collective of niche innovations that the CSPs are unable to compete with on speed, price or innovation. They are truly disruptive technologies.

Just as the behemoth CSPs are being increasingly impacted, the world of OSS could also be touched by a fundamental trend away from behemoth OSSs towards the management of an amorphous collection of niche communication apps.

Will your OSS handle this trend if it comes to pass?

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