Note: A couple of friends have asked why I say “A commons doesn’t scale, it scopes”. This is a relatively quick note to explain some thinking on why. It’s a topic I’m deep into researching now and developing my thinking as it applies to higher education as a commons, so with the caveat that I may alter some stuff later, here’s my thinking right now. This is part one of a two part answer. Typo in paragraph about Facebook now corrected.
I’ve been saying for awhile now in discussions of the commons, OER, and higher education that a “commons doesn’t scale, it scopes”. Before I explain why I think a commons doesn’t scale very well, I probably need to briefly clarify what’s meant by scale and scope. Like many terms in economics, they’re both commonly used terms in both business and everyday life, but in economics they may carry a subtly different, more precise, or richer meaning. Both terms refer to the production of an increasing volume of output of some kind. Enthusiasts of particular good(s), be they an entrepreneur producing the a product they hope will make them rich or an open educator advocating for more open licensed textbooks because it will improve education, generally want to see their ideas scale. And by scale, they generally mean “be produced in larger and larger volumes”. Larger volume of output, of course, brings a larger volume of benefits to more users. More output –> more users –> more benefits. But it’s the behavior of costs that really intrigues us when we think of “scaling” as a way to increase output. More benefits is nice, but if more benefits also means an equal increase in costs, then it’s not so attractive.
The era of mass production has brought a popular expectation that increased output should bring an increased total cost, yes, but with decreasing average costs. In other words, as you produce more it, the product (or service, or activity) becomes cheaper. This is what we call economies of scale and it’s why scale seems to be such an attractive idea for things we want more of. The idea of economies of scale goes back to Adam Smith.
But since at least the work of Panzar and Willig (see Wikipedia footnotes 3, 4 for links and full citation) around 40 years ago, economists have added a richer explanation. We (well not all economists, but IO and institutional types do) now distinguish between economies of scale and economies of scope.
Scale is to produce to the same thing in larger and larger volumes. It’s doing the same thing over and over again. A lot. There’s little variety, just volume. Scope on the other hand is a way to get to large volume by adding variety to the mix. Scope means doing a lot of things that are different by share some apects. The more aspects shared, either in final form or in production process, the closer you get to scale. The more variety you have, the more scope you have.
For some simple examples, think Ford Motor Company’s Model T. That’s scale in action. Enormous volumes of the same car – even down to the same color. Mass production generally involves scale. Standardization is a virtue in scale. Standardized inputs, processes, and outputs, all enable the great of economies or efficiencies we associate with scale. Massive scale can be managed within a hierarchical structure. The hierarchy adds costs, but it more than makes up for it by through an ability to control and standardize inputs, processes, and outputs. Hierarchical management achieves enough economies of scale to more than offset its added overhead costs.
Scope can bring economies, too. This was part of the Panzar and Willig contribution. Economies of scope are more difficult and complex than economies of scale. They’re less automatic and less obvious. Variety, whether it’s variety of location, product, inputs, processes, or outputs complicates things greatly. However, economies of scope are possible through shared services or other aspects. There are lots of examples of scope economies in the business world, although not so many in real life as business people imagine (I speak from experience). When you hear an executive make the case for merging two different businesses and say they’ll achieve cost savings through “synergies”, that’s economies of scope they’re chasing (and likely not getting, but the investors won’t know that until management has fled the scene). When a school district operates a multiple types of schools (pre-K, elementary, middle, high school, specialty) in multiple locations but insists on centralized purchasing and accounting, that’s an attempt at economies of scope.
When businesses, industries, or products first start to grow, they usually scale. But eventually there are limits to scale. When firms hit the limits of scale in growth, they begin to scope. They usually start with product differentiation and geographic expansion. Then comes segmentation of the market and multiple brands. Variety and variation bite back. Remember Henry Ford’s famous quote about “the customer can get it in any color they want as long as it’s black”? Economies of scale talking there. Unfortunately for Henry, his quote came just as Sloan and Durant at General Motors were pioneering ways of adding product differentiation and segmentation – variety.
When Facebook burst on the scene and seemingly everybody in America (and elsewhere) started signing up, that was scale. But when FB added What’s App and Instagram and Messenger to the corporate portfolio in order to keep the growth going, that was scope.
How does scale and scope apply in education? Scale seems to me to be the impossible dream. We’ve achieved very tiny little scale efforts. When a large flagship university (itself a shining example of wide scope) runs 600 seat lecture classes in principles of economics supplemented with smaller discussion/lab sessions taught by TA’s, that’s a scale effort. It’s tiny though. 600 is only 20x the size of the principles class I teach at the community college. In contrast, business world scale usually means thousands-times larger. We’ve tried to scale by producing textbooks and that has had some positive effect in that it enabled hiring more instructors (adjuncts in particular) at lower costs. But it’s limited too.
Society has for much of the past century been trying to “scale”. Society needs more college-educated people, yet, for many reasons, it is reluctant to pay more them. The idea of scaling education is tempting. If only we could scale up education like we did cars, or clothing, or beer, or music, then we could have more college educated folk and not have to pay the full costs. It hasn’t really happened.
I’d argue it can’t. Scale economies require standardization from inputs to process to outputs. That’s not education. Every learner is different – that’s variety and scope there. What works for one doesn’t work for another. Processes are different. Despite all our efforts in recent decades to define “learning outcomes”, they still defy definition let alone control and standardization. Education requires scope.
There’s more to why a commons won’t scale, but that’s in part two.