Coase and effect

Ronald Coase wrote persuasively about the need to scale business. Based on the notion of Transaction costs" -those base costs needed to operate a business; overheads, distribution, sales teams and the like. It was perfectly suited to the industrial economy of the time, and the "organisation as machine" mindset with its bureaucracies, hierarchies and financial needs. 

Times have changed. Although large businesses still operate to a version of Coase's thinking, the need has largely disappeared. "Transaction costs" have all but disappeared for new businesses, which changes everything. Suuccess today is imagination driven, purpose based and validated by the contribution it makes. Everything else is a purchasable commodity-including, unfortunately, many of the routine skills.

And the near religious pursuit of the orthodoxy is scale has unintended consequences as demonstrated compellingly by TalkTalk this week. If you put all your eggs in one basket-you better look after it as it becomes very…