Small Business Labs

Side Stepping Economies of Scale

A recent book from Harvard Business Press called 5 Future Strategies You Need to Know Right Now covers five business strategies that the author - a Boston Consulting Group consultant - believes will become important over the next 3-5 years.  One of the strategies is "sidestepping economies of scale".  Key quote on this strategy:

"Many business leaders are reexaming their assumptions about the benefits of scale.  Scaling down, not up, and building "disposable factories" and even "disposable strategies" are becoming new keys to lowering costs and boosting performance."

The author goes on to suggest that companies should explore new approaches that limit invested capital. 

The scaling down of fixed costs is creating many new opportunities for small businesses.  We discuss this in more detail in most recent forecast report. 

Media Screen on US Broadband Usage

Broadband is a fundamental enabling technology for online consumers and online businesses.  Because broadband's impacts are so pervasive on small businesses we track broadband technology, penetration rates and usage closely. 

I was recently sent a copy of a broadband presentation done by the market research firm Media Screen.  They  have been doing research on consumers and broadband for several years.  They call their project Netpop and they look at broadband usage a variety of ways.  Some interesting data from Netpop:

• 49% of US broadband users regularly visit sites dedicated to a hobby or personal interest 
• Broadband users spend an average of 5.3 hours per weekday online
• Broadband users spend 48% of their spare time online in a typical weekday
• 31% of broadband users contribute to online product review sites

For more details, see their broadband presentation at the Advertising Research Foundation website.

Broadband Rankings by Country - The US is 12th

I recently was sent an interesting study done by The Information Technology and Innovation Foundation (ITIF) ranking broadband access in OECD countries.  The ITIF has created a broaband index based on OECD data on broadband household penetration rates, broadband speeds and prices.  The US came out 12th in their rankings.  This is a bit better than the ranking of 15th the OECD itself gives the US.

I found the differences in speed by country to be of note.  The 5 countries with the highest average broadband speeds are: Japan 61 megabits; Korea 45 megabits; Finland 21 megabits; Sweden 18 megabits; and France with 17 megabits.  The US is well down the list at 4.8 megabits.  The good news is lots of work is going on to improve US broadband speeds, and over the next 5 years our speeds should increase substantially.

ITIF also has done a paper called The Case for a National Broadband Policy.  In it they lay out why broadband is an essential infrastructure for business and consumers, and recommend the US create policies to increase broadband speeds and penetration rates. 

Broadband fundamentally changes how online users interact with the Internet.  They go online more often, spend more time online, and do more things online - they also tend to watch less TV.  As broadband speeds increase so does the richness and intensity of web interactivity.  See Pew Internet for more data on US broadband penetration and usage.

The growth of broadband has clearly helped spur the recent growth in small and personal businesses.  As global and US broadband speeds increase, so will the opportunities for small business to leverage this infrastructure.