Why we need to rethink scale

In 1966, Bruce Henderson, the founder of the Boston Consulting Group, articulated what would become one of the most influential ideas in the history of business strategy: the experience curve. Its origins date back to T. P. Wright’s original 1936 paper, “Factors Affecting the Cost of Airplanes.” Wright discovered a relationship between the cumulative production of a physical good and the costs associated with producing it. The breakthrough was that you could predict your future cost structure in a way competitors couldn’t. In 1966, BCG did a major study for a semiconductor firm and made a similar discovery. As Martin Reeves describes it, they found “that a company’s unit production costs would fall by typically 20 to 30 percent in real terms for each doubling of “experience,” or accumulated production volume. This had a profound effect on how companies thought about building cost advantage and pricing their output, specifically moving aggressively to grow in the early years of an