“Economies of scale are a good thing. If we didn’t have them, we’d still be living in tents and eating buffalo.”
~ Jamie Dimon
I love economies of scale.
I first learned about economies of scale as an economics major at U.C. Davis forty years ago. After college, I was able to apply my knowledge of economies of scale to conduct operations more efficiently to create value for a variety of businesses during my thirty-year career as a businessman. But, still, it surprised me when I realized that economies of scale had been unknowingly at work within my kaizened life.
Let me take you back to Econ 101 for a little refresher.
Economies of scale are cost advantages that can occur when a company increases its scale of production and becomes more efficient, resulting in a decreased cost-per-unit. This is because the cost of production (including fixed and variable costs) is spread over more units of production, leading to lower fixed costs. Economies of scale can come from technical improvements, managerial efficiency, financial ability, monopsony power, access to large networks, or other types of operational enhancements.
In my last post, Reaching Sixty, Unscathed, I wrote that “my life continuously gets better and better, year after year because every day I wake up in a kaizen state of mind.”
Now I’ve realized my life also gets easier and easier, year after year because I’m enjoying the economies of scaling a kaizened life.
Economies of scaling my kaizened life are advantages that occur as I continuously increase my capacity to take good care of myself and my family resulting in a decreased effort to get done all the things I have to do. This is because my ever-growing capacity is spread over fewer and fewer things I HAVE to do leading to less effort needed for each thing. Economies of scaling my kaizened life can come from improving my physical, mental, financial, or spiritual fitness… or any other area of my life that increases my capacity to get things done.
The economic benefits of scaling my kaizened life derive from two initial sources:
- Increasing my personal capacity.
- Flipping my HAVE TO/WANT TO ratio so there are fewer and fewer things I have to do.
For example, improving my physical fitness and strengthening my body results in taking less effort to do household chores such as mowing the lawn, raking the leaves, and sweeping the driveway. If I’m in really poor physical condition, these physical chores take more effort and more time to accomplish. The more I increase my physical capacity, the less effort and time each of these chores requires.
Improving my financial fitness has resulted in the option to outsource household chores that I do not enjoy doing. When I was in really poor financial condition, hiring someone to mow the lawn, rake the leaves, and sweep the driveway was simply not an option. The more I increased my financial capacity, the easier it became to hire experts and specialists to do the chores. The benefits begin to multiply… eliminating something I HAVE to do, freeing my time for things I WANT to do… and a bonus benefit of outsourcing is the quality of work also improves because professional people are doing the work with proper expertise and tools.
Does this make sense?
With just these two examples, you can see why my life also gets easier and easier, year after year as I apply the economies of scaling a kaizened life. Continuously increasing my personal capacity, one small incremental improvement (physical fitness) after another (financial fitness), continuously decreases the effort it takes to get done all the things I have to do which also continuously reduces the number of things I HAVE to do… all the while creating collateral benefits, too.
And it feels really great!
But there’s more. The greatest life benefits of scaling my kaizened life come from the third, and most powerful (and way more fun), source.
And I’ll be sharing that with you in my next post.
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