Forum for Science, Industry and Business

Sponsored by:     3M 
Search our Site:


Building small: In many industries, economies of size is shifting to economies of numbers

For decades, "bigger is better" has been the conventional path to efficiency in industries ranging from transportation to power generation.

Food once grown on small family plots now comes overwhelmingly from factory farms. Vessels that carried 2,000 tons of cargo have been replaced by modern container ships that routinely move 150,000 tons. But now, new research shows, we are on the cusp of a radical shift from building big to building small—a change that has profound implications for both established and emerging industries.

Many industry sectors are nearing or have reached a tipping point in which efficiency of unit size is being replaced by efficiency of numbers, according to a recent study by Garrett van Ryzin, the Paul M. Montrone Professor of Private Enterprise at Columbia Business School, Caner Göçmen, Ph.D. candidate at Columbia Business School, and Eric Dahlgren and Klaus S. Lackner of Columbia University's School of Engineering and Applied Science. Rather than relying on custom-built, large-scale units of production – e.g. massive thermal power plants - industries can benefit from a shift to small, modular, mass-produced units that can be deployed in a single location or distributed across many locations – e.g. photovoltaic (PV) panels mounted on utility poles.

Conventional wisdom holds that capital cost per unit of capacity decline with increasing unit size. Other efficiencies of unit size arise from manufacturers' ability to spread out the fixed-costs components of production, as well as factors such as operator labor and design costs. This alternative approach to infrastructure design offers new possibilities for reducing costs and improving service, the researchers found.

The authors identify three driving forces underlying this shift. First, new computing, sensor, and communication technologies make high degrees of automation possible at a very low cost, largely eliminating the labor savings from large units. Second, mass production of many small, standardized units can achieve capital cost savings comparable to or even greater than those achievable through large unit scale. And third, small-unit scale technology provides significant flexibility—a benefit that has been largely ignored in the race toward ever-increasing scale and one which can significantly reduce both investment and operating costs.

This trend—observable in nascent form in several industries ranging from small, modular nuclear reactors, chlorine plants, and biomass energy systems to data centers—is resulting in a switch from large to small optimal unit scale, the authors found. The shift mirrors a similar revolution that began thirty years ago in the supercomputer industry. The traditional approach to producing higher capacity and greater speed in computing was to build increasingly powerful, specialized machines with ever-increasing processing power. This came to a halt in the mid-1990s, when it became cheaper to employ mass-produced processors and high-capacity memory from the burgeoning personal computer industry. Soon, the researchers conclude, many more industries will learn to "think small" and thereby reap the benefits of this new paradigm in production.

About Columbia Business School

Led by Dean Glenn Hubbard, the Russell L. Carson Professor of Finance and Economics, Columbia Business School is at the forefront of management education for a rapidly changing world. The school's cutting-edge curriculum bridges academic theory and practice, equipping students with an entrepreneurial mindset to recognize and capture opportunity in a competitive business environment. Beyond academic rigor and teaching excellence, the school offers programs that are designed to give students practical experience making decisions in real-world environments. The school offers MBA and Executive MBA (EMBA) degrees, as well as non-degree Executive Education programs. For more information, visit

Evan Nowell | EurekAlert!
Further information:

More articles from Business and Finance:

nachricht Finance: Belief in higher returns from private equity may be misplaced
13.10.2015 | Universität Luxemburg - Université du Luxembourg

nachricht RWI/ISL Container Throughput Index: World Trade Remains Sluggish
25.08.2015 | Rheinisch-Westfälisches Institut für Wirtschaftsforschung e.V.

All articles from Business and Finance >>>

The most recent press releases about innovation >>>

Die letzten 5 Focus-News des innovations-reports im Überblick:

Im Focus: Lactate for Brain Energy

Nerve cells cover their high energy demand with glucose and lactate. Scientists of the University of Zurich now provide new support for this. They show for the first time in the intact mouse brain evidence for an exchange of lactate between different brain cells. With this study they were able to confirm a 20-year old hypothesis.

In comparison to other organs, the human brain has the highest energy requirements. The supply of energy for nerve cells and the particular role of lactic acid...

Im Focus: Laser process simulation available as app for first time

In laser material processing, the simulation of processes has made great strides over the past few years. Today, the software can predict relatively well what will happen on the workpiece. Unfortunately, it is also highly complex and requires a lot of computing time. Thanks to clever simplification, experts from Fraunhofer ILT are now able to offer the first-ever simulation software that calculates processes in real time and also runs on tablet computers and smartphones. The fast software enables users to do without expensive experiments and to find optimum process parameters even more effectively.

Before now, the reliable simulation of laser processes was a job for experts. Armed with sophisticated software packages and after many hours on computer...

Im Focus: Quantum Simulation: A Better Understanding of Magnetism

Heidelberg physicists use ultracold atoms to imitate the behaviour of electrons in a solid

Researchers at Heidelberg University have devised a new way to study the phenomenon of magnetism. Using ultracold atoms at near absolute zero, they prepared a...

Im Focus: Climate Change: Warm water is mixing up life in the Arctic

AWI researchers’ unique 15-year observation series reveals how sensitive marine ecosystems in polar regions are to change

The warming of arctic waters in the wake of climate change is likely to produce radical changes in the marine habitats of the High North. This is indicated by...

Im Focus: Nanocarriers may carry new hope for brain cancer therapy

Berkeley Lab researchers develop nanoparticles that can carry therapeutics across the brain blood barrier

Glioblastoma multiforme, a cancer of the brain also known as "octopus tumors" because of the manner in which the cancer cells extend their tendrils into...

All Focus news of the innovation-report >>>



Event News

Gluten oder nicht Gluten? Überempfindlichkeit auf Weizen kann unterschiedliche Ursachen haben

17.11.2015 | Event News

Art Collection Deutsche Börse zeigt Ausstellung „Traces of Disorder“

21.10.2015 | Event News

Siemens Healthcare introduces the Cios family of mobile C-arms

20.10.2015 | Event News

Latest News

Siemens offers concrete solution portfolio for Industrie 4.0 with Digital Enterprise

24.11.2015 | Trade Fair News

Compact, rugged, three-phase power supplies for worldwide use

24.11.2015 | Trade Fair News

Sensor sees nerve action as it happens

24.11.2015 | Life Sciences

More VideoLinks >>>