Matan Czaczkes

From economies of scale to economies of scope

December 1, 2015


Most people are familiar with the term economies of scale: If you focus on doing something and do a lot of it, you can do it well and can do it cheaply. Arguably, in terms of cost savings, councils have pushed this logic to the limit.

But there is another industry logic that councils can uniquely harness: economies of scope. The scope of business which local authorities deal with is significant. From maintaining our roads to staffing our schools, from promoting public health to stocking our libraries. When you think about the scope of business that councils are involved in it is truly mind blowing.

This has its challenges, but also offers possibilities. It means that authorities can tackle the same problem from multiple angles. A good example is creating dementia friendly communities where libraries and cultural services can raise awareness; schools and education can teach children about what to look out for and how to help; and social care can provide high quality and targeted services.

The future of public services is integrated and through economies of scope, councils are well positioned to bring these services together.  Programmes such as Troubled Families and Total Place recognise the power inherent in economies of scope.

To make economies of scope work there needs to be a focus on outcomes, and systems need to be in place which gear people towards one clear purpose. Achieving this will require better collaboration with partners to deliver services, a more sophisticated use of data and insight, and a level of understanding about need and demand over and above what has been used before.

To thrive councils will have to innovate and change the ways they do things. Economies of scale have taken us so far, economies of scope could take us even further.

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