small by design

15/11/2022 ☼ unscalablesmallquality

on the banks of the ganges a few minutes before i submerged myself in the waters of the triveni sangam on the morning of makar sankranti in 2013, thereby purifying myself of the sins of many former lives and acquiring a tapeworm (20 jan 2013, 0632h).

in the before times, my friend tom downey and i decided to write a book about why there’s so much great stuff in japan. but actually it was going to be a book about the robustness of businesses that are small by design — unscalable businesses.

tom’s a fancypants writer for the WSJ, NYT, and other prestige publications. we ran into each other by accident at the maha kumbh mela in 2013 — i was part of a harvard research group on alternative urbanities and he was covering the research for smithsonian magazine.

we all stayed in the same absurdly luxurious, enclosed, guarded tent camp (“glamping is safer, to be compliant with university policy”) on the edge of the kumbh site, the transient city built on the temporarily drained floodplain of the triveni sangam, where the ganges, yamuna, and sarasvati rivers converge. during the day, we ventured into city. we returned in the evenings for hygienically prepared dinner within the camp perimeter. after dinner, on cooler nights, the staff built enormous fires in the center of the compound, around which campers could sit and discuss devotionality while drinking chai.

on one such misty night, i was telling some people that there was a WSJ article i assigned to students in an engineering and design class i was teaching about why things are always made better in japan. tom, from 15 feet away, said quite loudly, i wrote that.”

it turned out that we had both spent a lot of time in japan and noticed similar things.

i have been going to japan for research since 2003. it was (and still is) the country where the quality to price ratio (QPR) is generally high. this is not because japan is a cheap country, but because the quality is extraordinarily high. both tom and i had noticed it on our respective first visits, and come back repeatedly because of the superb QPR.

this is true across a vast range of things you can buy and consume in japan. pizza, denim, weird retail shops, cocktail bars, functional ceramics, hotels, glassware, building construction, and commercial printing. these are only a few of the products and services for which japan recalibrated us by exposing us to examples of quality so far beyond previous experience it was practically on a different planet.

both tom and i were repeatedly rebaselined in japan. being rebaselined by japan is common, but not as well-documented as it should be. mfk fisher, the great food writer and cultural theorist had the same reaction when she visited japan in the 1970s for the first time as the guest of shizuo tsuji, president of one of the largest cooking schools in apan.

when she got home to california, she wrote to julia child to say, if I could eat the unprocurable things that Tsuji managed to present to us as lessons in what present Japanese cooking is based on, I would gladly eat nothing else for the rest of my life. I would forgo every subtle dish I have ever tasted in the past seventy years. This is a shattering statement to make, and of course there is no risk of its ever happening, but it is true.”

the improbable story of how mfk fisher went to japan, helped ghostwrite the most influential english-language book about japanese food ever published, then used her clout to secretly engineer the ascent of japanese food to fine dining status in america — this story is a book manuscript that, for various extremely unsatisfying reasons, keeps getting turned down by editors and publishers.

in any case, tom and i kept in touch after the kumbh. the rebaselining experience was always a topic of discussion. after years of back and forth trying to understand why, we decided that what made japan feel so special was not that being rebaselined was specifically japanese, but that it was so common to be rebaselined when in japan. and the reason for that, we thought, was that so many businesses in japan were small, and not by accident or incompetence but by design.

looking closely at the many businesses we were thinking about — i considered them through the particular lens of a management and business researcher, as cases for analysis) — we saw that these unscalable businesses chose to make clear sacrifices that ran counter to conventional wisdom. the biggest tradeoff was sacrificing the possibility of growing the business into something big by making decisions about production, pricing, design, and labor that required small scale.

but choosing these crazy-seeming tradeoffs allowed them to pursue idiosyncratic ideas of quality which their customers loved. the customer loyalty and unusual dynamics of these unscalable businesses made them long-lived good businesses even before a global pandemic.

by the end of 2019, we’d written a book proposal and found an excellent agent. in early 2020, we sent the proposal out to take advantage of growing excitement around the tokyo summer olympics. we began to take meetings with publishers in february 2020. then covid shut everything down, including the tokyo olympics.

in the drawn-out pandemic aftermath, these unscalable businesses seem to survived better — and more happily — than bigger competitors that pursued scale. tom and i have found unscalable businesses in countries around the world, operating with analogously unusual business dynamics. now we’re thinking of reviving the book — stay tuned. even better, get in touch if you know someone who might be interested in publishing it.