Creating Economies of Alignment

by Philip Boxer
As we develop our understanding of the three asymmetries, it is helpful to associate them with three corresponding forms of economy that their management generates. The first two of these correspond to N-S dominant forms of governance, while generating the third necessarily involves E-W dominance:

  • Scale: The ability to create additional output from an existing capability, reducing average unit cost. (i.e. producing more output from the same technology infrastructure).
  • Scope: The ability of a business to extend the scope of its operations across different markets reducing average operating costs. (i.e. covering more markets with the same business process infrastructure).
  • Alignment: The ability to create additional ways of organising the business relationship with a customer over time, reducing the average cost of alignment of business operations to the dynamics of each customer relationship. (i.e. managing more distinct customer relationships over time supported by the same infrastructure).

Why take power to the edge? Because it generates economies of alignment in the management of a relationship over its life.

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