Why building big often backfires in complex systems design
In short: Designers frequently choose to build large-scale systems to capture economies of scale. However, this strategy often ignores a critical reality: these economic benefits only materialize if the facility operates at full capacity. This video explores the inherent risks of prioritizing scale over incremental development.
In the context of systems design, the drive to build big is fueled by the promise of economies of scale. As taught by Richard de Neufville in the Fall 2021 MIT course IDS.333, Risk and Decision Analysis, this approach is common but carries significant hidden risks.
The core problem is that economies of scale are not guaranteed; they are conditional. They only exist when a facility operates fully at its intended scale. If demand or utilization falls short, the anticipated efficiencies vanish, often leaving designers with oversized, inefficient infrastructure that lacks the flexibility of incremental alternatives.
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Sources
- Summary by Intellect · source: Unit 7: Drivers of Flexibility, Video 2: Economies of Scale
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