Economies of scale: Definition and digital applications

Economies of scale, a concept dating back to Adam Smith, remains crucial in modern product management, helping businesses achieve long-term success by efficiently increasing production without proportionally increasing costs. This principle, though seemingly outdated, underpins the operations of tech companies, where internal and external scale levers like labor, knowledge, and technology enable small teams to create impactful software for millions. As digital advancements like the internet and AI have transformed industries, the ability to scale effectively has become vital, separating thriving companies from those that falter. Product teams must seek internal economies of scale by being lean, focusing on outcomes, listening to their teams, and being data-oriented to ensure sustainability and a competitive edge.