Against Scaling Up

By J. Arthur Bloom for FRONT PORCH REPUBLIC
http://www.frontporchrepublic.com/2016/02/against-scaling-up/

In The Atlantic, Cambridge professor Antara Haldar tells the story of Oregon’s Stumptown Coffee, and how being bought by Peet’s last October could, “corrode the very core of what has, so far, sustained Stumptown: loyalty.”:

Even as Peet’s plans to treble Stumptown’s presence and make it more widely available at grocery stores, it threatens to make the Stumptown experience increasingly impersonal. But making Stumptown indistinguishable from Starbucks will jeopardize its core constituency, and may even hurt Peet’s bottom line.

Smaller institutions have much to offer—not just sentimentally, but also in terms of pure economics. The idea goes back to the 20th-century British economist E.F. Schumacher’s declaration that “Small is beautiful,” a notion fashionable again in the era of institutions “too big to fail.” Since the logic of scale is more attuned to quantity than quality, workers (whose wages are usually driven down), consumers (who enjoy lower prices, but usually get a worse product) and the landscape of the economy (which shows signs of marked decreases in diversity) all suffer from growth that is too rapid.

Worthwhile thoughts, but based on this feature in the Willamette Week from 2011, some Oregonians thought the selling-out happened back then, when the company was sold to a San Francisco-based investment firm. Todd Carmichael, a coffee blogger for Esquire, wrote, “Duane Sorenson, the founder of Stumptown, the Che Guevara of the rock-star barista movement, sold his life’s work to the highest bidder.”

Stumptown and Peet’s won’t be selling each other’s coffee. Which is a bummer, since there’s a Peet’s by my office, recently converted from a Caribou Coffee. Though I thought it sad at first that it, along with 87 others, were lost to the colorful sharia-compliantly financed Minnesota company, to the Bay Area-based Peet’s — a company with more than a decade of unsuccessful unionization efforts, some more serious than others — the majority of both is owned by the same holding company anyway.

More from The Atlantic:

The arithmetic of the “bigger is better” paradigm, or what economists call “economies of scale,” is simple enough. The larger the bushel of coffee beans, the lower the cost per bean. The larger the machine, the more lattes it can spew out. Most of all, scale translates into standardization: the conversion of an unpredictable creative process into a precise and highly economical algorithm of production. All of this means more profits.

But, based on studies of human behavior in places ranging from blood banks to daycare centers, academics now recognize that the calculus is more complex: People act more responsibly in the context of personal relationships that are meaningful to them than in strictly commercial transactions. In fact, loyalty sometimes even trumps economic rationality: going that extra mile to get the perfect cup of coffee, or paying a loan back when the opportunity exists to default. This is what the shift from boutique to mass-manufactured cuts out.

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