Volume is not Efficiency

At some point in your career, someone likely told you: "If you just grow revenue, everything else will follow." Sounds simple. But like most corporate mantras, it’s dangerously incomplete.

Growing volume, whether in users, revenue, units shipped, or SKUs, is not inherently efficient. In fact, chasing volume without strategic alignment is one of the fastest ways to scale mediocrity, bleed cash, and dilute your value.

Let’s get something straight: efficiency is not about doing more. It’s about doing right. And what’s "right" depends entirely on your growth stage, market position, and strategic focus. So let’s unpack why volume isn’t efficiency. And what actually is.

Courtesy of WIX Media

From scrappy start-ups to strategic scale-ups: the growth stage equation

In the early stages of a company, your job is simple: get noticed. Penetrate the market. Sacrifice margin for growth. Land those leads. In this phase, economies of scale are your best friend.

But as you grow, what got you here won’t get you further. Margin starts to matter. Operational drag appears. Your sales force doesn’t just sell, they hemorrhage money if not pointed precisely. It’s time to move from scale to scope.

Efficiency evolves:

• Early stage = volume focus, scale economies

• Mature stage = margin focus, scope economies

Economies of scale: the volume illusion

Let’s start with the basics. Economies of scale refer to the cost advantages companies gain when production becomes efficient, typically by spreading fixed costs across more units.

• Buy more, pay less (bulk purchasing)

• Produce more, pay less per unit (manufacturing)

• Ship more, reduce per-unit logistics cost (distribution)

Classic examples:

• Amazon dominates logistics with its massive fulfillment infrastructure. Its scale turns warehouses into profit engines.

• Target leverages centralized purchasing to drive down retail prices while maintaining predictable gross margins.

But scale is not infinite. Here are five characteristics to look out for in your path to growth:

1. Not all scale is created equal. There’s technical scale (process optimization), managerial scale (organizational structure), purchasing scale (bulk buying power), marketing scale (reach and brand amplification), financial scale (access to cheaper capital), and network scale (value increasing with user base).

   
   

2. Digital scale behaves differently. Think cloud vs. coal. For instance, AWS can onboard thousands of new customers with marginal additional cost: servers scale instantly, and software updates roll out universally. In contrast, a coal plant expanding capacity requires physical infrastructure, regulatory approval, and significant capital expenditure. Digital scale benefits from near-zero marginal costs, while physical scale comes with linear or exponential cost increases.

   
   

3. Network effects often matter more than production volume. For example, Instagram’s value increases with every new user because each additional user creates more connections, more content, and more reasons to stay on the platform. Similarly, Uber’s service becomes more valuable as more riders attract more drivers, which in turn lowers wait times and improves service reliability. These network-based advantages create exponential value that production scale alone cannot achieve.

   
   

4. Many businesses don’t hit their Minimum Efficient Scale. The Minimum Efficient Scale (MES) is the lowest production point at which a business can achieve the lowest average cost per unit. It represents the sweet spot where economies of scale are fully realized, and additional output no longer significantly lowers costs. Failing to reach MES means operating at a cost disadvantage. Your competitors can deliver the same product more cheaply, which erodes your margin or forces you into unsustainable pricing strategies. For example, a manufacturing start-up trying to compete with an established player without hitting MES might burn through cash just to keep prices competitive, without ever becoming truly efficient.

   
   

5. And beyond a certain point, scale becomes a liability. Enter diseconomies of scale. Slower decision-making, bloated middle management, communication breakdowns. Bigger isn’t always better. It’s often just… slower.

Economies of scope: the strategic advantage

Economies of scope happen when you can lower per-unit cost by offering multiple products or services together. It’s less about volume and more about leverage.

It’s not about making more, it’s about making more out of what you already have.

Classic examples:

• SAP: From core ERP to cloud-based HR, CRM, and procurement, leveraging shared data, infrastructure, and customer relationships.

• Disney: Expanding across theme parks, merchandise, film production, and streaming, all reinforcing each other through a shared IP universe and customer loyalty.

• FIFA: Monetizing governance, sponsorships, broadcasting, and merchandising from a singular brand asset: the game.

Scope allows you to diversify your portfolio while keeping marginal costs low. But it only works when offerings are strategically adjacent. Coke branching into water and juices? Great. Coke launching insurance? Please don’t.

What happens when you get it wrong

When businesses confuse volume with efficiency, two things happen:

1. They scale prematurely, thinking that growing top-line fixes all sins. It doesn’t. It just makes them more visible.

2. They diversify too early, expanding into adjacent services without the customer insight, operational discipline, or brand permission to win.

Examples?

• A mid-tier retailer launching 10 new private-label brands before fixing supply chain leakage.

• A SaaS start-up offering four products with half-baked UX, instead of perfecting one.

• A global expansion push before hitting MES in your home market.

You cannot have your cake and eat it too. Scaling volume and expanding scope require different muscles. Trying to do both, too soon, is a fast track to inefficiency.

The Strategy–Efficiency Matrix

Here’s a mental model to map your growth tactics:

Stage	Efficiency Levers	Metrics to Watch	Strategic Focus
Entry/Early	Economies of scale, customer acquisition cost (CAC) efficiency	CAC, customer lifetime value (CLTV), unit cost	Market share, virality
Growth/Scale-Up	Internal optimization, MES achievement	Gross margin, burn multiple	Operational scalability
Mature/Established	Economies of scope, upsell, retention	Net revenue retention (NRR), average order value (AOV), contribution margin	Portfolio strength, customer loyalty
Global/Expansion	Brand leverage, infrastructure reuse	Return on investment (ROI) by market, brand equity	Strategic adjacency, synergy

So, what should you do?

1. Audit your strategy. Are you chasing volume, margin, or brand?

2. Align your tactics. Don’t hire 100 sales reps if your product still leaks revenue.

3. Choose your efficiency. Scale or scope, but choose consciously.

4. Know when to pivot. Market maturity demands it.

5. Resist false economies. Lower unit costs mean nothing if your value per customer craters.

Final word: efficiency is contextual

Volume is seductive. It shows up in dashboards. It pumps your ego. It makes your CEO smile at investor day.

But efficiency? Efficiency is smarter. It’s harder to measure, harder to fake, and infinitely more valuable when you get it right.

Remember: volume gets you noticed. Efficiency keeps you alive.

Pick your growth path wisely.