How Growth Happens: CostCo Edition

Normally I ignore self-congratulatory corporate publications, but for CostCo, I’ll make an exception.  There’s a fascinating story about their Kirkland Signature brand in the latest CostCo Connection.  See economic growth at work: How their product designers identify high-quality competitors, and figure out how to make them a little better and a lot cheaper.  (Hint: Packaging, transportation, and shelf space all figure prominently).  See reputation at work: CostCo doesn’t just improve products; it figures out where the competition is cutting corners – and then boldly makes its products with their corners intact.

This article reminds me of a question I often have at CostCo: Imagine the old Soviet Union gave up on manufacturing, specialized in natural resource extraction, and invited CostCo to set up 10,000 warehouse stores in the Evil Empire.  I think it’s clear that this would have been a massive improvement for Soviet consumers.  But how much of a difference would it have made?  Would a USSR that swallowed its pride and outsourced its brain work and customer service still be around today?

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