I can rack my brain for typical issues or problems business leaders and their businesses face when scaling up and there are lots of them, but what I’m more intrigued by are the underlying assumptions fuelling a current trend in the whole business of scaling up your enterprise.
These assumptions are further driven by today’s pitch frenzied start-up world where successes seem to be measured by the amount of capital raised.
There is an implied message in all this, pointing towards a supposed ‘correct’ path for start-ups and scale ups. This implicitly influences a lot of decisions and activity and I’m not sure how awake the scene is to this.
I’m finding myself wondering more often whether there might not be just a bit of the herd mentality taking over here. The wind seems to be blowing in a not too dissimilar way to the dot-com era. (I’ll duck briefly while you throw things at the screen in disbelief, telling me that things have moved on since then. But back then I was involved in 3 dot-coms, one of which I founded and all of which went to the wall in that particular crash so I’m not just sticking my finger in the wind.)
What does scaling-up mean?
There’s a narrow definition out there that says scalability is about the potential ability of a product or service to grow without the same rate of growth in costs. For example, a piece of software that can be sold to many millions of people without too much impact on the scale of the company or organisation selling the software. This, it is hoped, turns into untold profit, riches, and world domination.
Resource intensive businesses, like those of professional services firms, aren’t considered scalable because to increase sales, it means you have to take on more people, thus more costs.
Investors tend to lean toward the former rather than the latter.
So clearly, this view of scalability favours some types of businesses over others; it favours transactional businesses over relationship and knowledge based ones.
A wider and perhaps more helpful view of scalability is one where the business is considered a functional system. Here, it means the ability to handle additional loads, or stresses. This can also mean its ability to adapt itself appropriately according to wider environmental demands. The key here is that at the forefront is a relationship with the wider operating environment.
In a way, this stuff is all rather academic, and it may not really mean too much to you. I don’t think they’re entirely helpful either. Let me illustrate:
In the mid to late 90s I did some work for what was still classed as an SME in the UK called Microsoft. It was scaling up massively. It had outgrown its small offices and was developing a new campus, but even by the time it was building the new campus, it was needing an advancement of its plans.
About 18 months later I came across an inconspicuous little firm with about 6 people. It was in a curious space, vaguely in the intellectual property/media rights/broadcast tech business. It had/managed about £2 billion in assets.
Regardless of the definitions, scaling up, and the concept of scalability, for such disparate organisations is a completely different challenge that depends less on what scalability means, more of what the business is looking to do.
Why does this matter?
It is not unusual to see companies great and small become too inwardly focussed on their structure, process and products meanwhile losing touch with why they’re where they are. Both views of scalability can promote this. There are plenty of examples out there of global ‘scalable’ businesses not reaching the mark as well as ‘non-scalable’ business practising world domination very well, thank you!
There are also different perspectives
A founder I worked with recently decided to decline some venture capital critical to his company’s growth because something with the investors didn’t feel right. He turned it down because something didn’t sit right with his strong ethos. And that’s okay too.
I have a few clients that take a rather different view of their mission. It’s not measured entirely by the wealth creation idea of scalability which can be unsustainable; it’s measured more by the social value of their enterprise and as individuals. Their purpose is to make a difference in a broader sense. And if their venture touches people in this way, that to them is an important dimension to scalability.
Perhaps this shows how the narrow business approach to scalability really needs a bit of a rethink.
These clients have a good sense of themselves which they’re able to maintain despite the pressures they’re experiencing in their business world. They take the time to consider at some depth what it is they want and the path they want to follow, and this has a natural consequence on how they develop their business.
So what do you actually want?
When the world around you is pestering you with statements telling you that you’ve got to think big, you’ve got to get investment, you’ve got to have these systems or this culture to scale, it’s easy to get distracted and find yourself blown off your heart-felt course.
And there’s lots of people out there wanting to give you advice on this to guide you in the right direction..
Yeah, I know, the irony isn’t lost on me, but I’m not here to give you advice; I’m just here to ask you what you want in terms of scaling up your business and what does this actually mean to you and your business?
It’s worth its weight in gold spending a bit of time to reflect on this.