3 Fundamental Shifts You Need to Make to Scale Your Business
A version of this article first appeared at Inc.com.
It’s one thing to grow your business (and a lovely thing it is, too) – but it’s another entirely to scale it.
Scaling – the ability to grow rapidly and at a compound rate, compared to the arithmetical, two-plus-two-equals-four rate of growth that non-scaling businesses achieve – requires new skills from the business’ owners and managers.
Many leaders never achieve scalable growth in their business because they fail to realize the need to change their attitude and approach toward what they view as irritations at best and ‘growing pains’ at worst.
Here are the top three areas in which I see leaders hobble their organization’s growth by failing to recognize the need for a personal change in perception:
In the early, Fun stage of growth, hiring people is typically a highly personal, intuitive – and largely enjoyable – exercise.
During Fun, founders do most the hiring themselves. And in doing so, we hire people who remind us of ourselves. We hire people who lack skills but have the right attitude, knowing we can spend the time necessary to mentor and coach them. We hire with little or no consistency in job specifications, individually negotiated compensation packages and idiosyncratic variances in titles and responsibilities.
Then, at some point – usually when the organization hits the growth spurt I call Whitewater – hiring is no longer fun any more. The rate of hiring accelerates – where previously we might have hired a few people each year, now we’re hiring people every month. And because we’re hiring at speed, we cant trust our judgment so much, and we don’t have the time to mentor and coach those we do hire.
Result? The quality of hire drops, and the growing pains of Whitewater are made even worse by having to grapple with an influx of less-than-stellar new employees.
The answer is not to see this shift from occasional-to-frequent hiring as an aberration. Now your organization is scaling, and not just growing, you will always be hiring – so you better, as an organization, get good at it.
The second shift that happens as an organization moves from merely ‘growing’ to ‘scaling’ is the need to systematize what until then has remained un-systematized: codifying and standardizing the patterns and dynamics that underly how the organization operates from day to day.
Making this shift is typically agonizing for the Visionary founder-owner. While their young, vibrant business is growing in Fun, systems and processes are anathema. If instituted too early, systems and processes slow down the organization’s growth and staunch its creativity and flexibility – so typically, and rightly, the founder team resist the installation of processes from the outset.
This intuitive reaction against systems and processes serves the company well during early growth, but stalls the organization’s ability to scale at the crucial moment in Whitewater.
How do you know your resistance to systems and processes has become problematic for the growth of your business? Look around at your most productive people. If they have ceased being productive and are spending most of their time instead fighting fires, then you’ve hit Whitewater, and you need to review your stance toward systems and processes.
3. Focusing on the internal customer
Remember the relative ease with which you used to serve your clients and customers? An order or an enquiry would come in, you or someone on your team would spec it out. Someone would order whatever raw materials were needed, they or someone else would add value in whatever way was required, and finally you’d ship your product (or deliver your service) to a happy customer.
Such was the relative simplicity of ‘mere’ growth – an almost seamless flow from initial enquiry to delivered product or service. Now that flow is a distant memory. Your team are frequently dropping the baton as the customer’s order is processed from department to department, from team to team, from individual to individual. You spend most of your time refereeing arguments and disagreements about where or why an order is stalled or inefficiently processed, and what was previously a tight, focussed team now appears to be hunkering down in silos rather than working harmoniously together.
The reason? Now your business is scaling, not just growing, the supply chain from initial enquiry to happy, fulfilled customer is too complex to self-manage. And simply focussing on the needs of the external customer isn’t enough to overcome that complexity.
If the groups and teams in your organization are frequently ‘dropping the baton’ as a customer or client’s order processes from initial enquiry to completed sale, then the time has come to focus on the concept of the internal customer – not just the external customer.
Your various functional groups need to learn how to exhibit the same respect and attention to the needs of their internal customers as they do to your external customers – otherwise, you’ll be stuck in mere growth mode, and the complexity of scale will beat you, every time.
Download a free chapter from Les’s WSJ best-seller, “Predictable Success: Getting Your Organization On the Growth Track – and Keeping It There” to learn more about how to move from growing a business to scaling it.