3 ways for scale-ups to keep on scaling
What does it take to grow a business at scale? Is it all about entrepreneurialism, innovation, and differentiation? Not quite. These factors are vital of course, but they need to be supported by great business culture, strong leadership, and high-performance IT for enduring success.
Scale-ups are typically defined as having annual growth of 20% or higher, sustained for three or more years. Achieving then maintaining this can be gruelling. If you’re a founding CTO of a scaling business, you have an important role to play facilitating and driving that upward trajectory. And the buck pretty much stops with you if it slows or flatlines.
There’s lots of advice out there about how leaders should nurture culture and innovation to drive growth. But it’s not always easy to find information that’s specific to your role. This blog looks at three key actions CTOs can take to avoid a growth plateau. And you can download our dedicated white paper for scale-up CTOs ‘Onwards and Upwards’ here for more detailed guidance.
1. Take a step back
Growing a business can feel like a never-ending game of whack-a-mole. Every time you overcome one set of problems that threaten to hinder growth, another issue raises its head. Remind yourself that many of the challenges you encounter are a natural part of business progression, experienced by the majority of scaling businesses. Greiner’s Growth Model puts this into perspective, outlining five typical ‘crises of growth’ and what they look like. Understanding that these are all but inevitable on the scale-up journey can reduce frustration and underpin better judgement and planning.
It’s much easier to overcome a challenge if you can pre-empt it before it has a negative impact on growth. Take a step back, so you can see the bigger picture – but not so far that you lose sight of what’s happening in the business. Effective delegation is an important skill to master. It releases your time, energy, and skills to grow the business, instead of running it. But new hires need to be selected with caution. Taking on the wrong people can be hugely detrimental to the culture, which has probably played a major part in success to date.
Don’t be afraid of employing specialists who can do their job better than you could – it’s not feasible to continually train-up juniors to do things ‘your way’. But remember that their values and attitude will shape the way the business evolves. These factors are just as important as their ability to perform the defined job role.
2. Break the bottleneck
In the start-up environment there is always immense pressure to deliver new features and innovations at speed. The received wisdom is that there’s a direct trade-off between speed and stability. Accepting that, and choosing speed, may have been acceptable as a start-up. But as you transition into scale-up territory your value-at-risk increases, along with client expectations, which means you must now increase stability without impacting speed. DevOps gives us the patterns and practices required to have the best of both.
This is where ‘The First Way’ from the widely acknowledged Three Ways of DevOps comes into play. The Three Ways are rooted in lean and ‘systems thinking’ and require a deep end-to-end understanding of the value streams enabled by IT so the inevitable system bottleneck, or constraint, can be identified and targeted. Focusing on small batch sizes and continually breaking the system’s constraint will increase both throughput and stability. So, the leadership team must be united in their approach to exploit, subordinate and elevate constraints as they emerge. We explore this in more detail in a separate blog post ‘Getting real with the theory of constraints’.
3. Promote ‘fail fast, fail safe’
As businesses grow and mature they typically become more risk-averse: there’s far more at stake if something goes wrong. Scale-ups can be particularly vulnerable to outside disruption – they lack the resilience of more established players and don’t have the natural agility of a start-up. So how do you tolerate the inherent riskiness of innovation as turnover and headcount increase? As CTO, you need to find ways to support experimentation within teams, giving people space and licence to try out new ideas, with the expectation that many of them won’t work.
Allowing people to take risks, while minimising the blast radius when things go wrong, is a central tenet of high performance. Those ideas that do work will push boundaries and provide tremendous value to the business.
Growing at scale requires careful planning and tenacity as well as new ideas and developments. The territory isn’t exclusively owned by successful disruptors and start-ups. In fact, financial institutions and government bodies increasingly recognise that high growth firms of all ages, sizes and sectors are more productive than start-ups when it comes to generating jobs, taxes and wealth. As Sherry Coutu, Chair of the Scaleup Institute explains: “Competitive advantage doesn’t go to the nations that focus on creating companies, it goes to nations that focus on scaling companies.”
Scaling businesses are the lifeblood of the economy. And their performance is largely dictated by leadership behaviours: to keep on growing at scale, take a look at your role and the areas of the business where you can make a tangible impact. Sometimes, you need to do less to achieve more. So make time to identify and iron out constraints. And find ways to inspire, empower and energise your people to take responsibility, take risks and take those next steps to reach new heights.