If you plug more lights into an outlet, the result will be more light ... for a while. Keep plugging them in, and...
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eventually you blow a fuse. A similar principle holds true for startups. Just adding more people to your startup won't scale your fledgling business. Eventually, if you don't change the way your startup operates, you are going to blow a fuse.
So what do we do? We upgrade the wiring and add another circuit. But then what happens? Suddenly, the room is bright but HOT! We need to upgrade the ventilation and cooling. To do that, we need to rip out a wall and add new ducting. We need to add yet more wiring and circuit capacity. Maybe we even have to change what kind of cooling system we use. The old air vent won't work any longer; now we need an actual air conditioning system.
Scaling a business is everything. If your business idea won't scale, you just have a hobby. You have a nice little product or service that you can share with your friends, but not something that is going to impact the world. It takes an organization to deliver that product or service, and far too often when talking about scaling, founders are talking about scaling the product or service, scaling the channel and the market, but they forget that they need to scale the organization.
Scaling a business: Brace for change on three fronts
Frequently, growth organizations miss out on three key areas of scaling a business:
- Scaling culture
- Scaling leadership
- Scaling organization
Failure to plan for and execute the scaling of these three key areas of any organization will result in the eventual decay and probable demise of your startup.
Unfortunately, scaling a business means change. If you want more power for more lights, you have to change that wiring. You still need wiring material, but it needs to be more robust, maybe with more circuits. The same holds true for scaling intangibles like culture, leadership and organizational structure.
Want to scale your cool startup culture? You need to examine it and decide what makes it so cool: What are you willing to give up, what would you lay down your life for to keep? Then look at models for scaling those elements of culture. You can't just assume that the way the five of you worked together when you started the company, will work when you grow to 20 or 50 people. The dynamics of group interactions change quickly as the number of people grows. Check out this video to the left I did back in 2013 to illustrate the complexity of communication in growing organizations.
That is just the surface of the complexities of scaling a business. With company growth, also comes an increase in interpersonal dynamics, company politics, the power structure, and the ceremonial culture. When you have only five people, there isn't a very complex social network that forms. When you have 50 people, there is a lot to know.
The same is true of leadership when scaling a business. You need to carefully consider how decisions will be made, what qualities you want to instill in all new leaders, what leadership traits can you hire for, and what can you train.
Scaling a business: First steps first
Think about your organization. What do you like about your culture, leadership approach and organization, and what do you dislike about them?
Share these ideas with others in your organization, networks and founder meetups. Gather people of like minds in your organization to ask the following questions:
- What in our leadership, culture and organization is mission critical?
- What in our leadership, culture and organization are we willing to let go of in order to scale?
- Where do we need help understanding how to scale our leadership, culture and organization?
Don't just read this article, act on it. If you are in the midst of or on the verge of scaling your business and you just realized that you have not thought through how to scale these other critical elements, let's talk. I love helping folks do this.
About the author:
Joseph Flahiff is an internationally recognized leadership and organizational agility expert at Whitewater Projects, Inc. He has worked with Fortune 50 and Fortune 500 companies, government agencies, start-ups and publicly traded firms, where he has been lauded by executives as an experienced, pragmatic and innovative adviser. He is the author of Being Agile in a Waterfall World: A practical guide for complex organizations.
Previous columns from Flahiff:
Delegator or talent-stifling micromanager: What kind of leader are you?
Eight tips for optimizing your distributed team
Organizational agility: Destruction, then rebirth