The internet is littered with startups that either scaled too fast or not fast enough.
Those who did so prematurely are easy to spot. Companies like Jawbone, Yik-Yak, Maple, Juicero glowed brightly as they burned through venture capital and imploded. Unfortunately, they never returned capital or justified their valuations. Other startups like Meerkat or Yobongo, simply slowed down so much that they never achieved scale.
There is a “habitable zone” though, where the speed of growth is just right—allowing businesses to flourish, and to attract and maintain capital investment. As a business matures, what keeps that appropriate pace of scale right? It’s as much an art as science. Below are a few strategies to help businesses scale at the right speed.
Make Hard Choices
Although written in the 1990s, Michael Porter's aptly named essay “What Is Strategy” still sheds light on common challenges to scaling.
Porter emphasizes the importance of sticking to your plan. He was among the first strategists to voice the idea that strategy is about "choosing where to play" and equally, "choosing where not to play". He reminds executives that strategy requires making hard choices and walking away from some target markets, customers or use cases that seem attractive, rather than lose focus. While it may seem obvious, it’s good advice for founders — as a company scales, it can be tempting to add unneeded services to the offering, or to build a feature that a large customer really wants, or to serve multiple customer use cases before perfecting one. While these may be good ideas, especially if they bring in revenue, in the end these extras may end up diluting the vision by pulling the company in different directions.
Focus, focus, focus. Do not get distracted. There will be time to address new markets and opportunities once the product has initial momentum, and your go-to-marketing engine has repeatable success.
Ensure a common vision
An important component of scaling is to maintain a common vision through effectively disseminating your company vision to new hires. This will ensure that everyone is focused on the same goals and driving towards the same purpose.
It may seem like a cliché but think of a startup as a sports team. Recruit those with skill and potential. Bench those who are divisive and unwilling to adapt. Hire solid assistant coaches because you won’t be able to be everywhere, all the time. As your team turns into a league with many teams (and you want all them to win) a solid vision is vital to keeping everyone in sync. Maintaining the company vision gets increasingly difficult as companies scale, but doing so is essential for growth.
Customers before technology
In the early growth phases, it's easy to look inward, get swept up in the development of a new technology, and apply that narrow focus to product buildout. This is a mistake. Concentrating on customer needs and solving real customer pain points will help you build a better product. Technology decisions should always come at the end of any business strategy discussion. By remaining focused on the customer perspective as you grow, you increase the likelihood of success.
Stay the Course
If you've done your research, and know what customers want, then execute according to plan. While later-stage pivots can sometimes be successful and help manage issues via new approaches, these successes are rare.
In the early stages of product-market fit, pivots should be common as you iterate quickly, applying lean principles to developing a product that customers want and are willing to pay for. However, once your product has traction, pivots are oftentimes the result of incomplete strategic planning or misunderstanding of users. Rather than changing your plan, it's wiser to follow the old adage: measure twice, cut once. In planning, make sure that experienced leaders are part of the process. There is no substitute for pattern recognition.
As companies get larger, the “big picture” can get lost in the minutiae of day-to-day activities. To scale effectively, decision-making needs to be distributed. Practically this means that the founder/ CEO cannot interview every person being hired, and cannot make every decision in the company without becoming a bottleneck and impeding progress. By hiring strong executives, inculcating the vision, planning effectively, and leaving them to do their jobs, you give your company the highest chance of success.
The strategies described above are mutually reinforcing. Making hard decisions to do a few things well, being customer-centric, planning effectively and hiring people who are capable and share the company's vision are additive when done in parallel. They provide founders with the best path to scale effectively, and avoid scaling too fast and burning up.
For more helpful direction and business insights, sign up for our monthly newsletter.