You can’t sustain profitable growth in a competitive market if you’re a disaster internally, and you can’t maintain a high-performance culture internally for long if you’re failing in the marketplace. – Chris Zook, The Founder’s Mentality
A funny thing happens once the processes are put in place and the business starts to grow — instead of getting easier as you scale, the business becomes a sort of “waking nightmare”.
Ask yourself these three questions:
- As the business grows, are you working longer and longer hours?
- Does every employee hired and customer acquired tire you out?
- As your team grows, does it feel as if you’re the only one pulling your weight?
Did you answer “yes” to more than one of the above questions? I’ll bet you’re wondering what’s happening.
What you’re experiencing is the Growth Paradox: the belief that as you scale the company — and increase your dream team, prospects, and resources — things should get easier. But they don’t.
Things actually get harder and more complicated.
The truth
Scaling a company is exhilarating, but it’s also hard. The truth is, only one out of nine companies manage to sustain a minimum level of profitability growth in 10 years. So what’s the difference that allowed some companies to scale, while others caved under the weight of their own growth?
Understanding complexity
Let’s go back to when your company was just you, a business partner, and your burning dreams and ambition. Things were a lot simpler back then. The channels of communication (or degree of Complexity) was just between the two of you.
The business grew, and you and your partner couldn’t handle the workload, so the natural progression was to hire more people.
It makes sense to assume that more people means more work will get done, more customers will be served and things will ease up for the leadership team. But more people also means the channels of communication become even more complex.
If communication between just two people is already difficult, imagine adding more people to the mix.
This is what we call Complexity, and Complexity grows exponentially with each person you add to the team.
Here are three fundamental barriers, to scaling up a venture, that are brought on by Complexity:
- Leadership: the inability to staff/grow enough leaders throughout the organization who have the capabilities to delegate and predict.
- Scalable infrastructure: the lack of systems and structures (physical and organizational) to handle the quagmire in communication and decisions that come with growth.
- Marketing: the failure to scale up an effective marketing function to both attract new relationships (customers, talent, etc.) to the business and address the increased competitive pressures (and eroded margins) as you scale.
However, if you remove these barriers, what once was a weight keeping you down, becomes the wind at your back, pushing you forward.
How does one counter this Growth Paradox?
Aside from, “How do I scale up my business?” the next big question asked all the time is the one above. Of course, we want to grow our businesses — ideally without the drama.
Over the past three decades, it’s been the mission at Gazelles/Scaling Up to help middle market organisations scale up quickly, yet sustainably, and without drama. We have created frameworks and tools that, when put in place, have proven to be successful for over 40,000 companies worldwide.
Give us a call if you would like to learn more. ijonathan@scaleupgrowth.co
