Many tech firms are well-positioned to scale: A company that builds a new platform or app may be able to accommodate thousands of new users for little more than the price of server space. “Because you can automate and standardize, technology affords itself to supporting scale,” says Kaylin Andrew Tabb, a former software engineer who is now a vice president and team leader for the Technology, Media & Telecom corporate banking group at Wells Fargo.
But scaling is easier said than done. Even the most scalable businesses must invest in people and infrastructure to develop, market and support their products. A company that doesn’t invest wisely will collapse under the strain of rapid growth.
“For many people who actually make a product, your worst nightmare is that [a customer] calls and you don’t have the capacity to meet the new demand,” says Ron Carucci, managing partner at consultancy Navalent. “It’s easy to be seduced into sprinting and then easily burn out. Great leaders who want to go the distance are very measured in how they scale.”
Get ready, get set…
Scaling requires that companies “begin to think in terms of systems and processes rather than merely asking how fast you can get from point A to point B,” says Shikhar Ghosh, a professor at Harvard Business School and founder/CEO of eight tech-based companies.
Preparing to scale can be challenging for midmarket firms because they need to sink money into infrastructure — technology, facilities, people and more — before they can realize the benefits, Ghosh adds. Scaling also requires a big shift in culture as a company can grow too large to stay under the exclusive control of the founder or founding team.
Here are a few ways to help prepare your firm for scaling:
Nail down your mission first: All scalable firms start with a management team committed to and capable of scaling, Tabb says. This team must develop a mission that describes the company’s purpose and then ensure that all new hires buy into the mission. When your staff grows to the point where you need to add a layer of administrators, “it changes the culture in a dramatic way,” Ghosh says. “If the business model is very clear, then this layer will really help you deliver. If the model is still constantly changing, that will slow things down — and your best people will want to leave.”
Standardize your processes: “Many of a company’s day-to-day activities are repeatable, from the simple to the complex,” Tabb says. Examine how standardization can help save you time and labor in areas such as sales, marketing, customer service, production, delivery and financial management, then invest in the necessary tools. Standardization doesn’t stifle creativity, Carucci says; it frees up creative energy that had been occupied with reinventing the proverbial wheel.
Don’t jeopardize your culture: Sometimes a smaller company will bring in an executive from a large company to provide guidance on how to grow successfully. Too often, though, these executives “know how to run a big organization, not how to make a small organization big,” Ghosh says. They may end up imposing policies that stifle the culture that attracted the company’s most valued talent. Be particularly careful about imposing rigid structures that change the relationship between employees and managers, Ghosh says.
Know when to hit the brakes: Tech culture doesn’t just encourage companies to move fast. Bold moves and disruptive innovation are requirements in today’s global economy. But a company can run into trouble if it grows too quickly without the right foundations in place, says Rahul Baig, a managing director with the Technology, Media & Telecom corporate banking group at Wells Fargo. The quality of the product or service may deteriorate; cash is wasted; products are launched half-baked.
The most successful companies leverage their networks and build partnerships with savvy industry veterans who can help them avoid missteps along the way, Baig says. “Experienced investors and executives are always looking for early warning signs that a company is growing too quickly,” he says. “When they see these warning signs, they can resolve issues before they become a problem.”
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