Is My Midlife Company Scalable?

That depends on how you respond to three fundamental questions:

  1. Does our company have what it takes to scale?
  2. What is the best approach to scaling our business?
  3. What must we do to assure success?

1.     Does Our Company Have What It Takes to Scale?

This question is foundational to the success of scaling the business.  Our prospective clients participate in a two-day SmartScaleTM Lab to get to the answer and explore the possibilities in both the present and future:

  1. What job is your company hired to do (current and future)?
  2. Is this job valued and done well enough to be considered the authority, earning it the right to own the category and build the “go to” community around it?
  3. Is the category large enough to be interesting?

If at the conclusion of the Lab, participants and ScaleWerksTM facilitators are confident that they have outlined a scalable product or service, the company is invited into the Accelerator portion of the SmartScaleTM protocol. The Accelerator starts with more in-depth analysis and deeper definition of the Category and Job to Be Done.

2.     What’s the Best Approach for Scaling Our Business?

To leverage the ability of the company to succeed at SmartScaling, the protocol must be executed in a way that is consistent with the priorities of the existing business model.  These priorities recognize conditions (“Resources”) and circumstances (“Stage of Life/Resistance to Change”) of the individual client company.

Resources are identified through financial modeling.  A forecast model is created that allows leadership to run what-if scenarios, define courses of action, track progress and disseminate measurement dashboards.

Stage of Life/Resistance to Change analysis and protocol personalization is based on Stage of Life analysis.  We define these stages[1] as:

  • Creation – When the company is listening to the voice of the job that’s calling to be done

When businesses start their first effort is to identify and deliver a meaningful value proposition – a product and/or service – that fulfills a significant unmet want, or “job.”

We emphasize the job as the primary focus of the Creation stage – because of the primary question that the team is asking – “What needs and wants can we fulfill to earn customers?” As the company grows it is very difficult for a business to remain focused on the questions that pertain to the customer’s job. Growth channels the company’s focus to innovating and supporting the products and services; and ultimately to efficiencies.

  • Sustaining Innovation – Where the company is listening to the voice of the customer calling for attention

Businesses that figure out how to endure by fulfilling the jobs – and develop a product or service – evolve into the Sustaining Innovation phase. The questions that the company asks itself are no longer “What Job?” – but now “How do we do that job faster, cheaper, more conveniently, and sell more?” Where the Creation phase generated the first customers, the Sustaining Innovation stage focus is to convert these customers into a reliable, loyal base and build the organization into a process-centric enterprise that delivers better products that can be sold for higher prices to the current target market.

The business has de-emphasized its focus on the job and applies itself to building processes that define the current business model.

While the Creation stage was centered around using subjective data and the founding team’s intuition to earn customers, the Sustaining Innovation stage is all about historical data and the effectiveness of operations.  Performance is judged based on the income statement: growing the top line and maximizing the bottom line.

  • Efficiency – Where the company is listening to the voice of the shareholders demanding returns on (or of) capital

Eventually, the efforts in the Sustaining Innovation phase no longer deliver annual increases in returns on assets deployed – sales level off, profits flatten or decrease.

In response, the business focus turns to a heightened emphasis on asking questions around reducing cost.  These questions lead to eliminating labor, reducing overhead, redesigning products to eliminate costs, outsourcing to capitalize on labor cost differentials, adding financial leverage, optimizing processes, and consolidating industries to gain economies of scale.

3.     What must we do to assure success?

One of our guiding theorems is that companies that undertake strategic change initiatives have an 8% chance of jumping from the middle to the top of their industry in terms of performance.[2]

To be in the 8% that make the performance shift requires applying SmartScaleTM in a way that capitalizes on the existing Stage of Life priorities – and that requires an executive team that has the characteristics and skills to work collaboratively to successfully execute the SmartScaleTM protocol.

Successful SmartScaling, like all strategies, depends on the execution phase – and successful execution depends on the effectiveness of the executive team.

Successful SmartScaleTM teams consistently demonstrate four core characteristics and four critical skills.  Please Note: This isn’t an all-inclusive list. Additional characteristics and skills are required based on the category, industry, technology, products and services, resources, stage of life, and geography in which the business operates.

Core Characteristics:

  • Clarity 

Great SmartScaleTM teams keep score.

Clarity is as simple as being able to clearly define for the organization the expected outcomes, tactics, actions, or behaviors needed to carry out the strategy.

It’s not enough to identify revenue and profit outcomes.  These need to be linked to the tactics and behaviors required to achieve them.

This definition comes to life in the form of key metrics being visible on a scorecard for organizational and team outcomes. What makes clarity so difficult is knowing the critical few metrics that drive the right outcomes and matter the most to the job the company promises to deliver to its customers.

  • Responsibility

Great SmartScaleTM teams assign ownership.

Responsibility means that each team member owns specific sections of the protocol and delivers performance to the organization.

Accordingly, responsibility waterfalls down the organization from top to bottom so that everybody takes ownership. This establishes strong linkages – individual performer to team to company performance.

  • Accountability

Great SmartScaleTM teams not only hold people to stated commitments, but they help people identify and reach for meaningful performance goals.

Because culture reflects its leadership, leadership must hold themselves accountable to each other for delivering on their commitments. Great SmartScaleTM leaders make the tough and timely decisions necessary to ensure they have the right people in the right positions with the tools to identify and reach for meaningful goals.

Second, great SmartScaleTM teams have cross-functional accountability partners who help keep an eye on potential blind spots, so the entire effort can stay on the course.

  • Vulnerability and Immunity to Change

Great SmartScaleTM teams build high levels of transparency and trust.

Vulnerability is an often-unspoken key to unlocking deeper team connection, a willingness to make topics that are implicit explicit, and ultimately foster a trust-based connection across the organization. Understanding personal and team immunity to change – and working together to overcome those promotes executives focused on building themselves and the people who scale businesses.

Critical Skills:

  • Self-Awareness

Do leadership team members understanding their personal strengths and weaknesses?

Do they exhibit social skills befitting a leader? Are they empathetic, mature and self-controlled?

  • Communication

The ability to communicate information and ideas is a crucial leadership skill.

This includes speaking and writing clearly, using active listening skills, encouraging discussion, building trust, conveying the vision and strategic intent, and asking questions in a manner that is a catalyst for collaboration.

  • Influence

Influence allows leaders to get things done and achieve desirable outcomes.

It centers on being able to present logical, compelling arguments that steer long-range objectives, unleashes inspiration, invites collaboration, and motivates positive behavior.

  • Learning Agility

Successful leaders need to be active learners.

This involves recognizing when new behaviors, skills, or attitudes are needed and accepting responsibility for developing them.

Learning agility involves learning from mistakes, asking insightful questions, being open to feedback, inspiring learning in others and creating a culture of learning throughout the organization.

Once the SmartScaleTM team is formed there needs to be clear and thoughtful governance:

  • Are there effective team processes?
  • What roles are needed to lead and implement the SmartScaleTM Protocol?
  • Who will fill these roles?
  • Who will have authority for decisions?
  • What will the people in charge be chartered to do?
  • How will leaders meet, communicate, manage the information, and interface with operations?
  • Who is the executive sponsor?
  • How does the leadership team get a handle on all of the organizational changes to lead them successfully?

If you want more information, contact us here: hello@scalewerks.co or scroll down and subscribe to our ScaleWerks Mastermind email community and join the conversation.

[1] The Hard Truth About Business Model Innovation, Clayton M. Christensen, Thomas Bartman, and Derek Van Bever
[2] McKinsey Corporate Performance Analysis