Navigating the Unique Challenges of Scaling Up

There are three basic phases of growth: startup, scale-up and grown-up. While each presents unique obstacles and challenges, the scale-up phase can be particularly difficult for many leaders. I’ll examine why scaling up is so challenging in a moment, but first let’s look at each of the three phases.

The Startup Phase

In this phase, your job is to prove you can build something, get customers to buy it and make a profit on those sales. You have to prove enough people care about what you’re doing to keep it sustainable.

This proofing process helps to both refine your initial proposition and take risk off the table. The work of the start-up phase is thus to test an idea and then prove potential risks either aren’t actually risks or are manageable risks.

There’s a particular vibe to the culture of a startup. When your entire organization is fewer than a dozen people, there’s usually little structure, discipline or processes involved. The small team simply pulls together to get done what needs to get done.

The Scale-Up Phase

If the startup phase is about proving things out, the scale-up phase is about making things repeatable at scale. Scaling up requires a different set of skills, because you’re going from, say, 20 to 200 to 2,000 people. In the startup phase, you don’t need many processes in place because everybody communicates via personal relationships. When you’ve grown to an organization of 200 people, it’s quite different.

Social systems get complicated when you add more people, so processes need to be standardized and rules established. You’ve proven your idea works, so you’re now in the business of building the social systems and the processes that will allow for reliable future growth.

The Grown-Up Phase

The grown-up phase is focused on achieving continued growth once you’re big and established. This growth is achieved through the identification of efficiencies in established systems and processes. It’s important in this stage for leadership to monitor and contain the inevitable creep of a bureaucracy.

Growth is slower during the grown-up phase, and making big changes to a mature organization becomes increasingly difficult, largely because stability and predictability are key components of the company.

The Challenges Of The Scale-Up Phase

When scaling up, you’re shedding the nimbleness of the startup phase, but you have not yet achieved the stability of the grown-up phase. You’re establishing structures for predictable growth, but what you gain in reliability, you lose in flexibility and freedom. This phase is full of trade-offs, and a delicate balance must be struck.

While the development of the necessary processes and structures to ensure scaled growth can be difficult, it is often the social-systems aspect of this phase that proves most difficult for leaders. When leading a company through the scale-up phase, your job is to impose restrictions. You can no longer have half a dozen different platforms for communication. People can’t be paid inconsistently. Culture and norms must become standardized throughout the company. You cannot scale effectively without rules in place, but imposing rules on a company that has previously thrived on the freedom of the startup phase is a major threat to the status quo of the existing culture. As a result, there is almost always pushback and resentful feelings from company veterans.

This resentment is usually accompanied by a mismatch of skills from one phase to the next. The people who were a good match for the company when it was a startup are often not the best people to be working for the company when it begins scaling up. This mismatch requires a lot of social adjustment. The longer the company has been in the startup phase, the more difficult that adjustment can be.

A leader in the scale-up phase must ensure they have the right people in the company at the right time, and sometimes, that means exiting people who were there from the start and have made significant contributions to the company’s success. These exits are seldom easy, but the company is changing, and the people need to change with it.

You’re no longer in the process of developing and selling a product or service. Instead, you’re developing and managing the systems that make or deliver the product or service. That’s a whole different skill set and a different lens through which to view the company.

For the craftspeople who have potentially spent years working on the product or service itself, this distancing from the intimacy of craftwork along with the readjustment of the company’s focus as a whole can be jarring. It’s an incongruence that cannot always be overcome, and it often leads to the exiting of veterans — either voluntarily or as a leadership decision.

Addressing The Challenges Of Growth

These challenges can catch the ill-prepared leader off-guard, especially if the leader isn’t aware of what stage their company is moving through. An understanding of each of the growth phases accompanied by an accurate recognition of what phase your company is working its way through is imperative to your leadership, because the phases dictate where you should be focusing your attention, as well as what challenges you should be anticipating.

At the same time, you must acknowledge your own strengths and interests as a leader. The mismatch of skills from one phase to the next applies to leadership just as much as it does to the rest of the organization.

It’s possible you’re an excellent startup CEO but don’t have the skills to navigate the social dynamics of the scale-up phase. It’s just as plausible you’re well-positioned to excel at the change management aspects of scaling up but aren’t able to thrive in the slow-moving rigidity of the grown-up phase. Nobody knows where you can best contribute better than you do.

Your task as a leader then is to know what makes each of these growth phases unique and what phase applies to your organization’s current status, as well as in which phase you are best able to contribute.

Original Source: Forbes