Playing one level up – Being ready for scale

Start-ups are often proudly scrappy. The founders and early employees embrace ambiguity and the prospect of diving into varied problems and opportunities while seeking new experiences with an entrepreneurial mindset. They solve problems quickly and put in just enough processes and tech to keep things moving. Mike Cannon-Brookes of Atlassian famously recounted taking calls from customers and thinking about whether he was the accounts payable or accounts receivable persona.

An early-stage start-up focuses on its product and its customer (rightly so). What matters is Customer Acquisition Cost, Churn Rate, Lifetime Value, Daily/Monthly Active users, Gross Margin and Burn Rate. Typically, this means all available engineering effort goes into building a scalable product that customers love. This small business entrepreneurial mindset is critical to proving a market and attracting investors before angel funding dries up.

If we use the analogy of a human, then these would be the childhood to pre-teen years. We grow physically and mentally. We begin learning the basics of feeding and bathing, then on to all sorts of skills like how to fit in, communicate, collaborate. We try things, fail, bleed a little, learn and move on. The world is our oyster. 

Then we hit our teens – acne, puberty, growing pains, social hierarchy; things physically and mentally seem immediately more difficult. 

In a business sense, the founders find that communication is becoming more complex. People have become teams, and each team has had the autonomy to 'make it work'. The processes and bespoke disconnected point solutions developed over time begin to get in the way of doing business. For example, sales and Marketing are struggling to work together efficiently, HR needs better tools to ensure compliance, culture and employee value, and Finance needs robust tools to satisfy the reporting needs of investors and possibly regulators.

What was once our strength, a small, scrappy and agile team, is coming apart. Often we don't see it coming, then that realisation slaps you in the face quicker than an Oscars nominee can rush the stage. It's also likely that this realisation lands when you can least afford it. Those investors are expecting scale now.

What's been built is a product that can scale to meet demand, supported by business tools and processes that can't scale with it. To borrow Marshall Goldsmith's book title, "What got you here won't get you there".

As I tend to do, I penned this idea on a napkin in a Sydney bar earlier this month while discussing the concept with a new acquaintance. In the journey from Start-up to Unicorn, I called this adolescent phase 'grow-up'. So here's a slightly neater representation of that idea.

But how do we get through this phase quickly and enable the business to scale with the product? How do we avoid getting our internal engineering teams distracted with internal issues and remaining focused on the product? 

I think the key is to recognise that complexity is inevitable, and those who want to scale fast need to get ahead of it. The sooner we recognise and plan to solve these problems in the journey, the cheaper, quicker and easier they'll be to solve; and importantly, the faster you scale the business.

Nigel Dalton, a social scientist in the Digital Transformation and Operations Team at Thoughtworks, summed it up nicely in the latest episode of Platform Diaries. "Play one level above where you are. If you're 15 person company, play like you're 150. If you're heading north of 100 because you've been venture funded and you're on scale-up and profitability, think like a 500 person company, think like a grown-up! Think about customer management, think about payments, think about job descriptions and strategy like a grown-up".

So what does that look like? 

Suppose you're planning for this in the early stages of the business. In that case, it's understanding the milestones that would trigger investment in scalable platform solutions so we proactively manage the problem and sail through adolescence. Proactively play one level up.

If we're already adolescents and feeling the growing pains, then it's taking the time to analyse the business value streams, pain points, processes, and systems, understanding our preferred target operating model and identifying platforms that can unlock scale. Building a sensible phased roadmap that considers the implementation and running costs, change management and governance required to be successful and then pressing go.

Shameless plug – Leveraging platforms to enable scale is my jam. If I can help guide you early on to plan for scale or pull you out of adolescent pain by helping you to build a considered platform roadmap, I'd love to help! Check out my services page for more info.