Step 2: Scale without sacrificing speed

fm-blog-9-02-14In June, I wrote about a conference I attended in the US with a dozen founder-CEOs whose growing companies had all been purchased by the same corporate parent. The purpose was to discuss how their new owner could help these CEOs as their companies scaled.

One CEO wrapped up by saying, “As a tiny company operating in a vast ecosystem, you have only one real competitive advantage: speed. When we start a dialogue with a customer, we know deep in our hearts we can get them exactly what they want, tailored to their specifications, faster than any of the big boys. When the scale of the corporate buyer helps speed us up, that’s a good thing. When it doesn’t slow us down, that’s also a good thing. But when your ‘value added’ slows us, that’s the kiss of death.”

I love this. It is a simple lens insurgents can use as they scale. The critical question becomes: As we add new organizational elements, are we retaining our speed or are we slowing down? Within this context, here are four things we’ve learned about how to scale without sacrificing speed, the second step of the Journey North:

  1. Define speed as one of your most important strategic assets. As we’ve noted, speed is one of the very few advantages a start-up enjoys relative to bigger players. Using it as a lens for making organizational decisions can help defeat what we call the growth paradox: Growth creates complexity, and complexity is the silent killer of growth. Sadly, we find that most companies spend very little time vetting decisions based on whether they add complexity or reduce speed.I am intentionally contrasting speed with complexity in this context because “simplicity vs. complexity” misses the point. You’re not seeking simplicity as an end in itself—you are striving to preserve speed. A large corporation often will default to adding “advanced” processes when an analysis shows that adding X or Y will make Z slightly better. But if the lens you use is speed vs. complexity, the question becomes: Will the added complexity of adding X or Y slow us down—and what is the cost of that reduced speed?
  2. Empower your “kings” and educate the “court” in their role as subjects. We introduced the notion of kings in Step 1 of the Journey North. We defined the kings as those most clearly accountable for delivering your products or services to your customer. We argued that maintaining the insurgency required asking them to co-create the strategy by translating it into “non-negotiables” that guide frontline behaviors and activities. Defining the kings also helps you make organizational decisions. These crucial employees should always be supported by those we call the court—supply-chain specialists, marketing teams, etc. The court’s role is also vitally important, but its agenda is always subordinate to and shaped by the kings’ agenda. Those employees whose role has no direct link to serving customers or creating value we refer to as “the rest.” To scale without sacrificing speed, all organizational decisions should a) empower the kings to better serve customers, b) define the court or improve its ability to support the kings, c) help to reduce the rest on a relative basis as the company grows.
  3. Define how best to scale and abandon the simple model at your peril. There has been a significant amount of work done on the issue of how best to scale your company, but what we’ve learned in working with companies on the Journey North is that it pays to scale simply. Consider two basic models. In the first, the central organization gets increasingly bigger and more productive as the company grows. As the center expands, current kings become more productive,and you can always add more kings to increase the pace of growth. Most technology companies, for instance, can grow by adding more engineers and developers to churn out more products or services. The second model, by contrast, expands via replicable units outside the center—a network of branches or stores, for instance. The kings lead these units and the company grows both by supporting their efforts to produce more unit volume and by adding more kings.We have learned that leaders need to be very clear on this relatively simple question about how to scale because it helps them avoid organizational complexity during rapid scaling. The question becomes: Is your goal to scale via a central engine of growth with limited power in the colonies or is it best to grow with a small center that exerts light-touch control over a large network of branches or stores? We understand that these two simple models will get more complex over time. The central model will eventually require establishing some local offices and the branch model will very likely want to centralize some important functions. But the point is this: Don’t just add these things because it seems more “advanced” to have them as you scale or because they might be “nice to have.” Add them because they enhance speed, make your kings more productive or make it easier to find more kings.
  4. Maintain the focus on the team and teaming. The three lessons above are all about clarifying who is accountable for what as you grow. Each is a call for simplicity. But the final lesson is a cautionary one: Be careful that all this focus on individual accountability doesn’t discourage teaming. One of the current myths about large multinationals is that good organizational design entails “single-point” accountability, which leaves the individual free to “get on with it.” This is almost never the right answer. The best organizations focus on building teams to gang-tackle problems. They enforce a culture than fosters teaming and celebrates actions that involve more than one player. We use the terms kings and court not to underscore the primacy of the kings but to emphasize that it is a well-focused team that best supports the customer.Notwithstanding our call for simplicity, we also want to stir a little chaos into the mix. Insurgency demands that everyone is willing to do what it takes, anytime, anywhere—even if it produces a little chaos. This discourages “trapped resources,” where people are forever locked in one area of the business, regardless of new priorities. The magical part about chaos is that it prevents the cement from hardening around an overly complex model. It allows the organization to react “out of character” and rally around the right solution if the customer demands it. Insurgency is a team sport.

These four lessons encourage insurgents to use the lens of speed to help shape the organization and define accountabilities as they grow. Simply stated, don’t just add new functions and accountabilities without asking four crucial questions: Do these changes help us move faster (lesson 1)? Do they help empower our kings or clarify the role of the court (lesson 2)? Do they accelerate our basic scaling model (lesson 3)? And do they encourage teaming and allow for a bit of chaos (lesson 4)?

Learn more about The Journey North and its steps:

This entry was posted in The Journey North by James Allen. Bookmark the permalink.

About James Allen

James Allen is a senior partner in Bain & Company's London office and recognized as a leading expert in developing global corporate and business unit strategy. He is co-head of Bain’s Global Strategy practice and a member of Bain & Company's European Consumer Products practice. He is co-author, with Chris Zook, of Repeatability (HBR Press, March 2012) and Profit from the Core (HBR Press, 2001 and 2010).

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s