There is a lot of conflicting advice when it comes to starting and scaling a business.  For many decades the mantra was to scale quickly, to become the largest player in your niche, to gain as much market share as possible to crowd out other entrants.  As news from Macy's, Sears and others prove, size alone isn't a winning proposition any more.  More importantly, scale can be achieved virtually, as asset-less companies are demonstrating.  What innovators and entrepreneurs need to know is how to create a company that is "big enough" to matter but not so big or complex that size and bureaucracy become a burden, or remove the ability to act with agility and speed.

A Steve Jobs Story

Everybody has a favorite Steve Jobs story.  Mine is almost counter-intuitive for an innovator who seeks growth.  Upon returning to Apple after years in the wilderness, Jobs immediately slashed the product line, deciding to focus on only four key products.  Apple's breadth and portfolio meant that it could not invest deeply in any one product.  But by shrinking the product portfolio he was able to focus Apple and make it more nimble, and open up resources to invest in the eventual "i" products.

However, there is a countervailing problem that many entrepreneurs face - they aren't quite "big enough" to get attention or don't have the credibility or "heft" necessary for customers or consumers to believe in them.  These firms may be agile, and even profitable, but they lack enough depth, size and customer awareness to gain more profitability and scale.  These firms are almost too small to matter, whereas Apple before Jobs was too bloated and too unfocused.

The Goldilocks scenario

I'm going to stipulate that there is a Goldilocks scenario - not too big, not too small, but just right, for any company.  This magical middle isn't measured on revenue or headcount however but by three factors:  customer awareness, agility and business model.  Far too often entrepreneurs are encouraged to scale rapidly, and they react by adding headcount rather than finding ways to scale through technology, through networks or partners or through other means.  The act of scaling often throws the culture into a tailspin, codifies ineffective processes and introduces people who aren't aligned to the original intent or purpose of the company.  A lot can go wrong when you scale.  Most of the stories we are told are about the successes, not the struggles or failures, and the decisions you make as you scale often lock in solutions and remove options.

Instead, let me recommend an alternative.  Grow, by all means, but grow as quickly but as intelligently as you can.  The period of rapid growth is fraught with challenges, but none as important as defining the business model, getting the right people who believe in the purpose of the company on board while remaining agile.  Getting too big too quickly or by means of simply hiring more people isn't the answer.  Getting bigger by stuffing the physical or virtual aisles with more stuff isn't the answer, as anyone who has been in a Macy's recently can tell you.  More products or more people frequently aren't the right answer - having the right product, at the right time, to meet an emerging customer need without making customers wade through thousands of options or even make choices is what will be attractive.

Getting bigger while respecting and evolving your business model, in line with your purpose, leveraging technology, platforms and ecosystems to remain flexible and nimble is perhaps the best way to grow, but that means having the goal in mind throughout the growth process rather than simply throwing bodies at the situation hoping that they can "figure it out".  Rather, figure it out ahead of time, and grow purposefully and intelligently while sustaining your purpose and values and building the business model that will help you thrive, keep you profitable and helping you retain agility in a very turbulent market.

Published on: Nov 15, 2018