Scaling a business: 5 mistakes companies make during rapid growth
You’re the CEO of a fast-moving business. All the stars are aligned. You’ve defined your core customer, and everyone’s clear on the problem you’re solving for them. Time and effort have gone into creating a sound strategy, and you’ve landed a minimum-viable product.
Now you’re set on scaling up. But you want to do it properly. Most importantly, you want to grow so that your business becomes more efficient over time, not less. Too many businesses scale up and get caught in a growth trap. Revenue grows, but profit turns to zero. If they’re not careful, they’re growing broke.
From my experience scaling up two UK technology service firms and coaching scale-ups, I know the rapid growth challenges you’ll likely face. Now I coach businesses through these common scaling-up errors. So what are they? And how do you overcome them?
Mistake 1: Doing Too Much at Once
Here’s a scenario for you. Let’s see if you recognise it. As CEO, you’re great at innovation. From a Working Genius perspective (our personality evaluation tool), you’re strong at ‘Invention’ and ‘Galvanise’. But there’s no ‘Discernment’ in your profile. So you have a great idea and throw it at your Executive Team. They’ve already agreed on a quarterly plan, including their burning priorities, but it’s week two, and you’ve already thrown in something new. Nothing is removed from their workload. And as a result, nothing gets completed.
We see this business growth mistake all the time. Instead of sticking with three to five OKRs every quarter, there are too many objectives. People get overloaded, and nothing gets done correctly. Quality starts to drop, as does customer satisfaction.
The other thing to remember is that people will always procrastinate on things they don’t know the answer to. So, evaluate whether there’s a hypothesis built into an objective. It may be the trickiest part, but it needs to be tested first. If you treat it like a fact and then realise later that it’s not true, you’ll have wasted too much time and resources on it. If you’re not careful, sunk cost bias kicks in, and you keep going with something that will never succeed – a surefire way to demoralise your team.
Mistake 2: Hiring Too Quickly without Proper Onboarding and Integration
This is one of the worst scaling errors you can make. Recruiting the wrong people is a disaster for a scaling-up business. If it’s only a few people yearly, you probably won’t have any data on how badly recruitment is going. But as soon as you turn on the taps and start hiring at scale, you will need a rock-solid recruitment and onboarding process. Otherwise, you will dilute your team.
First things first. Are you clear about what an A-Player looks like in your business? Create an internal definition and share this with your staff. Agree that you won’t hire anyone who isn’t an A Player or has the potential to be one. Copy the example of Amazon. They have a ‘bar-raiser’ for each job vacancy outside the hiring team. No one is hired unless interviewed and given the green light by this person. They ensure the recruit is better than at least half the team. So they raise the overall bar.
Then there’s onboarding. A fellow business growth coach, Brad Giles, has written a book called ‘Onboarding’ which is well worth a read. One of his heuristics is making time every week to meet with recruits. No matter what other meetings you have, you always give them at least an hour a week to help with any questions or guidance. Too often, people leave at the end of six or twelve months, and they’ve had no time invested in them.
This is the stuff that slips when you’re scaling up fast. I was talking to a Chief People Officer of a highly successful scale-up recently. He said it’s binary in his business. You either succeed or fail. And those that succeed do so without any help. We both stopped to think, how much better would these good people be if they’d had mentoring and guidance? The business could have scaled even quicker.
Mistake 3: Poor Communication and Silos Developing
There’s a classic business growth mistake that comes from copying bigger businesses. As organisations scale up, they think everyone should be in a function. So silos of Marketing, Finance, Sales, HR, etc. start to form. The customer travels through the organisation, interacting with these different functions, and it starts to feel disjointed. And if there are multiple lines of business, it feels like they’re dealing with several different companies.
Silos become tribal. People start thinking their world revolves around them. And the tail starts wagging the dog. Rules are written that make sense to one department but not to anyone else. ‘Them and us’ attitudes infect your teams like a disease, and before you know it, functions start to work in isolation, or worse, against each other. Communication takes a nose-dive.
If your business is still small, you have an advantage. Approach your structure differently. Start with your leadership team – they must know that their loyalty is to each other first. The Executive team should be the number one team. Make clear the game you’re playing, the score and how you celebrate success. Always remember leaders cast a long shadow.
In the rest of the business, grow with multi-disciplinary pods or small teams to deliver value to defined cohorts of customers.
Mistake 4: Lack of Standardised Processes and Consistency
Proper processes will free your business up. Yet too often, organisations that are scaling up quickly fail to see this rapid growth challenge coming down the tracks. The people running the business make things up as they go along. Even though many other fast-growth businesses have faced the same challenges, they don’t know how to create and scale processes. The results are steadily growing inefficiency and chaos.
So what should you do if you hit this problem? Hire people who have the right expertise to help you. When I think about the professional services organisations I’ve coached over the years, they often don’t have good enough project managers. Often these people appear organically but don’t have the skills or tools they need. If you hire someone who’s worked in a 1000-headcount professional business at scale, they will know what processes work. You wouldn’t do a DIY course on YouTube if you needed brain surgery. You’d hire a Brain Surgeon!
I was with a client recently whose business implements CRM and ERP systems. If the sales team sold something today, it wouldn’t be installed for 12 months. 12 months! That’s a massive backlog. They don’t have a good skills mix in the delivery function. Two years ago, when they were smaller, this didn’t matter. Now it’s evident that they’re running it poorly. They need to double their sales this year, and so far, they haven’t delivered anything they sold last year. So they’re going to need 3x of their usual delivery capacity. The chances of them solving their process issues are slim unless they bring in some expertise.
Mistake 5: Focusing Too Much on Sales/Marketing and Not Enough on Operations/Systems
This common scaling-up error occurs in our clients when pre-sales becomes a bottleneck. Initially, they resourced pre-sales from the Ops team, and these people already had a full-time day job. As the business starts to scale up, they need to transition to having full-time pre-sales people. The technical person who’s a salesperson in disguise is a very different beast from a technical person who does a bit of selling.
This is a watershed. If you can overcome this business growth mistake, your sales team will sell things you can deliver, and the customer will believe in your expertise. Without this, scaling up will be very difficult. It’s a significant structural change. Before, you couldn’t afford to have a specialist team. Now you can’t afford not to.
So to recap, the five most common scaling errors that we see are senior leadership trying to do too much, hiring too quickly without a proper onboarding process, developing into silos that are poor at communication, having no standardised processes (so no SOPs), and focusing too much on Sales and not enough on Ops. Strong leadership is paramount to avoid these business growth mistakes. And without a deliberate approach to solving them, your business will unlikely achieve your scaling-up ambitions.
- NAVIGATING AND COMMUNICATING CHANGE
- BUILDING COMPANY CULTURE
- CHOOSING THE RIGHT OPPORTUNITIES
- ORGANISING YOUR A-TEAM