ASSET OF VALUE

Scale: Before and beyond technology

Oct 25, 2019, 3:36:47 PM / by Pavlo Phitidis

Scaling is less about technology and more about strategy. Led by strategy, scaling is about business design and discipline. Its measure is found in the yawn between rising turnover and stabilising costs. It is a journey more than a destination. Getting it right reaps great rewards. Getting it wrong yields a life of grind and sweat.

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1. Strategy first

Winning businesses are increasingly specialised around a well-defined customer segment. By this, they seek to understand, quantify and solve a well-defined problem being experienced by this segment and to provide a great experience in the process. It takes time, constant iterations and 1,000 mistakes to get this right, refine it and own it. Contrast this with being product-driven which makes attaining scale unlikely; and trying to be everything to everyone makes scaling impossible.

 

2. Systems next

Success in strategy must be executed by business systems. These are activities in a sequence that can be measured and drive a consistent, predictable outcome. Business systems also stretch across all functions and must integrate and orchestrate to deliver the customer experience defined in the strategy. Much like the organs in your body, each organ is expert in its function, but all work together sending data to the brain which controls your body, life and wellbeing. Scale is holistic not isolated to one or two functions. Investing and building an operational, fulfilment foundation without scaling lead generation and conversion capabilities is a futile exercise. A great heart with weak lungs prevents the body’s ability to walk, never mind run.

 

3.People follow

With systems in place, the right people doing the right things at the right time becomes possible. Instead of ‘jobs’, create system operator opportunities. It allows for more success in recruitment, accelerates capacitation of new staff and when people do what they have aptitude to do and succeed, they flourish and grow, helping execute your strategy.

 

4.Technology tightens

With a deep understanding of your business, measured performance and the right team, opportunities to digitise, mechanise and automate become feasible and viable. A good team recognises their role and understands their future; to get there, they themselves need to move beyond compliance, processing, repetitive work as well as gain the advantage of technologies to increase their performance in the systems they operate.

 

5. The yawn emerges

A scaled design resulting from the sequence above will see accelerated revenue growth with stabilising operating overheads. The result of the ‘yawning gap’ translates into free cash enabling self-funded growth. the moment the yawn begins to tighten, it’s a clear indicator that things have changed, either in the market or in the capacity of the business.

 

6. Repeat

Remedying the capacity or strategy is found through repeating steps 1-5. Scale is not a destination; it is a journey and the steps to achieve it remain the steps that guide its repetition.

 

7. Reap

A scaled business, generating a wide yawn will attract fantastic valuations. It makes a good time to exit should you not want to repeat the ‘refresh’ of this scaling system. The worse possible outcome is that in the face of a tightening yawn, complacency sets in because of comfort and the entire exercise of creating a scalable business is never rewarded with a handsome exit.

We work with established business to Sweat out a relevant, future oriented strategy; Scale a business to deliver on it and capture and own its chosen area of specialisation; and support the Sell, to lockdown and secure the reward for success in scaling. Any business can do it; do you want to do it? Work with Aurik and we’ll help you get there.

 

 

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Topics: Scale, Asset of Value, Business Owner, Sweat Scale $ell, Next Level

Pavlo Phitidis

Written by Pavlo Phitidis

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