The Science Behind Setting Up for Scale
To a growing business leader, scaling is both an exciting prospect and a formidable challenge. Do you have enough resources to sustain the momentum? Are you aware of the problems that might limit growth?
- Defines scalability, including its differences from growth;
- Identifies four factors you need to scale properly; and
- Mentions the challenges and limitations businesses face when scaling.
Only a few businesses make it to the fifth year. Partnering with a chief marketing expert gives you the best chance of thriving. Read below to learn more.
What Is Scalability?
Most people, including marketers, use the terms “growth” and “scalability” interchangeably. Although they are related, their meanings differ.
- Growth refers to a general increase in business metrics such as revenue, customers, and employees. It often implies a proportional increase in operating costs and resources as well.
- Scalability is when a company increases output and results exponentially without significantly increasing costs and resources. It enables expansion without losing quality or control.
Imagine a restaurant that gains popularity for its excellent food and service. As demand rises, the owner expands by opening two new locations.
At first, growth is strong. Revenue and customers increase at each new restaurant. Soon, problems emerge. The food quality is inconsistent. Both locations struggle with handling inventory, leading to increasing food costs.
Simple growth happens with boosted revenue and locations. However, the end result is proportionally higher costs and lower quality. To solve this, the business should scale to use its resources optimally.
It can centralize the inventory system, order food in bulk, or standardize food quality and presentation.
The Uber Case Study
A popular brand that successfully scaled its operations is Uber. When ridesharing became popular, the company expanded into new cities. It also onboarded more drivers and riders. However, because it was heavily focused on revenue, it encountered several issues:
- Long wait time as rider demand outpaced driver supply
- Inconsistent ride experiences because of the lack of quality standards for drivers
- Difficulty expanding to new cities while maintaining corporate standards and culture
- Increasing customer acquisition costs meant Uber needed promotional deals to provide incentives to frustrated riders
Uber optimized its operational model to scale better. It introduced reforms such as the following:
- Leveraging data and artificial intelligence (AI) to predict rider demand and dynamically match it to driver supply
- Implementing rating systems and training programs to ensure service quality across regions
- Building modular tech infrastructure and automated workflows so new city launches were seamless
- Carefully analyzing marketing data to identify the most effective acquisition channels
Uber still experiences hiccups. For example, it should learn to adapt to newer federal regulations and requirements. However, applying the changes mentioned above means that riders can now experience the same standard of care wherever Uber exists.
Key Infrastructure and Strategic Changes for Scalability
Even an obviously necessary goal, such as scaling, can fail when executed poorly. For instance, a software startup lands a huge new client that will triple the user base. Excited by the growth potential, it hastily adds staff, scales up the cloud servers, and deploys an expensive enterprise software platform to handle the user surge.
It soon discovers that much of the new cloud capacity goes unused because of an inefficient system architecture. Onboarding new engineers is slow because the company lacks training programs and documentation. The complex new software requires long development cycles for modifications.
The result is high costs without improved scalability.
Businesses that need more direction and support for their scalability often bring in a fractional marketing expert. This person then designs a comprehensive, flexible program based on the following factors:
- Scalable technology
- Adaptable processes
- Clear organizational structure and roles
- Smart data tracking
Let us discuss each point below.
1. Implement Scalable Technology
One of the persistent reasons for poor scalability is poor IT/OT integration. In particular, information technology (IT) cannot sync with the present operational technology (OT). This can occur because the latter is still a legacy system. If not, the technology is too proprietary to work with broader innovations.
This type of fragmentation introduces several problems in the long run:
- Higher maintenance costs as the business needs to maintain both
- Inability to fully maximize the potential and features of both systems
- Cluttered data that presents a limited view of the operation’s performance
- Security risks
With an outside-in view of systems and data flows, fractional CROs objectively assess current platforms. They then build business cases for migrating to more scalable solutions. They are also adept at vetting vendors, overseeing implementations, and ensuring new tech integrates seamlessly across the business.
Last, they keep abreast of new trends and innovations that align with the company’s goals and direction.
2. Build Adaptable Processes
Bureaucracy and outdated workflow prevent businesses from flexing their capacity to meet growing demand. For example, a software company wanting to scale growth through new product launches has a development process that moves sequentially through departments:
Engineering → Marketing → Sales → Executives
Each has to fully review and approve product specifications before passing them on to the next. In turn, new products take months to launch. By the time they hit the market, the products are often outdated or outpaced by competitors.
The long bureaucratic approval process also hinders the company’s ability to rapidly iterate and launch new products based on changing customer needs and market feedback.
Fractional CROs specialize in meticulous process mapping to eliminate bottlenecks and redundancy. They streamline processes for maximum efficiency and scalability.
They also document standardized protocols to maintain branding and company culture. If the company expands to different locations, the offices and teams can reliably duplicate the same workflow.
Based on the example above, an FCRO might implement the following:
- Concurrent reviews across departments
- Standardized hand-off protocols
- Executive sign-offs earlier in the cycle
- Reusable templates for product requirement documents
3. Clarify Organizational Structure and Roles
As businesses scale, responsibilities blur without clear ownership. For instance, regional marketing teams can take on branding while corporate marketing handles messaging. This situation often contributes to a lack of accountability and fragmentation.
A transparent organizational structure is critical to coordinating large, distributed teams and avoiding duplication or gaps. This means defining distinct roles at the regional and corporate levels.
Consider Starbucks. Regional store managers oversee baristas and the in-store customer experience. Meanwhile, the global corporate headquarters guides real estate selection, product development, and brand standards.
Organizing a cluttered company is easier said than done, though. Thus, hiring fractional CROs simplifies the task. One of their primary roles is to advise executives on realigning teams and assignments to support growth.
For example, they assess that
- Engineering needs dedicated team leads for each product vertical as offerings expand,
- Regional advertising should function under a centralized global marketing system, and
- HR reps must work both locally and centrally to support hiring demands.
Fractional CROs also assess needed changes to who reports to whom, how decisions are made, and what rules and processes are in place as the company grows. For instance, FCROs might help establish a management committee for regional offices. They are responsible for deciding geographical issues.
4. Install Smart Data Tracking
Scaling brings an onslaught of data. Without systems to harness this information, businesses can easily miss key signals. For example, tracking inventory levels across distribution centers can provide early warning of shortages.
Because growth brings more variables, comprehensive data helps identify optimal paths forward. This is especially true for predictive forecasting and dynamic pricing.
Fractional CROs are skilled at maximizing data and doing analytics to
- Help companies pinpoint vital metrics to track for scaling challenges or opportunities,
- Compare their scalability against growth goals and address issues proactively,
- Manage the data influx and enable advanced analytics, and
- Provide hands-on guidance to develop business intelligence capabilities.
Scaling a business brings big opportunities but also inevitable growing pains. As operations and data expand exponentially, complexity swells. Often, companies struggle to maintain standards across more employees and locations. Training large, distributed teams is challenging as responsibilities shift.
The key is taking a scientific approach to building scalable systems and strategies from the outset. With experienced fractional CROs, leadership teams can make scaling a reality.
Do you need one for your business? Digital Authority Partners (DAP) is an award-winning fractional CRO agency. We bring expertise and perspective to transform companies for growth. Specifically, we lay the right foundations so that you can thrive at any size.
Contact us today to schedule a free consultation.
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