There are many variables that have to be factored in while getting the formula right for scaling up.
There are two key aspects that prove to be the biggest challenge for any business. These are customer acquisition, and scaling your business profitably.
Acquiring new customers is tough and making customer acquisition predictable often seems like an insurmountable problem. We typically search for a formula that is working that we can just rinse, repeat and multiply in order to grow our business. In reality, this is more challenging than it sounds. Every business is unique and has a unique formula for success. There are many variables that have to be factored in while getting the formula right for scaling up.
Here are some of the key questions to consider - have we clearly defined the purpose of our organisation? Do we have the right people? Are our processes streamlined? Do we have the right marketing plan and budgets? Are we operationally efficient? Do we have the right culture in the organisation? The list is endless.
Peter Drucker said, "Culture eats strategy for breakfast". It doesn't matter how brilliant your idea is or how beautifully crafted your marketing plan is. You could have all this in place, have the capital and have everything seemingly figured out but if you don't have the right people and the right environment in your organisation then there is no way your strategy can succeed. Among all the factors - listed and unlisted - I feel that getting the team dynamics right is the most critical. A good idea may work in the short run but may not sustain in the long run without the right team.
A few years ago, I ventured into studying McGregor’s Theory X and Theory Y. Simply put, there are two types of managing styles. The Theory X style states that most people hate work, avoid responsibility, need to be led, have little ability to solve problems, have to be monitored and controlled to get results.
The Theory Y style believes that work can be enjoyable, most people accept a reasonable level of responsibility, people have strong goals for themselves, they are good problem solvers, they don't need constant policing, they can work independently and show results.
Scaling up has to do a lot with the mindset of the business owner too. It all boils down to what the leader/business owner/manager believes about his people. You may be familiar with the concept of ‘the self-fulfilling prophecy’. Let me illustrate this point. If the leader (Theory X leader or manager) believes that his employee does not have the ability to solve problems, he will always disregard the solutions his employee proposes. Soon the employee will stick to doing just his job and not offer any solutions to avoid being rejected again. After some time, the leader will think that his assessment about the employee was right and no good solutions are coming forth. The leader will then stick to dictating his solutions and remain under the assumption that he is the one who knows it all and can do it all.
Isn't this scenario far too familiar? This holds true especially in small businesses, where the leader/business owner of the organisation is driving everything and soon feels fairly overwhelmed with the amount of work he/she has to do leading to frequent breakdowns in the processes, friction within the team that eventually leads to poor outcomes for everyone involved.
You may wonder, why is the understating of the above concept important. If we want to scale our business, we must crystallise our own mindset and have belief in our teams for them to perform exceptionally. As they say, you don't build a business, you build people and then people build the business. Any business that is thinking about scale must ensure that their teams are well aligned and poised to handle growth.
I have experimented by consciously practising both the above theories with different teams. I realised that both the theories can bring results. However, in my experience, the practice of theory X is for short-term growth and leads to frequent breakdowns, while the practice of theory Y can result in sustained growth because the whole team is involved. Theory Y is the route to building self-organizing, self-sustaining teams within the organisation. It facilitates more brains working at a time than only one brain controlling all aspects. Under Theory Y the management's primary job is to align the teams (hearts and minds) in the right direction. All they need to do is - set intent, set boundaries/framework and seek to buy in.
Focus on common goals that you can work towards together as a team. Create a framework within which the team has autonomy to take decisions, contribute and perform.
This requires a great amount of transparency to be built in within the system. The management should be comfortable to push data in front of people and make it very transparent. Data enables decision making. A transparent environment gives access to all types of information needed to take decisions.
For e.g. an MIS report or a P&L report should be shared regularly so that people are clear about the costs and revenues booked. Abolish individual incentives and focus on team incentives which can be a percentage of profits earned. Collectively arrive at a growth plan for the business where the team sets the targets to be achieved while taking complete ownership for the same. All these factors will ensure buy-in for the decisions to be taken, tasks to be performed, and the outcomes.
There are no leaders, there are many role holders and the roles are fluid and keep changing depending on the job that needs to be addressed at that time. Everybody is equipped to making decisions that are for the betterment of the organisation. Team players follow simple guidelines while taking decisions, they take into consideration three broad aspects:
1) Seek advice/consent from people who will be directly impacted by this decision
2) Is it good for the customer/company/employees?
3) Make sure there are no objections on principle i.e. unethical practices, etc
The culture of the organisation is now built of the strength of the understanding of these frameworks. Each team member is the core custodian of the organisation's culture now.
Their own progress is directly linked to the organisation's progress and it is in their best interest to make sure that they deliver to the fullest of their abilities. They feel like owners and behave like owners too. When the team takes ownership then catering to customers is easy. That is what will lead to scale. Teams will work towards internal efficiency making sure costs are in control, improved customer service will drive sales, focus on improving revenue month on month and year on year will become a team decision and not something that is thrust upon by the management. The management's role is to build people and people will build and scale the business.
Reiterating what’s mentioned earlier, there are many other factors to scaling our business but having a self-organizing and self-sustaining team is one of the key factors. As a business owner, if my business entirely depends on me and my absence affects the growth of the business then I have built a very poor business model. My business should grow in my absence, without me being used as a processing/ filtering unit for all decisions to be taken, for all firefighting to be done, etc. I should feel liberated enough to take long vacations and use my time to work as a mentor or a coach for the team. The team is the hero not me. The team is winning, and we are growing together.
(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)