Why Your Company is Not Scaling
The vast majority of companies in America fail to scale. The processes and people who got your company to where it is may become obstacles to get to the next level. Learning how to scale is critical to the future of your company. Let’s discuss 8 reasons companies fail to scale.
1. The CEO Is in the Way
CEOs aren’t aware that by clinging to their existing strengths and habits, they risk creating dysfunctional companies. Leaders who scale do so because they take deliberate steps to confront their shortcomings and become the leaders their organizations need them to be.
2. They Fail to Find the People to Grow
Scaling a startup is like building a tower of Jenga blocks—you need to find the right pieces to make it stable and sturdy. If you're missing a few blocks, your tower is going to come crashing down. Finding the right people is like magic. Once they are in place, you can trust them to build wealth for you without you worrying about it. Change your mind set by delegating responsibilities, not tasks.
3. They Keep Their Original Staff Too Long
Sometimes people have the right skills to get the company off the ground, but they lack the “runway” to 10X growth—or what I like to call “scale in zeroes.” This is always a tough one because often the original staff have become close friends at this point. Still, growth isn’t just about adding new people on, but also recognizing when people have gone as far as they can. Jack Welch said it best: “Hire people with runway.” If you have a company that is running at 1 million and going to 10 million, you need to hire someone who is already at 10 million. Misguided loyalty is a typical trait for companies who fail to scale. Do your key leaders and personnel have the experience and expertise to get your company to the next level? Have they done it before? Do not allow anyone in your organization to devalue the work of others.
4. Misalignment Around the Vision
If your team isn't aligned around your vision, it's like trying to herd cats— You need to get everyone on the same page! Early on, it’s easy for everyone to share a common vision for the company’s purpose. As the company scales and the team grows, this becomes more difficult. If the vision becomes unclear or misaligned with the actions being taken, a company can quickly lose its way and communicate the wrong message both internally and externally. The key to not derailing is to get the right systems in place.
Bring in a seasoned CEO coach. We were able to implement quarterly strategic planning, goal setting, weekly meetings, and daily huddles. Thankfully, the systems worked to get everyone in alignment and within two years, we were able to sell the company to a fortune 500 company at 17 times EBITDA.
5. Failure to Expand the Story
As you grow, so must your company’s Story. Where would Amazon be today if they had stuck with only being an online bookshop? By strategically expanding their story, they opened new opportunities. This doesn’t mean you do anything and everything—but it means you expand in ways which are consistent with your values and customer’s needs.
Expanding your story is like adding toppings to a pizza—it can make it delicious and exciting, or it can turn it into a weird, unappetizing mess. You need to be strategic and thoughtful with what you add.
6. They Don't Kill Failures Fast Enough
It’s okay to experiment and try new things. But when those new things don’t work out, you need to cut your losses and move on. Too often, companies pour too much time, money, and energy into a new product or service which simply fails to connect with customers. They try to force it through when it would be better to let it die.
It all comes down to this:
Test and fail more.
Cut losers quickly.
Scale winners big.
It’s that simple.
7. They Don't Use Systems to Scale
Scaling without systems is like trying to navigate a new city without a GPS. You're going to get lost, frustrated, and probably end up in the wrong part of town. You need to have systems in place, like a GPS guiding you to your destination. The companies who scale best are the same ones who put in strategic systems designed to facilitate growth. From sales playbooks to strategic planning sessions, to HR systems, project planning, CRMs, ERP systems – make sure your systems will support the future growth of your company. Too often, company leadership fails to implement systems that are relevant three years into the future.
8. Train Your People to an Inch of their Lives
Finding and implementing systems with training is a waste of resources and causes companies to implode. Ensure your people know how to use these systems; everyone uses the systems in the same way; and there are written processes and procedures your people can follow. If everyone uses your systems differently, the data becomes almost useless.
Want to learn more. Feel free to reach out me. dboim@dsbconsult.com
