Question

What are the processes involved in getting to management scale?

Answer 1

1. Commit to grow

First, and perhaps most obviously, entrepreneurs need to want their business to grow. According to the report, many early-stage ventures lack the will and ambition to scale. This is fine, of course, if their dreams don't stretch beyond building a business to support a certain lifestyle, but more ambitious entrepreneurs need to create realistic growth targets and develop plans and concrete actions of how growth will be achieved.

2. Build broad management skillset

As Chobani founder Hamdi Ulukaya recently acknowledged by giving away a 10 percent stake in his business to his employees, it takes more than a founder to build a successful business. And as this report makes clear, though founders have a given expertise, growth requires an expanded skillset. As such, entrepreneurs are advised to build a team with broad and complementary skills. The report reveals a recent trend of growing businesses hiring people with MBA degrees (a qualification that used to have the reputation of characterizing ‘big company types’) because of the general management skills they can bring. It also suggests accountants, bankers or experienced executives could also provide useful mentorship to scale ups.

3. Build collaborations

The growth mindset needs to extend to partnerships with people and organizations outside the business. Entrepreneurs should build a network of partners, such as service providers, sales channel partners, suppliers and customers (who may, for example, be willing to help with market information). Many of these engagements could take the form of formal alliances between the entrepreneurial firms and established companies.

4. Establish standardized processes

Flexibility can be the enemy of growth. It can be hard to admit, but “managing the operations by hands-on involvement of founders will eventually limit growth”. If a start-up is going to scale, managers need to implement standardized and repeatable processes, with proper delegation. This may require investments in purchasing support systems including IT and training personnel accordingly, as well as delegation from the founder and senior management.

5. Identify core competence

Without knowing your core competence it’s difficult to create strategies. Many start-ups have evolved by doing certain things without articulating their core competence. The report recommends that entrepreneurs need to identify and emphasize a company’s core competencies – the unique knowledge that underlies its capability to compete – in order to invest in focused growth.

6. Articulate competitive strength

Many entrepreneurs fail to look at their business through the eyes of their customers, with research suggesting that some founders build a distorted self-perception based on their own definition of the quality of their interactions with the customer. As such, the report recommends that entrepreneurs aspiring to grow their company need to “develop a clear articulation of their company’s competitive strength in the eyes of the customers, and how this strength is related to internal processes and knowledge.