I was having lunch with a friend today, and we were discussing how does someone know when a person is scaling or not. Who will scale as the company grow and what stops someone from scaling further?
Some companies have early members scaling beautifully as the organization grows, while some don’t. A lot of smooth scaling happens typically when the company is growing organically and the growth rate is relatively modest (< 50% YoY). When a company is growing > 50% YoY, and in some cases, doubling or more, it becomes incredibly difficult for people to keep up with the scale of the company, as humans grow linearly, yet companies grow exponentially.
Below are a few questions to ask yourself to check if you are scaling with the growth needed and some tips and strategies to continue on the fast growth trajectory.
1. Am I “going horizontal?”
I came across the concept of “Going Horizontal” during 10xCEO program and we discussed extensively on how to make sure the executive team is continuing to scale at the right capacity level for the growth needs of the company.
The team internally might already be “over capacity” if the company’s growth rate is modest and the team is experienced. But if the needs for the leadership capacity emerging from growth out weigh the current capacity, then it will hurt the growth rate and the potential upside of the company as long as the leadership team is not fully built to handle the needs.
I first learned the VPC Framework (VPC: Value-Price-Cost) back in 2006 and the simplicity of the framework made an impression on me. I still revisit a few times a year to think about where our company is in the position within the framework and how we are investing our resources.
The concept is quite simple. Let’s start with the definition:
Value: This is the value your offering is creating and delivering to customers.
Price: This is the price you charge and customers pay for to acquire or use your offering.
Cost: This is the cost of creating and delivering your offering to the customer.
The differences between these elements create the benefits:
As an organization reaches certain scale, it is inevitable, at least due to the current limitation set by human interaction mechanisms (e.g. verbal communication, synchronous meetings, groups, hierarchies, physically independent) that there is a certain level of structure that needs to be put in place to manage the organization.
There is a few frameworks that can be useful when scaling the leadership. It’s local applications of the general management frameworks, so let’s explore how they can be relevant to scaling leadership.
1. Convergence <> Divergence framework
This framework demonstrates how to navigate within the horizontal layer (x-axis) of management.
As your organization scales, one thing you constantly run into is the overall increase in diversity within the organization. The proportion of diversity may increase or decrease, but the absolute number of diverse entity (in this case, employees) will simply increase as your headcount grows.
After managing different teams of various background and scale over the years, I’ve always thought the question “what is your leadership style?” is almost a trick question. An executive from another company once shared with me a framework he learned at one of the leadership classes he took at Harvard.
It seems like the original version of Situational Leadership is a bit more complex, but the simplified version he shared made more sense to me and felt more applicable to everyday managers.
When I was young, I’ve fantasized about the Wall Street and its masculine bossy cultures. I’m not sure if I admired it, but it was fun to watch in the movies and I felt the catharsis of running a fast-paced organization full of workers doing homogeneous jobs, with the boss being the absolute best at it. Like those Chinese martial art movies where the teacher is the best martial artist in the country.
It became clear to me this was not always the case. In reality, the junior investment bankers stayed up late, crunched numbers, done researches and wrote reports, while their bosses went out to grab drinks and have fun. When the juniors got promoted, they too became like their bosses, reaping on high salary and bonuses while getting the new blood to serve them well. Deep inside, I’ve always felt this wasn’t really the kind of leader I respected nor wanted to become.
When I worked for a tech company back in my early 20s, our team’s manager was an eccentric guy. He joked a lot, sounded silly from time to time, didn’t seem that intense or focused on work, felt like he was laid back most of the time.