Scalability depends on two main factors: capability and capacity. Before scaling any business, you should ask yourself two questions: does your company have the capacity to scale now? And, will your team, infrastructure and system be able to adapt alongside this scaling? You need to answer “Yes” to both to scale efficiently.
The pandemic hit businesses hard in 2020 and left many companies globally struggling to keep up. 2021 looks to be different, Founders and Investors alike are hopeful, and a lot of businesses have their own plans to scale their businesses efficiently. But the question of efficient scaling remains largely unanswered given the highly variable list of factors that determines its success: product, market, region, talent, capital, and technology.
To consider those factors—and much more—members of HotTopics.ht’s business leaders community debated the aforementioned question during our last Meetup. Below are nine points covered across the Meetups’ debates. Special thanks to Clare Ward, Edward Keelan, Keith Willey, Jody Saunders, Hugo Drayton, Sheetal Walsh and Peter Stojanovic for their moderation.
1- Efficient vs effective scaling
Efficient scaling is to scale your business as fast as possible, using the most appropriate amount of resources and investment. A highly replicable product, for example, is an extremely efficient model of scaling, the group has agreed, and means time and effort are spent on the growth strategies of your product, rather than on personalization, for example. The crux of the matter, our business leaders raised, was at what point in time do you recognize a switch to effective scaling is in order?—i.e. evolving your proposition to its next iteration.
2- Initial assessment
Our business leaders considered that understanding your position in the market is a key point of scaling efficiently. What is your MVP, do you have the right team and what is the competition landscape? All help smooth the initial speed bumps in an efficient scaling program.
3- Cost vs investments
The difference between cost and investment is that the former is in reaction to changes to your efficient scaling program and the latter is a proactive stance to further it along. But it’s not always easy to recognize the difference at the time. Efficient scaling requires the right spend in the right areas, which might mean a very lean course of action for the first few quarters at least. In this way, efficient scaling is not choosing where to invest in your business, it’s being shrewd enough to know where not to…yet.
4- Product Market fit
Some leaders were concerned about whether their products or services fit their market or not. An extension to point 2, don’t scrimp on a product market fit as it will provide crucial data for your scaling proposition. Will your business have customers? Does the product fit customers’ demands—is it a sticky product? Adapting your product to the market is essential to efficiently scale
Other leaders thought that sometimes efficient scaling can be made better via partnerships with a steady and strong partner. No doubt that partnerships can cost money and time but if this partner has resources to share, say access to a larger market, it can be cost effective.. Note well: sharing your IP so early on must not be done lightly, so map out the longer term consequences and how replicable your product really is.
6- Technology investments
Investing in technology can dictate how quickly your product grows, how you market them and how these products can be used. It also can help in achieving faster, easier and cost-efficient scaling. However, our leaders believe that if investing in technology does not directly help scaling it can be argued that it is not as important in this stage.
7- White Space
Creating a new market for your product inevitably makes for a slower scale than evolving a previously made effort. So, if your next venture is simply to find something that can be efficiently scaled, don’t seek out white spaces
Speed can be considered as one of the main factors behind efficient scaling. In our Meetup, our business leaders raised a question about how fast do you want your business to grow? Obviously, efficient scaling can be defined as the fastest time a company can grow whilst still building a strong brand. However, scaling fast without considering your team, infrastructure and your competition can end up a brittle organization. That isn’t efficient scaling.
9- The pandemic: an opportunity or a challenge?
During macro events like the pandemic, is scaling your business a challenge or an opportunity? We heard mixed reviews and, in fact, further debates are needed to consider a proper answer.