Innovating While Scaling
In the beginning, you sell one product. You crush the MVP, the PMF, the TAM, SAM and SOM, and all the other TLAs (three letter acronyms). And you rejoice in your relentless pursuit of growth.
And grow you do – at least we all hope we do. At some point, you feel you’ve grown sufficiently to call yourself one of those lucky businesses that are “At Scale”!
And that’s usually when you start hearing those frustrating gripes, perhaps from your own employees (“we no longer innovate”), or from industry “experts” (“the platform is feeling stale”). So you say to yourself, “Self, it’s time to start pursuing some new product opportunities.” You come up with half a dozen – and tell the team to execute on the best ones.
Sounds simple enough. But it never is.
Because as a startup scales, more and more pressure is put on its teams to meet the current internal and external demands of scaling. With more features come more bugs to fix. With more systems come more workflows to fix and integrations to support. With more customers come more customer requests and more support tickets. With more employees come more policies and more employee relations issues. With more revenue comes more accounting. And with more scale comes more tech and operational debt to fix.
This is all about running the business – sometimes called “keeping the lights on” – although I don’t like that expression because it grossly undervalues the work that has to be done to scale existing business operations.
Teams are often so busy running the business that when a new opportunity is identified, there are no resources available to help implement the opportunity to change the business. Expecting a couple of people pulled aside from their day job to successfully drive new business opportunities for your company is like hiring one person to do a house remodel.
Business strategists come into play when a business needs to change. Change is a strain on any startup and too much change is a bad thing. It’s important to balance running the business with changing the business.
Like most things in life, you can apply the 80/20 rule to how much resources you might invest in running your business (80%) versus changing your business (20%). The 80/20 rule is always a rule of thumb. Perhaps it's 90/10. And honestly, if you’re happily growing by selling your existing products to your existing customers, don’t ruin a good thing! Make it 100/0. But if you start hearing those frustrating gripes, or your growth starts to slow, it is likely time to invest in innovation. And you'll have to do it while continuing to scale your core business.
With the fast pace of changes in the tech world though, tech startups, in particular, need to be vigilant about keeping up with the changing needs of their customers and the new opportunities that new technology brings with it. For most startups ready to scale operations, changing the business should be around 20% of the overall efforts of the startup.
If you are innovating while scaling, you need business strategists that do these four things well.
They help their teams allocate roughly 20% of their time to supporting new opportunities, leaving 80% of their time to running the business.
They ensure that these 20% of resources are focused on supporting the same set of opportunities, rather than each team implementing their own separate opportunities that help change the business.
They understand that 80% of the company’s resources (in most cases) are needed to run the business, which means they limit change, prioritize just a few new strategic opportunities at a time, and wait to complete or abandon one strategic opportunity before adding a new one for the business to implement.
They align to identify goals for every new opportunity they undertake and ways to measure progress against those goals, and they report on achievement against those goals on a regular basis.