Platt Perspective on Business and Technology

Moving past early stage and the challenge of scalability 26: avoiding sclerosis and keeping the organization lean and simple 1

Posted in startups by Timothy Platt on March 29, 2013

This is my twenty sixth installment in a series on building a business for scalability and long-term success (see Startups and Early Stage Businesses, postings 96 and scattered following for Parts 1-25.)

I write a lot in this blog about lean and agile approaches to business organization, and operations and strategy, usually focusing on here-and-now business efficiency and on how lean and agile shape competitive position for the business as it is now (see, for example my series Virtualizing and Outsourcing Infrastructure at Business Strategy and Operations, posting 127 and loosely following.) The alternative in practice is the perhaps slow, but inevitable accretion of organizational structure, processes and understandings as to goals and priorities that do not actively, efficiently support the business and its competitive position in its marketplaces. This negatively impacts upon the business in its here and now scale and form, but it also shuts down capacity to grow and to further scale up with ongoing strength and stability. Businesses that simply ad hoc accumulate headcount and organizational complexity, and operational policy and process as a path to growth become sclerotic and find that they have expanded out into an organizational dead end.

I have at least touched on some of the issues that I would raise here in this posting, in earlier series installments where I have cited lean and agile approaches but more in passing. My goal for this posting is to more explicitly and systematically discuss the relationship between developing and maintaining a lean and agile focus, and building for smooth and straightforward scalability and growth, and expandability that does not just lead into a dead end.

And I start by considering a second, alternative reason why a business might face limits to growth, and even if it is very well organized and run, and managed with a goal of cutting out any dysfunctional or extraneous operations that might in practice serve as unneeded cost centers.

• If a business, by its very nature, serves one specific set of overall needs in a fixed size marketplace, and it comes to dominate that marketplace, in effect saturating any potential room that might be grown into, further growth potential might be very limited and regardless of its approach to scalability and expansion.
• Consider as a working example, a local-marketplace business that would only work locally – not online. Dry cleaning businesses and barbershops come immediately to mind but there are many other possibilities here. A business owner might grow and develop their small town or other locally situated business to be the one barbershop that everyone goes to, or the one dry cleaner left standing in the area that once again everyone goes to who lives in or near that town. But if opening up a branch outlet in another town is not a feasible or desired goal, this market saturation is going to mean further real growth in scale is not feasible, and regardless of how effective and open-ended the approaches followed in reaching this position of local marketplace domination.

I am not writing of that type of scalability limitation scenario here, where success is in effect self-limiting due to fundamental marketplace constraints. I am writing about how approaches to operations and strategy, and to planning and optimization can become such that a business becomes sclerotic – and unable to grow into what otherwise might be available new market share and market space.

I began this series by looking at the role of business models in scalability and come back to that here, and to consideration of how lean and agile, as paths to scalability have to be defined from a dual perspective – looking inwards to the business and its systems, but also outwardly to the marketplaces and communities served. In my bullet pointed example above, expansion to a second town was not an option, so scalability was limited and even curtailed as the one town and its marketplace were fully developed as a source of business activity. If that constraint were to be removed – and a nonlinear scalability approach accepted in making that second town/second marketplace transition, this business could continue to expand and scale up – along a newly defined linear scalability path, until it hit its next limiting constraints and had to change expandability course again. But all of this depends on staying lean and agile in the right ways. And this brings me to the key wording that is central to this posting: “staying lean and agile in the right ways.”

• The precise prioritization and needs-based pattern of structure and operational process that would go into a business as it pursues one linear scalability path will, by definition change as it saturates the capacity of that approach to work and as it has to expand out in a new way if it is to continue to grow.
• Lean and agile are important, but what goes into a business’ effective lean and agile will change. This is crucial, and all too often overlooked and certainly by business leaders and strategists who are caught up in lean and agile business solutions reliably followed up to now, and lulled by the up to now steady effectiveness of their approaches and solutions to date as the business has been growing.
• When lean and agile solutions in place are set in stone and not subject to change or even discussion, they become sclerotic in their own right and limiting to the business and its potential for further real growth.

So if scalability and business expansion form a strategic goal, the basic understanding of what lean and agile, and effectively focused mean for that business has to change in synch with the business’ changing needs and circumstances. A switch to a new linear scalability path is always going to be a switch to a new lean and agile too.

I am going to continue this discussion in a next installment where I will at least begin an outline as to how this type of strategic and operational review and refinement would be carried out. As a part of that I will look at silo partitioning and keeping the business organizationally open and interconnected. Meanwhile, you can find this and related postings at Startups and Early Stage Businesses. You can also find related material at Business Strategy and Operations and at its continuation page: Business Strategy and Operations – 2.

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