How to perfectly scale your idea
What does ‘scale’ mean to you?
The other day, I picked up an old book called Scaling up Excellence by Hayagreeva Rao and Robert Sutton. It includes a story about the growth of Starbucks. CEO Howard Shultz laments about the state of the chain of coffee shops he had founded – by scaling from 1,000 to 13,000 stores, the company had watered down the Starbucks experience. The best parts of an intimate neighbourhood coffee shop, including the aroma of roasting coffee, had been literally filtered out.
The tension of retaining smallness within bigness is the heart of every great company.
As we feel the strains of giantism of many systems – health, education, food, tech, banking – grown out of control, it’s an important time to be rethinking scale.
Scales are how we frame size and space in our minds.
I’m obsessed with how spaces make us feel, which means I think a lot about scale. Scale, as a concept, is the size of something in comparison to what is considered ‘average.’
Scale is an idea used to frame things throughout our lives:
· Children’s reading books are graded on difficulty scales
· Films and programs are rated on a scale
· Salaries in companies often have different pay scales
We even think about problems through the lens of scale. “I’ve got this problem but it’s not on the scale of what you’re experiencing.”
When my students ask, “What’s the best way to scale our start-up?” they generally refer to the infamous hockey stick growth that every entrepreneur supposedly wants.
There is a widespread notion that scale = growth = progress.
Interestingly, the etymology of scale is tied to an upward movement – it comes from the Latin scala meaning “ladder or flight of stairs.” Things get better as they get bigger. But scaling is messy and complex.
Here’s what I’ve been thinking: do ideas (and companies) have a perfect state of scale?
If the organisation becomes smaller or larger than its equilibrium, then it loses its potency, or its purpose changes. The idea gets watered down, just like Starbucks.
Anatomy, Psychology, and Physiology of scaling
When leaders of fast-growing organizations think of scale, they often focus on structural elements: more people, more suppliers, bigger offices, more capital, and so on. According to Professors Rao and Sutton, this is the anatomy side of scale.
But there are two other sides of scale that we often don’t pay enough attention to:
· Physiology: the processes that make something run well.
· Psychology: the culture, values, and promise.
To successfully scale and not get too big (or stay too small), we must think about how all three – anatomy, psychology, and physiology – stay in balance over the long term.
Anatomy scaling errors are often the easiest to spot. Take org charts.
When companies scale, how people are organized can become too hierarchical, flat, or complicated. Around seven years ago, the late CEO Tony Hsieh decided to upend Zappos’ traditional management structure during rapid growth. The online shoe retailer would adopt a completely decentralized system with no job titles, no managers and no hierarchy, period. ‘Holocracy’ is beautiful when it works; however, it’s often too disorientating or overwhelming for some people at scale: 18 percent of the Zappos workforce left.
I like the advice venture capitalist Ben Horowitz gives related to anatomy – think about how scaling impacts:
- Communication: who needs to know what and when?
- Decision making: how are final decisions made?
- And common knowledge: how are ideas and information shared?
Physiology is more about feeling than efficiency
When companies look at scaling processes – hiring, benefits, comms – it’s typically orientated around efficiency. But a piece that can get lost (and really damage trust) – is how these processes make people feel – the physiology of scale. Let me give you an excellent example of scaling from the book.
When Pulse sold itself to LinkedIn for $90 million, they implemented a simple practice. Every Friday, they asked employees to respond anonymously to a simple question: “What are you wondering about?” Most responses were not about policies or profits but about insecurities and confusion. For example, “Is Google going to buy us?” By the afternoon, the founders had responded to all the questions. A simple but effective way for leaders to show how vital trust is to them.
Maintaining culture when scaling
The psychology side of scaling is tricky because how do you strengthen, not weaken, relationships at scale? Culture comes from transmitting values through small daily actions. Start-up leaders often describe how they hate that moment when they no longer recognize all the names and faces in their company.
It sounds counterintuitive, but one way to maintain culture is not just to think about things you’re going to add but to find ways to subtract.
- What do you STOP doing?
For example, how can an ‘all-hands meeting’ that gets too big be taken away or turned into something smaller?
The Goldilocks principles
One of my favourite concepts in developmental psychology is what’s known as ‘the Goldilocks Effect’ – seeking ‘just the right’ amount of something. It impacts how we pay attention.
We can apply the Goldilocks Effect to the right sizing of ideas and organizations:
- They feel heavy, sluggish, or strained when they’re too big.
- They feel fragile, wobbly, or unrooted when they’re too small.
- And when they’re ‘just right’, they seem lively yet calm, contented, and caring, like the perfect local coffee shop.