Scaling: three guiding principles

Principle 1: Ready when you are

The word “scaling” has somewhat confusing origins when applied to business. There is the noun “scale” (“a machine for weighing”), coming from the Old Norse word that means “bowl”. There is “scale” that means ratio, proportion, for example for models or in geographical maps.

Then there are two that I like more. One is the Latin word ‘scala’ meaning ladder or staircase. “To scale” initially referred to climbing. You can scale a tree or a mountain. Then there is “scale” as synonym of “adjust,” as in “scale back, scale up, or scale down”.

It was probably "scale up" (“to increase the size or amount”) that has been shortened to scale when used in business contexts. Or maybe it was the ladder one.

Regardless, let’s start with a simple fact: scaling is growth, i.e. repeating sales.

Hence -> You can only start scaling when you know what you are selling, to whom and how.

Usually after you have found the product market fit (see “Rabbit story” in another post I will write soon), you have figured out what your product is and who buys it. From the initial chaos of “I’ll sell anything to anyone who buys it” you shift to some predictability and replicability in sales. Then you need to sharpen things – modify the product if needed, come up with classification of buyers and what they want (“buyer personas”), figure out ways to get the sales message to those buyers (channels) and close a sales transaction. Those are components of your go to market approach. As always, the pareto principle (aka 80-20 rule) is a good guiderail – focus on the 20% that buy 80%.

In short: PMF (product market fit) -> go to market (GTM) -> scaling.

And off you go

Principle 2: Bite what you can chew

Small companies don’t have enough resources to take bites from several pies. So, avoid trying to scale several products at the same time, at least initially. Often this approach leads to none of them taking off in a meaningful way. What if you have several options and don´t know which one to scale? That means one of two things: a) you are not ready for scaling or b) you need to decide which goes first. Ideally you should get to the point when you are convinced that if you start putting resources (money, sales guys) into scaling a product it would sell. That’s closer to “I am sure” than to “I think”. Learn to stand up before you can walk, let alone fly. To rule the world, you need to survive for long enough to partake in the beautiful future.

Many companies want to be “platform companies” – meaning the product is universal and can do many things. That’s a great thing. That gives you much bigger potential and brighter future. But – it has killed more companies than you can imagine. Why? Because customers don’t want to buy platforms or technologies. They want to buy something that they can use to do what they need done. And platform companies very often have a “swiss-army knife approach”, which means they could be used for many things, but in reality don’t really do any of them in a way that wows their customers. The power of platform is often spread on many small green shoots, none of which is a tree.

In my view, the only way to scale a company (and often to even get through to the beginning of scaling) is to focus on one product/application at a time and make sure customers eat that one out of your hands. I call them “use cases”. So, focus. One PLM -> GTM -> scaling at a time.

What do you do with the other product ideas? You don’t scale them. Get one rocket going before you move to the next one.

For the rest I use my “push and pull” principle. Basically, the same Pareto principle applies to use cases – 20% of them would bring 80% of usage/leads. So, you select one or two use cases you understand best and “push” them – meaning actively promote them, spend marketing dollars, focus sales force on them, etc. The goal is to develop an engine for replicable, repeatable, stable sales.

The rest of the use cases you put into “pull” mode – which means you don’t actively market them, but see which ones of them the market shows more interest in. The goal is not to achieve a lot of sales, but to select the most interesting use cases. You set up “listening” structures trying to gauge market interest – say hackathons, occasional blog post, etc. Once your first “push” use case starts generating stable sales and you can afford to turn to the next one, you would have data to select the next candidate to move into the “push” category. You then define GTM for it and try to push that one.

This way you don’t spread your resources on many things, but rather develop one or two to the point where they start feeding the next ones – while the next ones are being nurtured and compete amongst themselves for selection.

Principle 3: Bowling Alley

I won’t spend too much time on this one, it’s a well-known and well-covered concept from “Crossing the chasm” book. The short of it is that you start with capturing a beachhead (one product, one customer group – in my terminology one use case). Once you have done that, you can start expanding by changing one of the variables – either the same product to a different customer group or a different product to the same customer group. This boils down to the same “one PMF -> GTM -> scaling at a time” approach, but also aims to reduce the risk of expanding, making shifts more incremental.

Checklist

• Can you identify a use case that you can predictably sell? (product market fit)
• Can a new sales guy start selling a product? I mean - not you or your first sales folks who can get creative, but actually someone who is used to “cookie-cutter” sales?
• Do you have a “push-pull” classification of use cases?
• Do you use appropriate approaches for “push” vs “pull”?
• Have you worked out your “bowling alley”?
• Can your company stomach the rapid growth phaze? (for that see the next post, The inevitable mess of scaling)