Strategic Insights for a Successful Scale Up
One of the biggest challenges any startup or SME can face is getting tangled up in the bureaucracy and organizational inertia, which characterizes many big organizations. As companies scale and add more product lines or services and employees, decisions take longer to be made, implemented and adjusted, according to the market reception. In many cases, companies fall into the trap of adding multiple organizational and approval layers, which makes it harder to respond quickly to the market environment and client expectations. Consequently, the collaboration among key teams becomes difficult, which results in ideas being slow to implement or killed-off altogether and, ultimately, the company misses crucial market momentum. And although each company is unique, there are some key elements they companies need to consider when shaping their strategy in order to succeed in today’s environment. Below are the three main strategic concerns that all companies should consider while growing to avoid the above mentioned traps.
Companies often focus on innovating in the marketplace, but fail to improve on their processes, too. And by companies that innovate we don't mean those trying to build the next Google or Uber, or companies that are primarily technology-oriented. Innovation comes in all shapes and sizes, and can be anything that differentiates a product or service, or any process within a company. There has been a lot of hype surrounding innovation in the past few years, but companies direct all of their resources into developing or improving their products or services and they miss out on the critical part of keeping their processes simple enough as they scale, which in the end only hinders their innovation efforts.
For example, a company might have a product development team with a highly efficient process when building updates for its products, but what about its interaction with the sales team when it decides which updates to build? If there is no clear or simple way for the sales team to send suggestions for updates to the product development team, then how important is the efficiency that the product development team has established? And if the sales and product development teams are not working properly together, then the product team is distanced from the marketplace reality and feedback that the sales team is exposed to on a daily basis and ends up working in a silo, therefore failing to respond to market conditions and expectations.
Another example is the transparency and speed of the decision-making process after suggestions have been gathered from any relevant teams. If teams are sitting on those suggestions for months and not deciding quickly because of the many approval layers or miscommunication among teams, then resources are wasted and revenue is lost due to the company’s inability to adapt rapidly to market expectations. Processes need to be continuously improved in order to be as lean and efficient as possible.
Product or service innovation goes hand-in-hand with process innovation, and companies that combine them have been historically more successful. Therefore, companies are better off when they continuously improve on their processes and the ways their teams collaborate, as they add more product lines or service enhancements. Instead of treating internal processes as elements of the value chain necessary to be established and kept up with on a day-to-day basis, companies can view them as an opportunity to create a key capability that will differentiate them from the competition.
Building a Culture of Innovation by Hiring the Right People
Assuming companies pay attention to the process innovation mentioned above, they also need to hire for the specific talent that will allow them to grow according to the organizational structure and processes they have set in place. There is no point in treating process innovation as a capability, if it’s not a key part of the company culture. A flat organization and a focus on process innovation must be embraced by employees and a heavy emphasis on all aspects of innovation must be the basis of the company culture.
People must be passionate not only about their own area of expertise but also about setting new standards in all areas of the process chain. These are the types of employees you should be looking to hire. For instance, anyone working in product development must be excited not only about further product enhancements, but also about how suggestions are gathered, analysed, prioritised and developed.
There is no point in having the best product developers if there are bottlenecks in the different stages of the development process. If the marketing, sales and product development teams are not collaborating properly - in order to filter key product enhancements and properly analyse the way the market responds to these enhancements - then the quality of the product development team becomes less significant. Constantly improving all elements involved in the product development chain must be part of each employee's mindset, and new talent acquisition practices must reflect that. That’s when innovation becomes a real capability and the key factor behind a company’s growth.
How You Measure Customer Experience Matters
Finally, there’s a lot of talk lately about customer experience; it has become the new catch phrase in the business world. But how do companies really measure it? In my experience, companies only use one key metric to measure customer experience with any new product feature or service improvement, and unfortunately it is revenue. We are all interested in revenue growth at the end of the day, but adding other key metrics in the evaluation of any new product release or service improvement will help a company better identify when to invest in a project or abandon it.
Being able to look at key metrics that will signal market appetite will allow a company to test the market and adapt its strategy in a faster way, which ultimately means a more efficient use of its resources and maximum revenue growth from these resources. For instance, when there is an update on a product or service, the marketing team can monitor the change in the amount of leads it generates for the sales team in order to better understand how the update is impacting the market demand. The sales team can also measure the average sales cycle after a product update in order to better understand how much faster it can sell the product. These are both important data points to look at other than the revenue, and will reflect the market sentiment and the revenue growth pattern. The pattern is crucial in order to identify and measure not only how much revenue will be generated from product updates or service improvements, but also how exactly the revenue will be generated.
This gives a company a more accurate picture of its projected cash flows, which in turn will help it plan accordingly for future investments and growth. Therefore, a company should be specific about how the enhanced customer experience it is trying to achieve will affect revenue growth and understand what it should be monitoring in order to analyze this revenue growth as a result of the improved customer experience.
Considering the three strategic points above when scaling up can put your business a step ahead of competition, as you will avoid some of the most common and costly pitfalls of trying to take a company to the next level. And although these points are broad enough to be applied to any startup or SME, each company is unique and you have to plan and execute carefully with your own company’s capabilities in mind. Enlisting help, such as an agency that provides consultancy services, can be a useful and cost-effective option, especially for those companies that are not yet ready to add new employees. However, outsourcing always requires a careful selection of partners, especially since this will be a collaboration that will last for years. Selecting an agency and a team that will share your vision and be engaged with your product or service will ultimately produce more successful results, as you continue to build a valuable relationship in the future.
Zoi Therapou, is Commercial Director at Confirmation.com
She has over 12 years of experience in achieving startup and new territory growth in the financial services industry internationally, now working in fintech. She is passionate about startups, technology and innovation.