Why Startups Should Care About Operational Scalability

When you look at startups in their early days, there’s nothing but brilliant energy. Members of the founding team know their roles: from overseeing the business, to focusing on sales and partnerships, to managing internal operations and finance. And they thrive, driving the organisation forward with mutual understanding and a shared vision. 

In a Hollywood version of reality, a small startup might enjoy constant interest from investors. While this may be true for businesses like Netflix and Grab that continue to thrive and push forward with multiple rounds of funding, banking on this for your startup is a little like waiting and praying to win the lottery. 

What’s more likely to happen is that startups hit a plateau as growth slows. What should they do then? Hire five more engineers? Or two more people for the sales team to reach new markets? Improve profit margins? After all, they have their investors to think about. How can they continue to eat and dream, balancing short term profits with their longer term goals?

If these decisions are made with heart, without a clear reason, accepting these trade-offs becomes a challenge. Trust is shaken and as disagreements grow, the mutual understanding that helped the founding team to thrive gets chipped away. 

More mature founders know better and take time to develop frameworks and internal processes to guide their decisions. This makes the mutual understanding that has been so critical to driving their company’s growth explicit. When disagreements inevitably arise, they can return to these checklists and find a shared logic to make decisions.

Yet, for most startups, investing time to develop operational rigour is seen as unnecessary administrative work, especially for a small team. And that’s fair.

Suppose you think of your company as a bucket and measure how well it's doing by how full the bucket is. A lot of the time, you’d be focusing your efforts on sales and customer acquisition to add to the bucket, fuelling growth. And what of the bucket itself? Your company’s internal processes and things like attrition rate for instance? Without anyone keeping an eye on it, your bucket may be leaking, dampening your efforts to grow, and you wouldn’t even know.

So the next time someone rolls their eyes at operational rigour, invite them to think about why these measures should be there. After all, should you not also be building a foundation for your operations to sustain growth? 

Clear is Kind

What happens when your small team grows and now comprises hundreds of employees? How will you motivate everyone to keep the same vision and passion the startup’s founders had? Developing operational rigour helps you and your employees to get clear on the organisation's goal and vision, even without the same energy and passion the founders once had. As Brené Brown champions, ‘Clear is kind. Unclear is unkind.’ Start seeing these mechanisms as a guiding principle to align employees on what success looks like. 

You don’t have to look at this in ridiculous detail or create something on par with large enterprises. There are plenty of CRM tools that come with pre-defined templates that small companies like yours can use to start putting things in place. 

Always Know Why

Another common gripe is that metrics, such as ROI, are hard to measure. While this may be true, think about what it means not to be able to measure your decision at all. How would you know if you’ve made a good decision? Or if you should be exploring alternatives instead?

For example, in a fast growing company, what would it mean if no one is looking at your pipeline? Sure, it’s easy to focus on the present and take for granted that all this growth will continue. You’re only human. This makes it even more important to design a system to ensure that someone in your organisation is always building a pipeline. Use clear and concise KPIs to track what you’re communicating to your customers. Find out the ‘why’ behind what’s driving your growth.

Start today

When you finally get the hyper growth you’ve worked so hard to achieve, you need to have operational mechanisms already in place. This includes incentives to keep your employees motivated, concise KPIs to help everyone to be conscious that they’re on the right track and back-up plans if metrics suggest otherwise. 

If you only start thinking about what you should be measuring and building systems after you get your big break, when you’re riding out the high of your overnight success, chances are you’ll struggle. This is actually what makes or breaks companies as they grow in scale. So do the hard work now. Even if it seems boring and annoying.

On a quick scan of the different components of your business, can you honestly, hand to heart, say that you know what’s going on? 

1 Does your whole organisation know what success looks like?

If your employees offer vague responses like ‘to do great’, take it as a warning signal that you need to start setting up a foundation to get everyone on the same page. Or to improve what you currently have. What you’re looking for is a clear, specific, measurable goal that everyone is working to achieve. And once you have this, what are you after? Whether it’s building PR, getting new customers or something else all together, get clear on this as an organisation. When you receive random propositions, you’ll then have a way to assess if it is the right fit for you, for now.

2 What business are you really in?

Not the product or service you’re offering, but rather why your customers are choosing them? What human needs are you serving? It’s amazing how many businesses get so laser focused on driving short-term profits that they don’t take a step back to define this. You don’t have to fall in a similar trap. 

3 What’s making you money?

Life is great today, but do you know why? What if your main source of revenue is actually opposite to what business you’re really in? Without a system to effectively track and measure, how would you actually know? In the absence of data, you run the risk of making decisions purely on instinct and are more likely to spiral and panic when growth slows.