Nearly every small-business owner wants to scale his or her business—to have it continue to grow and succeed. Eventually, though, even the most successful small business must master the natural tension between excellence and growth.
Is it possible to scale up without losing quality?
It's a pressing challenge for businesses of all shapes and sizes, and it's the very question Stanford professor and bestselling author Robert Sutton and his Stanford colleague Huggy Rao set out to study and answer in their excellent new book, Scaling Up Excellence: Getting to More Without Settling for Less.
Sutton and Rao recently took some time to answer a few questions I had about scaling.
How do you define scaling?
Sutton: If your organization has a bit of excellence, a “pocket of goodness,” how do you spread it to others there? Early on in the project, I saw an interview with the famous folk singer Pete Seeger. He said something like, “Sometimes the only thing wrong with it is there isn’t enough of it.”
Can you give me an example of an innovative scaling pioneer, and what we might learn from them?
Sutton: A hallmark of every successful scaling company is that they behave as if they were spreading a mindset, not just creating a big footprint.
Facebook is exhibit one. Even as it's grown like crazy, hiring thousands of engineers, it continues to devote six weeks to instilling key elements of the Facebook mindset in every new engineer—most famously a “move fast and break things” mindset. Before management decides what job a new engineer ought to hold, let alone putting them to work in a particular group, each engineer spends those six weeks in boot camp working on a dozen or so short projects for a dozen or so different groups.
How exactly can a company scale well?
Rao: A pocket of excellence is developed or uncovered, the people who know how to do it are connected to people who need to learn it, and new and presumably better ways “cascade” throughout the system. And in all the cases we studied, the change wasn't spread like a thin coat of goodness over the whole system. There were one, or a few, pockets of excellence that were used, in turn, to create new pockets. That's why we say scaling well requires treating the process as a ground war, not just an air war—hearing a few speeches and giving people a few days of training or a bit of coaching now and then isn’t enough to instill and spread excellence.
The pressure is higher than ever today to do everything in business fast, especially scaling. How can scaling be done fast but effectively?
Rao: What we learned is that, especially in cases of fast and effective scaling, the teams that guided these efforts often slowed down at key junctures—to think about what they're doing and to develop true excellence—so they could move faster later. Scaling takes a lot of patience and persistence, in concert with an obsessive focus on making progress toward long-term goals every hour of every day.
Does the same approach to scaling work for all kinds or organizations, including large and small, for profit and nonprofit?
Rao: While the scaling principles we recommend work for both small and large organizations, when organizations get larger, there are structural changes that are necessary and impossible to avoid. Even though founders often don’t like it, as companies get bigger, they need more process and more hierarchy and more specialized roles. Many of the things that “got you here” won’t get you to the next stage.
At the global design and innovation firm IDEO, for example, it worked great to have an all-hands meeting every Monday morning when the firm had 60 people. But after the company grew to 100 and beyond, it became too impersonal, with most people being unable to add to the conversation. Things worked much better after the office was split into smaller, 30-person studios.
Chapter 2 of your book is titled "Buddhism Versus Catholicism," referring to different scaling decisions and approaches. What's the short course?
Sutton: It's about choices, the most important being deciding how much to insist on standardization and replication—which we call Catholicism—versus encouraging local customization, [which we refer to as] Buddhism.
Here's the thing: The further you want to spread your footprint, the more likely it is that you'll need to move toward the Buddhist end of the spectrum. So, for example, although we may think of McDonald’s as standardized, it actually has extensive local customization in different countries. It serves beer and wine in Europe, and burgers are made out of lamb, not beef, in India.
Much of what you write about concerns a central tension between capability and capacity. What should young companies struggling with that keep in mind, especially when facing key transition points in their growth?
Sutton: Ask yourself whether you're in a “You can’t get there from here” situation. Your goal might be to have hundreds of skilled employees who fit your organization perfectly, but right now, you might only have a dozen or so. If you try to hire too fast, you'll have a big but bad organization.
Shona Brown, Google's former senior vice president of business operations, told us that the reason the company was able to scale from 2,000 to 30,000 people relatively quickly was that they hired so slowly and carefully. Too many startups bring warm bodies on board too fast, which helps in the short term but can destroy what made them great in the first place.
Then you must ask if what got you to where you are will get you to where you want to be. Many of the things that organizations do that work well when they're small no longer work when they get bigger. We encountered dozens of examples in our research: all-hands meetings that have too many hands, CEOs who grew their companies by approving every small expense but continued to do so after it had grown, which causes things to grind to a halt, and on and on.
Who are your scaling heroes and why?
Sutton: There are many, but three that stand out for me are Bonny Simi, vice president for talent at JetBlue Airlines, IDEO's founder and chair David Kelley, and Dr. Louise Liang, who led Kaiser Permanente's computerized health records project. What's compelling is that while they're all wildly different, they all have something important in common.
All three created, and often discovered, pockets of excellence and then helped spread them to new places—that's the meat and potatoes of scaling. All three started where they were with what they had. All three made wise early choices to get the ball rolling—to create one or a few early pockets of excellence. And all three never thought of scaling as an abstract or mechanical process.
Rather, they each viewed scaling as a fundamentally human undertaking, one that required constant attention to quirks, histories and motivations of the people they hoped would build and identify a bit of excellence and spread it to others.
If a business owner wants to start scaling excellence in their company tomorrow, what's their first step?
Sutton: Start where you are with what you have. It's what is present in every successful case of scaling that we examined, from a single manager to a big scaling effort. We met one manager who wanted to spread design thinking in her company, so she started by changing how her cubicle looked. Kaiser Permanente spent billions and devoted years to rolling out its computerized health records system, but it started in the company’s smallest region.
What's the one thing you want readers to take away from this book?
Sutton: To scale faster and better, you need to slow down to take the time and effort to instill the right mindset in people as your project is rolled out. Just running up the numbers as fast as you can is a recipe for disaster. You also need to slow down because scaling requires so much mindfulness—it requires so many changes in organizational structure, tactics and strategies, and so much thinking about how what you're doing now will set the stage for success later.
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Photos: Getty Images, Claudia Goetzelmann