Scalability is the natural output of a successfully sustained organization. A healthy organization can weather the storms that often arise from fast growth and is not hampered by a lack of financial resources or internal operational dysfunction.
The past decade’s technology has allowed many different types of organizations to increase their growth rate as they implemented automation into their daily workflow. This increases their efficiency in many ways of doing business and creates both higher top-line and bottom-line financial results.
But there is a line of diminishing return. As a business produces higher and higher sales, it becomes a challenge to continue this growth rate at the same level of efficiency and profitability. This is a potential gap that the business cannot continue to scale with the same level of efficiency, customer satisfaction, and other aspects they have grown accustomed to providing. And for companies with external investors, the pressure is even more demanding as they are being evaluated on a quarterly basis.
Although automation can operationalize more routine daily tasks and make them far more efficient, strategic points of decision-making require experienced managers. To continue to build this growth machine, there are three key strategies that, executed together, can continue to produce highly desirable scalability:
1. Lowest-Cost Producer: Using a cost leadership strategy allows the business to establish itself as the preferred source of goods or services. By leveraging high-volume output and production, a company can take advantage of the savings this larger scale of output brings. amazon.com and walmart.com are two excellent examples of a lower-cost producer as they have the purchasing power few others possess in their field. In both cases, as their operations became stable and sustained, their growth increased exponentially. In the early years, both had to finance much of their operations and make up for their losses, but over time this investment was repaid, and as they say, the rest is history.
2. Strategic Differentiation: Equally important as being efficient is being known as a highly desirable and differentiated brand from all others. How to accomplish this needs to align with the core strategy of the company, which can be broken into one of three broad categories. Expert who knows more about something than anyone else. Experience who has provided the product or service more times than anyone else. Efficiency who can provide the goods or services at the lowest cost per point than anyone else. The key is to choose just one core strategy and build everything else from it.
3. Narrow Market Niche: One of the most difficult things for a business to do is limit what it provides and to whom. The natural tendency of leaders is to provide whatever their customers want. However, left unchecked, this can quickly build a company’s reputation as a “Jack of all trades and master of none.”
In the growth machine phase, it is incredibly difficult to turn down profitable business, which is why upper management is not for the weak of heart or for those who choose the path of least resistance. An example of a company with a winning growth machine strategy has a razor-sharpened focus on a narrow market niche offering products and services at the lowest cost. This three-prong strategy focuses the company on a narrow target market and allows it to distinguish itself from all of its competition.