Tag Archives: scalability

Scalability

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From the Ask Tom Mailbag –

Question:
When a medical service based business begins to scale and the customer experience becomes inconsistent, how do you typically determine whether the issue stems from personnel training or organizational structure?

Response:
It’s both, and a basket full of other things. Inconsistent customer experience usually stems from a lack of well thought out internal systems that bring that consistency. Your internal systems have to identify the common elements in all service delivery and be flexible enough to account for individual nuances. Those nuances need to be looped back in for consideration to how the system handles them, to constantly refine your system. And, then you have to train for the system.

That training will also teach you (as management) what realistic system deployment looks like, in terms of its predictability, repeatability and whether it can be delivered within the confines of your revenue stream (meaning, is your customer willing to pay for and value your system delivery). Sorry for the length of the response, but your question is not a binary either/or.

And, if you are truly looking to scale, your system is not just your service delivery. Scalability requires the integration of all of your systems. You have to have a well-thought out, consistently executed marketing system, a sales system that guides the right clients to your services. Most companies only focus on the operational system, but you also need consistent appointment and reminder systems, post-service follow-up systems, a privacy system, insurance and self-pay system. If you want to scale, you have to integrate ALL of your systems.

Scalability

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From the Ask Tom mailbag –

Question:
We have worked very hard to refine our core process. We believe we have the highest quality in our product offering and simultaneously have driven out extraneous costs. So, our customers enjoy a high quality product at the most competitive price. In spite of that, while sales growth is steady, our profitability suffers. Our gross margin is good, but by the time we get to the bottom line, the net is not so good. We have tried to cut SG&A, but that seems to make the net even worse. The more we try to take our company to the next level, the more frustrated we become.

Response:
You are in that No Man’s Land dilemma, too big to be small (amongst your competitors) and too small to be big (among those companies who have the biggest market share).

This is a classic integration issue. You describe your refined core process, which is clearly a step up to S-III. Your core system is well-honed, but scalability is elusive. Your core system creates your gross profit, right where it needs to be, but it sits among other systems that drag down the net profit. Companies at S-III have great products, but scalability only happens at S-IV.

  • S-I – Product
  • S-II – Process
  • S-III – Core system (sequenced processes, critical path)
  • S-IV – Integrated systems (multiple critical paths)

Your core system is critical, it is the product that your customers want, but it is now surrounded by other systems. Not only do these systems have to be effective and efficient, but they also have to be integrated together, and that is the challenge at S-IV.

Most core systems exist in a defined operation function, and are surrounded by a marketing function, sales function, project (or account) management, quality control, research and development, sustaining engineering, human resources, facilities and finance. You may have a strong core function in ops, but your company will never scale without the integration of all those internal systems.