From the Ask Tom mailbag –

Question:
We want to scale. We know scaling starts with sales, but every time we push our sales volume, things get wobbly. We spend time on the things that are wobbly and realize our sales have dropped. How do we get to the next level?

Response:
While we can be descriptive about the stages a company goes through, understand that in real life, those stages have blurred edges. Transitioning from one stage to the next often happens in fits and starts as you described.

No Man’s Land
Too big to be small and too small to be big. As your sales volume increases, it strains all the other systems in the company. Each system has an output capacity, limits based on its constraints for throughput. And, while each individual system has throughput constraints, so does the entire enterprise.

Except in rare technology business models, most companies that move to the next level also see an increase in headcount. It simply takes more heads to manage all the systems and sub-systems required to satisfy the increase in sales volume.

The complexity of one project sets a pattern. Two simultaneous projects can often be managed the same way as the single project. Three simultaneous projects requires more resources, but it is not much more complex than two simultaneous projects. But, 50 simultaneous projects is another level of work. A project manager cannot punch through 50 simultaneous projects the same way as three.

As sales volume increases, production struggles. As production struggles, some sales promises get delayed, substituted or broken. Sales volume silently recedes until somebody notices.

There is no magic bullet short of understanding what is different. When the organization is small, we keep track of things in our heads. When the organization grows, we have to create a system. And a single serial system is critical to profitability, but still, does NOT mean you have all the ingredients to scale. One system begets another system and soon we have multiple systems and sub-systems. Many companies stay stuck here, some fix it.