Scaling a Start-Up The good news is, whatever it is you are doing, it appears to be working. The bad news?

It wont work at scale. Now what? While each start-up has its unique issues, all start-ups seeking to scale have to address a common set of issues around the following five topics: Organizational Design, Executive Transitions, Systems and Processes, Culture, and Governance. What follows are some guidelines to jump-start your thinking in each of these areas . Organizational Design As a start-up the initial organizational model is simply a team. Everybody has a specialist position, but the dynamic is a single entity with a single leader. The organizational design issue happens the day you realize that leader has become a bottleneck to good, timely decision-making. Going forward, which organizational model you follow depends primarily on whether you are in a B2B complex systems business or a B2C volume operations one. The former needs to organize around the target market segment you are trying to penetrate first, so your key is to install a GM-like capability accountable for taking that segment by storm. The rest of the company organizes functionallysales, marketing, services, engineering, and operationsbut the real action is tightly focused on driving the vertical target market segment to a tipping point. By contrast, in a volume operations enterprise, it is critical to organize around the means of production, so your key is to install a really strong ops executive atop the critical scaling function. If that is engineering, then youll be transitioning from an R&D executive with the emphasis on R to one with the emphasis on D. If instead the critical function is some version of transaction processing, then the key hire will be someone to ride herd end to end on scaling the throughput and reliability while driving down costs. In all cases it is someone who is both pragmatic and hard-nosed about trade-offs. Executive Transitions The scaling motion here is from invention to deployment. You are not going to stop inventing by any means, but what you must do for the first time is segregate the two, so you stop inventing in the midst of deploying. That behavior drives customers and partners crazy, wastes endless cycles in heroic rescue missions, and burns out your team. To effect this segregation, you need to install deployer types in the critical roles of your organizational design, making sure they do not report to inventors who can overrule their calls. In an ideal scenario, there is no change in personnel required because the leader is both an inventor and a deployer by nature. This is the true meaning of the word entrepreneur. But your scenario can be less than ideal and still produce great results if you can backfill for the missing capability without losing momentum. This requires the inventor to take a step back, often to a CTO or an evangelist role, allowing a new person to take the reins. And that new person has to be strong at assessing the current team from a deployment perspective, making the changes needed, all the while respecting, and wherever possible enlisting, the resources in place. Systems and Processes Start-ups, almost by nature, are process averse. That is how they can move so fluidly in real time. But

there comes a time when the die is cast, and moving fluidly is less important than moving powerfully. Inevitably this involves curtailing optionality in favor of scalability and predictability. And that is the role of systems and processes. But this does not mean it is time to install a process mentaility. The right time for that is after all the secular growth in the category has been mined, and the category has matured into a cyclical growth stage. Now is a different time. The challenge is to operationalize ramping, not sustaining, initiatives. The process work is all about maximizing throughput, minimizing churn, and reducing cycle timeall in service to a land grab strategy of capturing as much market share as possible during the hyper-growth phase of a given category or market or offers life cycle. Thus systems and processes need to be standardized and centralized for everything that is non-differentiating context, while keeping as hands-off as possible an approach to what is differentiating core. You do not want to undermine your competitive advantageyou just want to discipline all the supporting activities so they do not waste resources, most especially the one irrecoverable resource--time. Culture Culture should not change in the transition from start-up to scale. If it does, that represents a failure either in the incoming or the outgoing administration, or both. Changing culture is almost always a loselose undertaking and is only appropriate for turn-around situations. This means that those installing the deployer playbook must respect and be motivated by the values inculcated during the invention phase. This is a screening device for ensuring you recruit the right help with the transition. That said, as you do scale, there comes a time when the company experience can no longer deliver the personal and the equity rewards that a start-up promises. At that time you will be recruiting people more interested in career, job title, performance compensation, and the like. And as the system adapts to their interests, the old guard will feel the company is losing its mojo and the vision has been slightly betrayed. This is where it is imperative to assert the abiding elements of the culture while not forsaking your company to the pull of its past. Governance Governance, on the other hand, must change at the transition from start-up to scale. The whole point of the transition is to develop enough mass to have a material impact on the world. Material impacts need governance, and societies are not particularly forgiving when it is not in place. So if you have the ambition to scale, you must embrace the responsibility of compliance to the relevant regulatory regimes. Typically this begins with adding board members who have experience with the compliance issues of a scaled enterprise, and some time later, rotating off the board early stage investors whose greatest strengths apply to an earlier phase of development. In parallel with this, the role of CFO expands from capital management and fund-raising to include systems and process installation along with the organizational change management to shepherd the new practices to enterprise-wide buy-in and adoption Feedback I would love to get other people's fingerprints on these ideas, so please circulate them and or reply below, as convenient. Thanks.