What is Scaling?
There are many divergent opinions out there about what scaling means. But one thing everybody agrees with is that scaling is a challenge.
Depending on your business there are different perceptions of the challenge. If you’re a fast growing startup, a growing employee base might represent a scaling challenge. If you’re in a large organization, you talk about scaling as the challenge of replications, like Ikea opening stores in China. Others consider scaling the challenge of finding best practices and spreading them. According to Robert Sutton, Professor of Management science at the Stanford Engineering School and author of Scaling Up Excellence, it is always a problem of more.
If you go to Investopedia, you’ll discover that scaling is “the capability to cope and perform under an increased or expanding workload. A system that scales well will be able to maintain or even increase its level of performance or efficiency when tested by larger operational demands.”
If there’s a divergence of opinions about what it means, there’s an almost unanimous agreement about the financial impact of scaling.
A scalable business is a business that can add revenue at a rapid rate while adding resources at an incremental rate. This means that for every dollar of additional revenue, the business makes more money per unit of throughput.
Bob Jordan, the CEO of the Association of Interim Executives, provides a good insight about scalability: “The reality of getting to the next stage in its growth and scaling a business up is complicated, hard, and messy. Part of the challenge is squaring costs with revenues.”
Eric Kish as an author, speaker and practicing CEO. He is the author of 5 to 50 to 500: How to build and run scalable organizations and Everyday Turnaround: The art and science of daily business transformation
