Scaling Up capabilities

Session 12

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Scaling up- interplay of two aspects
• Corporate growth strategy- Directions and methods of growth
• Business Model- scalability of the model
• Scalability of the components of the model
• Scalability of the interlinkages

• Concentric vs model replication across geographies/ segments

• Acquiring external capabilities or entire business through inorganic
approach

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Scaling up as a capability

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Standardising processes and leveraging
technology

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Is there a ‘right’ pace for growth?
• Is there a sustainable growth rate?
• Wherein you don’t increase your level of debt and don’t have to sell off your
stock?
• Or you don’t have to reduce your debt or buy stock?

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Issues caused by rapid growth
• Opportunity overload
• Abundance of capital
• Misalignment of cash burn and collection rates
• Decision making-more operational than strategic
• Expanding facilities and space-delays, interruptions
• Too many new people in the firm
• In-sufficient documentation, and knowledge

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Issues caused by rapid growth
• The decision to expand is based on impulse
• Loan acquired for expansion is large
• Owners and other partners keep themselves getting
out of touch with key employees
• Management becomes too involved – managing all
the new operations
• Mounting overhead
• More bureaucracy- meetings, less coordination
• Increase in customer complaints
• Overdependence on a single customer/contract
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Growing too slow
• Have modest ambitions
• Not changing the core
• Under-leveraged firm
• ‘Zero debt’ – is it always good

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CONTEXT OF CHANGE: STARS:
Common situations that leaders may face

Start up Turnaround Accelerated Realignment Sustaining

Growth success

Issues Assembling Saving a Managing a Re-energizing Coming in

People and business in Rapidly a previously on
finances troubled Growing Successful the heels of
times Business. Company. A regarded
Leader.
Challenges Build Motivating Build Convincing Living in the
strategy / employees. Structures employees shadow of
Structure Effective to that A leader.
from Decisions permit change is
scratch under scaling Required.
pressure

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Scaling up marketing capabilities
• Finding new markets
• Individual level relationships with customers
• Databases , external linkages, software, divisions

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Scaling up HR capabilities
• Continuously evolving practices, culture, skills
• Standardized HR practices, policies

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Scaling up operational capabilities
• Skills of operating at different scales, supply chain management
• Capacity currently being utilized
• External linkages
• Understanding of newer (Higher scale) processes and technologies

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Scaling up Knowledge management
capabilities
• Building a knowledge culture, managing and integrating the software

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Scaling up innovation capabilities
• Crafting innovation at different scales
• Managing impulses- culture, incentives, outcomes

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 Scaling up in terms of structures
• Adopting structures suitable for larger scales
• Creating more hierarchies
• Creating flexible structures for achieving greater level of work
• Creating partnership structures for scaling up
• Installing old people in key roles in new businesses
• Replicating existing structure and incorporating systems for
decentralized management of groups of such structures
• Problem of replicating knowledge/culture across teams
• Focus on documentation, training, standardization

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Change in structure with growth
• Eg. Change in structure of international business with time within
organizations
• Increase in complexity with size

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Characteristics of complex organizations
• Multipolar organizations- business units relying on each
other for expertise, centre’s role to orchestrate, vision
• Dualistic systems- structured/chaotic, formal/project
team
• Front line orientation- staff more line and less control oriented
• Cosmopolitan mindset-pluralistic, global workforce/TMT
• Capability based organizations, multitalented employees
• Semi-permeable boundaries- multiple centres, steeples
of expertise, interdendent units, multiple alliances,

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• Risks of resource loss, if organizations do not understand the
resource base

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