Maximum growth, minimum risk: building the optimum plan for scale

Publications
20 February 2019

Maximum growth, minimum risk: building the optimum plan for scale
David Burke, Director

Businesses often make the mistake of scaling too quickly, before they have the right product-market fit. In the first in a series of articles on growth, I called in an expert to explain how to approach scale while minimising risk. 

Advice on this subject is abundant. And the chances of someone with no experience offering their opinion? Even more so.

So I asked someone who has been there and hand-weaved the t-shirt to tell it to us straight. Mike Murnane is VP Strategic Change at Fenergo, experts in client lifecycle management for financial institutions worldwide. With over 25 years experience in enterprise software delivery and scaling/growing businesses, Mike knows his stuff.

Here’s what he had to say about choosing the optimum time to scale.


Before you begin, know where you’re going

“First, identify the opportunity, whether it’s within your existing customer base, the wider market, industry trends or regulatory changes”, says Mike. “Before knowing when to scale you have to know where you want to get to. From this, create your value proposition which forms the bedrock of any plans to scale.”

Consider how you’ll approach the market too: “An aggressive approach that calls for speed and heightens risk is one option. A slow-burn minimises impact but also mitigates risk.” How you decide depends very much on your capabilities.


Choose an approach to market in line with your capabilities

Now you have your vision, assess your ability to deliver it.

Says Mike, “Are you going to evolve slowly or heavily invest in an accelerated roadmap? Will you shut the factory to retool or adapt opportunistically? Do you have scalable talent, processes and technology? Do you grow it or buy it in?”

Building a clear picture of competency helps define your market approach.

“Ideally you can enter with a low investment and scale as your revenue grows, focusing on your market differentiators,” advises Mike.


“Can you create a Minimum Viable Product and evolve through iterations? Do you have an ally in the market to work with you? Perhaps an existing loyal customer with which you can create a mutually beneficial engagement?”

Heavy discounts for early adoption or a product tailored for their needs can be attractive incentives. This gives you a reference customer and valuable product feedback.

“Be wary of customising the product to the detriment of the wider market,” Mike cautions. “The customer who adopted your product in the early days is less risk averse than their successor - the mass-market buyer.”

Build for long-term demand

When it comes to sales and marketing, “Don’t mistake size for scale” advises Mike. Ramping up your promotional activity is, surprisingly, not as wise as investing for long-term demand. A slowly rising curve is better than one that soars too high, too soon. Why? Cash flow.

“Feeding a sales and marketing function devours profit,” say Mike. “And short-term tactical initiatives are just that: tactical.”

Search instead, for slow but assured measures.

“Find the marketing activities that have good impact at moderate cost. Outsource at first until cashflow is secured. Then hire a team and consider more high-profile marketing activities.”

When you’re about to scale, protect your products: think of the years, not the months, ahead.


Are you competing on price?

It’s the fastest way to the bottom of the pile. Shredding your margin to win today’s price race erases opportunities to delight and nurture your customers with first class service, sensational buying experiences and quality products they can proudly believe in.

“When you compete on price you’re prioritising your business and the competition. The customer comes last and so does the supply chain,” says Mike.

“Contrary to common belief, a low price thinks only about how you’ll beat the competition today. It disregards the customer’s experiences in the long term and, increasingly, their wishes for an ethical, well-delivered product”.


Are you facing all the issues?

Maintaining a positive disposition is imperative to success, problems should be tackled head on and not allowed to fester. “Fail fast, learn, recover … keep moving forward. Acknowledge the failures and celebrate the successes,” says Mike.

A good culture and company spirit can survive more than you think. If you’re unsure how to approach problems with culture, processes or systems, seek advice from advisors with real-world experience and associates and suppliers who have helped organisations like yours address these problems before.


Building the optimum plan for scale

From an expert in the driving seat of organisational growth, Mike shows that building a plan for optimum scale is as much about planning as it is about action. These considered and conscious choices enable maximum growth and minimum risk:

  • Crystalise your value proposition
  • Assess your existing capabilities
  • Select an approach to market
  • Take a long-term approach to marketing
  • Never compete on price
  • Build a culture of accountability