The economy was cranking and the opportunity for growth had never been better. The executive team was more excited than they had been in years, and they wanted to “strike while the iron was hot.” Scaling infrastructure was the challenge before them. They had loyal technically talented employees who had lifted the company to its current size of 7M per year. The good news was that their equipment was already overbuilt due to a technical propensity of the founder, yet their administrative system needed upgrading. They moved quickly bringing in a more robust administrative software product that could help them scale as well as a couple of IT professionals to run it.
As they hired technical and administrative employees they watched their budget being blown, but they were so busy supporting their new customers they felt they had no choice and kept hiring. They were a bit mesmerized by the pace and maybe even in a bit of action-denial about the needs of the business. They hired and hired and some would say that perhaps hired too many people. Looking back they had in fact over hired because their legacy leadership system couldn’t leverage their time and continued to get more mired in the details instead of addressing People development and process issues. They told themselves “we need to make hay while the sun shines” to get to the next level, and then we will “trim the bush later.” As time went on they became over staffed throwing more people at old ineffective processes. This reduced reserves they would need in the future to maintain quality and their hard earned reputation.
Growth is a wonderful challenge, and those of us deeply immersed in the business world across industries undoubtedly notice that the scaling word is used daily. It is almost used as much as the buzz word “disruption.” Scaling is typically thought of as building the financial, administrative, technical or scientific infrastructure of the business, yet seldom thought of as building the leadership system that will do the scaling. This is the Myth of Scaling-- that above all; scaling is a financial, technical, scientific or administrative challenge.
Scaling is first and foremost a human challenge of leadership, yet this fact escapes most executive managers trained the logic of the administrative-financial and technical or scientific knowledge systems. Hired and promoted for their prowess in these areas they never learned to lead others well across broader scopes of responsibility. They didn’t master the emotionally challenging skill of developing others to handle more for them. Said in another way, they never mastered the art of controlling quality and productivity through the effort of others.
Some companies will do in-house technical training and send managers off to leadership school while scaling. Seldom is this leadership training embedded properly into the organizations in alignment with important change goals. Most think of this type of development as “training” instead of realizing that leadership and organizational development properly done is an “intervention.” Further, most leadership development programs are not based in helping managers understand their self-limiting beliefs and subsequent blindspots and behaviors that blocks their leadership potential to cause change. Without this awareness their ability to drive success throughout a larger growing system is not as effective as it can be.
In the story above due to not scaling the human and leadership system well, the company’s brand began to erode which was eating away at its sustainable future. With their bias for conventional action coupled to their limited mindset and associated blindspots; they took unnecessary risk by ignoring the proper development of their leadership system while scaling. Creeping slowly and out of sight entropy (slow death) began taking them over without much notice until the founder stepped aside and brought in a new CEO who did understand the foundational aspect of the human system and leadership. The good news is that they caught it in time by invested time focused into building the human systems and are now doing amazingly well.
The human system of all organizations operates by a simple yet profound logic that differs from the numbers logic of the administrative systems or the physics–logic of the technical systems or the research and statistical models of science. It operates by what we call “psycho-logic.” That is; “given a similar set of circumstances, without self-awareness—people tend to act the same way over and over and over again.” In simple terms we are creatures of habit. Growth through scaling changes conditions and many former effective leadership habits will no longer work—and requires a new way behaving. Without a clear model and language of leadership throughout management it is next to impossible to navigate change without unnecessary loss.
In summary, scaling effectively enquires managers to lead differently across broader scopes of responsibility. Transitions of this type require more than a superficial understanding of oneself and others. As managers shift their operating model to “building and leading leaders” instead of doing the direct work themselves the probability of success increases. This shift frees up time and energy to focus on team leadership as well as proactively identifying performance gaps within the new organizational design. This is the hidden secret of healthy and successful scaling—developing your system of leaders throughout the organization just before or while you are scaling your business.
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