Fewer, Bigger, Bolder: From Mindless Expansion to Focused Growth by Sanjay Khosla and Mohanbir Sawhney
April 6, 2014
Small Muscles and the Long Race – Building a Scalable Company
October 17, 2012
I have been doing strength training for the past three years with a personal trainer. He focused on lifting weights to make me stronger. I thought I was doing well – my body had become better toned and I could lift more weight than I ever have been able to. Last year I took up distance running. I hoped that my hard work in strength training would help me in running. To my surprise, I didn’t make as much progress as I would have liked. I would get tired and I also started to develop heel pain. Over the past few months, I have been working out with a new trainer who is focusing on making me a better runner. His diagnosis – I had focused on my big muscles and had ignored the small muscles in my feet and my back that are very important in stabilizing the body when you run. My body was lop-sided – parts of it were quite strong while other parts were dangerously weak. My new trainer told me that I was risking serious injury if I did not balance my muscle development. Without this balance, there was no way that I could run a marathon. I might make it to a half-marathon, but I would not be able to sustain my pace in a long race.
And so it is with companies as they grow. They focus on hiring engineers to build more products and beefing up the sales force to generate more demand for their products. These are the most visible drivers of growth, so they get the most attention from management. They are the “big muscles” of the company. But other less visible areas get less attention. Some companies, like the infamous People Express in the in 1980s, under-invest in service capacity. Others pay less attention to building a professional marketing organization. Yet others don’t invest enough in capability development for their people or building a strong bench below the top management team. These are the “small muscles” of the company – processes and activities that are less glamorous and less directly related to building stuff and selling stuff – the two core activities that management focuses on to drive performance. So as the company grows, it becomes lop-sided. Eventually, the areas that are under-developed start causing stresses and strains to the system, and the growth stalls. Just as a runner with lop-sided muscles cannot compete in a long race, a company with lop-sided capabilities cannot be built to scale.
I have been advising several mid-sized companies on growth strategy. A common question they ask me is – how do we grow 2x or 5x in a few years? How do we scale the company’s revenues aggressively? My advice based on my running analogy – what are the small muscles you have ignored? What are the capabilities that you have under-invested in? What are the processes in your company that are not “built to scale”? I advise them to diagnose their capabilities in:
Hiring and developing talent
Accessing markets and customers
Generating demand through marketing
Managing IT systems
Improving operational business processes
Building bench strength in senior middle management
In my experience, these are some of the common “small muscles” that get ignored in mid-sized companies. If you don’t pay attention to these under-developed capabilities, your company is not built to scale. If you want to win the long race of growth, start focusing on the small muscles.