Ian Gray is the founder of Gray Dot Catalyst, a strategy, innovation and partnering consultancy. He has over 15 years' experience in the development sector, holding senior positions in strategy, humanitarian, policy and innovation. Ian will be speaking at our Global Youth Entrepreneurship Summit, taking place from 10-14 June in Cartagena, Colombia.
Following the recent launch of our "Models for scaling the impact of youth entrepreneurship programmes" report, we invited Ian to answer some frequently asked questions about scaling.
Although it’s widely used, there isn’t a clear definition. However, there are three things I see as indicators that a business is going to scale. One is that the business is able to deliver its service or solution across multiple contexts and locations and/or it is working with organisations in multiple locations as delivery mechanisms. Finally, in each context, or in the majority of contexts, the business must have a significant market share.
Scaling impact is not the same as scaling an organisation. Depending on what route to scale you chose, you might need to grow your organisation or you might not. One example of scaling impact is Alcoholics Anonymous, an organisation that has made its service replicable by making their methodology open source – anyone can use it with guidance materials. They really scaled impact without significantly scaling the organisation. The challenge is ensuring quality isn’t diluted. Private companies like McDonalds invest heavily in upfront training to ensure that quality is maintained, from franchise owners to staff members.
The number one pitfall with any growing organisation or business is cash flow management. For organisations that rely on grants, this is a real issue as they are rarely continuous which means significant gaps in cash flow. Plus, when you are trying to grow, you often need to make upfront investments which can eat into your reserves.
A second key pitfall is codification, or making sure your service or solution is replicable. When a service is reliant on the knowledge of a limited number of team members, the scalability of a project is in jeopardy! Codifying and writing the core elements down helps ensure that this knowledge is stored and can be used to assess the replicability of your service or solution.
The last pitfall is falling into the trap of thinking that scaling means doing exactly what you are already doing but on a bigger scale. In reality, it is likely that businesses need to change their model, structure, operations, and/or delivery approach to achieve scale.
It really depends on where organisations are operating. In the public space, how the government and donors regulate and invest in the market can spur or hinder efforts to scale. When you’re trying to scale you need to continue to deliver quality services while expanding into new markets and growing your organisation – this requires significant investments. However, these kinds of organisational costs are underfunded because donor funding is too often tied to project line items. Nonfinancial support like mentoring can also be instrumental to guide organisations looking to scale.
Scaling means operating in a completely different context than the day-to-day. It involves a significant change not just in the structure of your business but also in the capabilities of your staff. You need to be ready for this.
To help people think about this I like to use the pirates, privateers and petty officers model. When you’re in the early stages of a business you need people who are inventive and perhaps slightly rebellious - your pirates. When you’re running a mature business you need people who can follow systems and procedures, keeping the ship steady - your petty officers. When it comes to scaling, you need people who can be agile and innovative but do so whilst building the systems and structure of your organisation. These are your privateers, essentially pirates, who were allowed to operate legally by the navy as long as they focussed their efforts on attacking enemy ships. Finding the right balance across your team and your organisation as you scale is fundamental to success.
Do you want to explore the theme of scaling further? Join us and Ian at our Global Youth Entrepreneurship Summit (GYES), taking place from 10-14 June 2019 in Cartagena, Colombia. GYES 2019 will bring together YBI members, leading experts, influencers and decision makers in the youth entrepreneurship sector to explore new approaches to the ever-changing needs, challenges and aspirations of young entrepreneurs globally.
Visit the GYES website to learn more.