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How to expand without losing your mojo

'Scaling Up Excellence' shows how to grow and replicate the creativity and innovative prowess of start-ups without triggering an anarchic free-for-all.

February 16, 2014|By Andrew Hill

How to get big — without getting bloated — is one of the greatest challenges facing growing businesses.

Start-ups want to know how they can expand without adding layers of deadening process. At the same time, large companies want to know how to replicate the creativity and innovative prowess of start-ups without triggering an anarchic free-for-all.

Drawing on the authors' own and others' insights, "Scaling Up Excellence: Getting to More Without Settling for Less" promises many answers to those pressing questions.

To the authors' credit, they do not shy from the messiness and difficulties of the task of expanding an organization. Stanford professors Huggy Rao and Robert Sutton point out that too many growth plans are launched with fanfare by grandstanding chief executives who then turn out not to have the "grit required for a prolonged ground war."

Scaling, they say, "requires grinding it out, and pressing each person, team, group, division, or organization to make one small change after another."

Unlike more simplistic accounts, "Scaling Up Excellence" — published by Crown Business — also makes clear that there is no definitive prescription for growth. For instance, organizations are neither wholly "Buddhist" (guided by an underlying mind-set, with the specifics left up to individuals) nor entirely "Catholic" (adhering to preordained practices and beliefs).

Similarly, it is tempting to think that growing companies should shun rules, or that large companies should scrap all bureaucracy in the interests of innovation. But the authors point out that no company will scale up successfully if it does not impose a few non-negotiable constraints. "Guard-rails" is the attractive concept they highlight.

They also suggest that companies may need a bit of scaffolding — over-complex but temporary systems — while they are building. The key is to ensure the scaffolding can be dismantled later.

This is not just a book for ambitious start-ups, however. It also demonstrates how big companies such as Tata Consultancy Services and Google avoid "Big Dumb Company disease" by constantly subdividing into smaller teams and using hierarchy to encourage communication and reduce friction.

Unfortunately, Sutton and Rao are sometimes guilty of imposing on their readers the sort of cognitive overload they warn is one of the main threats to fruitful expansion.

Growing organizations "often pile on so many metrics, procedures and chores that people lose the capacity and willpower to do the right things," they write.

That is roughly how I felt when I was trying to absorb five "key elements" that make up one of seven tools, within one of the six subsections of Chapter Six, halfway through the book's second part.

My advice is to start with the final chapter, where the authors sum up their argument and expand on Nobel Prize-winning economist Daniel Kahneman's favorite idea for testing big decisions.

Divide your team into two groups and make them imagine that, a year later, they are reporting back on the outcome of the yet-to-be-taken decision. One group must pretend it was a disaster; the other, a success. The ensuing discussion will unearth doubts and suggest new paths to success.

"Prospective hindsight" may even prompt entrepreneurs to reconsider their growth plans.

The last chapter introduces Hank Jotz, a San Francisco sailmaker, who took on five employees but reverted to a one-man operation when he found he was making no more money and "realized [he] was just running a hippie support system."

A bit like the Vietnamese developer, who last week withdrew his hugely successful Flappy Bird games application from stores because it "ruins my simple life," the tale of Jotz Sails is a valuable counterpoint to the dominant theme that growth is usually worth the trouble.

Hill is the management editor of the Financial Times of London, in which this review first appeared.

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