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The Fast Company Executive Board is a private, fee-based network of influential leaders, experts, executives, and entrepreneurs who share their insights with our audience.

Never underestimate the complexities of scaling a business

Never assume it is easy to do the same thing as another business just because what they do seems simple.

Never underestimate the complexities of scaling a business
[Gorodenkoff/Adobe Stock]

One of my favorite ways to get a point across is to use a folksy analogy and something tangible illustrating the concept. So when it comes to growing a business, my favorite bit of advice is that anybody can make a cup of coffee, but not everybody can be Starbucks.

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This analogy drives home that operating at scale is tougher than you might think. Yes, you can probably make a few cups of coffee, but making four million cups a day, all meeting the exact same standard, is an entirely different feat. The level of complexity is mind-numbing when you move from your kitchen to a global scale. There are several concepts to consider when scaling globally or even out of the kitchen, garage, or incubator.

NEVER ASSUME YOU’RE AN EXPERT IN THEIR INDUSTRY

Entering a new industry is always harder than you think.

Never assume that you can do a core function that another organization already perfected. You might be able to look at another business and say, “We can do better marketing than them,” or, “We can do better with sales,” or, “We can do better personnel management.” You may be able to see that. However, when you look at somebody’s core product, never be arrogant enough to think it is a business opportunity for you just because you can pull it off a couple of times.

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Getting back to the Starbucks analogy, you could grind some beans, pour some hot water, and make some coffee one time, 10 times, or 100 times. But, could you do this a billion times, seven days a week, on most of the continents of the world? Could you source that many coffee beans with consistency and always get the same cup of coffee? Scaling out of the incubator phase is not easy.

HIRE PEOPLE WHO ARE SMARTER THAN YOU

If you’re the smartest person in the room, you’re probably in the wrong room.

A business leader needs self-awareness to understand that growth is only possible when surrounded by experts. I know what I’m good at and where help is needed. For example, I’m a pretty good salesman, motivator, and strategic thinker, but I needed experts to handle the finer details and execution of my company’s sales and marketing departments. We also needed people sharing our vision and expertise in IT, operations, customer retention, and product development.

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Founders must delegate and bring other talented people to the team, while simultaneously growing their individual acumen and roles within the company. While it was important to look for people who fit our corporate culture to grow my company, it was even more important that these people were specialists in the areas where we needed help.

BUILT-IN REDUNDANCY IS NO LONGER A LUXURY, IT’S A NECESSITY

Without redundancy, you’re doomed to failure.

One of the many reasons my company survived the pandemic was that we planned for operational redundancy at the outset. Before ProctorU was three years old, we had a second office on the West Coast so that we had a presence in two time zones to better serve students with later operating hours and to spread out risk.

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As the company grew, we opened proctoring centers around the globe. When the pandemic took hold, our operation was flexible enough to handle the constraints of worldwide quarantines and still provide service to test-takers. Surely Starbucks executives have similar stories to tell about engaging their own redundancy plans with global supply chains. Plan for redundancy and then engage that plan right at the start.

DON’T UNDERESTIMATE THE COMPLEXITY OF SCALE

The level of complexity for operations at scale is what people unknowingly and arrogantly overlook.

Do not mistakenly assume that understanding the end product equals understanding how to produce that product at scale. On the surface, the service my company offers seems straightforward. It must be easy to monitor an exam or two with Zoom, right? Using our coffee example, brewing a cup at home requires some tools: a machine (or a filter), some ground beans, and some water. But, it is far more complex than that at scale.

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Online proctoring may seem just as simple as making a single cup of coffee. You need a proctor to watch the exam, a webcam, and a screen-sharing platform. Yet, scaling a webcam and a screen-sharing platform to monitor thousands of exams each day is dramatically different than watching one. Each exam has different rules and definitions about permitted materials, time, accommodations, and locations. Even different departments within the same university don’t follow the same rules and expectations. Add to this that students constantly find new ways to game the system.

If you’re going to build a business, solving a problem that can be scaled is vital, but keep Starbucks in mind. Never assume it is easy to do the same thing as another business just because what they do seems simple or you feel you’re exceptionally smart or talented. There’s a steep learning curve to solutions delivered at scale, yet it’s easy to assume you know enough or are smart enough to be successful.

My advice is that when looking at business opportunities, keep in mind the Dunning–Kruger effect. In the simplest terms, it’s a psychological concept that the less someone knows on a certain topic the more likely they are to overestimate their own ability and assume they are an expert, leading to poor executive decisions. Instead, maintaining a level of humility with realistic assessments of one’s knowledge can prevent you from making fatal business mistakes driven by your own hubris.

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Jarrod Morgan is the Founder & Chief Strategy Officer of Meazure Learning, the parent company of ProctorU.

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