Crossing the Chasm to Predictable Growth

Companies need to "build muscle" when they compete in the rigors of the market and strive to meet the demands of customers.  Scaling an organization from a concept or "early adopter" phase to a self-sustaining company serving the needs of a large customer base is the chasm most companies fail to navigate.  The idea is generally good, the market is ripe, the product "works" but making the transition to self-sustaining scale successfully often requires a wholesale change in how managers think, how processes are designed and how performance is measured.  And a complete rebuild of the basic infrastructure and plumbing supporting the company - basic things like a robust general ledger, a full-function CRM system.  Things that aren't sexy but are the "roads and bridges" of a Company.

When companies scale - processes, systems and organizational structures can all breakdown under the weight and pressure.  This will ultimately stall growth as sales leads drop through the cracks, operational performance and service levels suffer and, finally; customers become frustrated and leave.  Creating an infrastructure to support sustainable growth requires planning, investment and experience.  Maintaining a competitive cost structure in today's environment often requires the added complexity of accessing offshore capabilities and capacity.  Having created an organization in India and built it to 450 employees, I have lived through the arduous process of setting up an offshore operation and lived to tell about it.  There are many pitfalls and places to lose one's way.

An early focus on Operational Excellence helps ensure a company experiences expanding operating margins as it grows its top line - no small feat.  High profit margins help ensure that rapid growth rates are self-sustaining as G&A expenses ramp to support the growth.  A robust operational model requires the building of a strong organizational foundation for revenue growth and enhanced profitability through increased productivity.  Gross margin and operating profit are "lagging indicators" that reflect the results of how a company is performing every day on the key operating metrics that drive the cost and quality of a product.  Defining those 2-3 key drivers of cost in an operation is a critical precursor to understanding what truly needs to be measured and managed.  Models need to go beyond the financials - which are lagging the indicators - and focus on the leading performance indicators in the business.  It is those leading indicators that tell you how much further you have to go in crossing that chasm.