It has become conventional wisdom that scaling up your organisation can cause it to become less agile, less responsive to challenges and bogged down in decision making bureaucracy, therefore meaning its capacity to innovate is reduced.
But is this really the case? Does scaling up your business mean you need to relinquish innovation? Should scale be closely managed and limited to ensure this doesn’t happen? And is there such a thing as too big to innovate?
There are a number of ways to approach scaling your organisation. Inc.com argues that the ability of your startup or small business to grow is crucial, as ‘a scalable business can adapt to a larger workload without compromising performance or losing revenue.’ Included in their seven practical ways to increase scale is the importance of perfecting the basics before you go bigger, boosting marketing to get the word out there about your growth, and outsourcing and automating all ‘non-essential’ tasks to capitalise on our network-connected marketplace, as opposed to growing your team in house.
Fast Company argues that while scale is seen as the desirable ‘next step’ for any businessman or woman who has seen their idea build from nothing into a small but profitable venture, finding the right type of scale is highly important. Fast Company asks, ‘instead of scaling up, why not scale out?’ This can allow growing companies to better manage risk, avoid unnecessary stress from having all your eggs in one basket, and prepare thoroughly for potential challenges to growth.
WHY IS IT SAID SCALE IS INCOMPATIBLE WITH INNOVATION?
There are three schools of thought about the relationship between scale and innovation:
- They are incompatible
Back in 2014 the Stanford Social Innovation Review (SSIR) published an article entitled ‘We Need More Scale, Not More Innovation.’ Although specifically focused on the role of innovation in providing solutions for economic and social challenges, inherent in this ‘either or’ mentality is that scale and innovation are incompatible, and that one should be forsaken for the other.
- Scale slows innovation
Another SSIR article wrote that innovation and scale was a ‘A Tough Balancing Act’, arguing that:
‘scaling and continuous innovation are fundamentally related in a counterintuitive manner: Scaling successful past innovations may make future innovations less productive, and ongoing cycles of innovation may make scaling less productive.’
It is argued that as innovation moves from focusing on disruptive idea generation to incremental improvement and refinement as an organisation grows, scale can often force the pace of innovation to slow and reduce capacity to challenge the status quo.
- You can become too big to innovate
The writer suggests that despite the fact that the term ‘innovation’ is more commonly used now than ever, ‘most companies pump out the same old gadgets and services, placing more of a focus on cost and efficiency than creativity. They are so tied to Wall Street’s demands to “grow or die” that they are rarely able to get a fresh idea into the starter phase.’ With so much competition and demand to be as efficient and profitable as possible, scale can often be seen as a barrier to an organisation’s capacity to innovate.
HOW TO MARRY THE TWO
Despite conventional attitudes towards choosing between scale and innovation, all hope is not lost.
A recent Entrepreneur.com article argues that maintaining both innovation and scale is a matter of finding ‘the right approach.’ To put this into practical steps, Entrepreneur.com suggests keeping your company mission clear as a good first step to take. Pointing to Facebook’s sustained reputation as a ‘scrappy’ startup despite its now 12,000 strong team of employees, it is suggested that ‘keep[ing] your company mission clear for all employees, then follow[ing] through, no matter how large your company grows’ is important, and can be played out in simple day to day contexts like the look and feel of your office space or how you position yourself in relation to employees.
Other practical steps that can be taken to maintain an innovative culture are maintaining an active manager role, keeping a literal and figurative open door policy, setting an example of agility, and focusing on fostering a company culture that values innovation. This should not only be understood as an abstract, but as allowing innovative people to be able to contribute to decision making and engage with processes, to ensure that no matter how big an organisation gets, hierarchy and bureaucracy don’t cause it to become stagnant and risk averse.
For more information on how to remain agile and encourage innovation, no matter how big your organisation, take a look at our innovation programme here.
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