South Africa sits with various challenges that affect our economy. The real solution to the country’s unemployment is scalable entrepreneurship i.e. new businesses starting and growing rapidly ultimately creating sustainable employment - these are not survivalist or life style businesses.
The disciplines of successful scale-ups create a positive systemic impact - it encourages a focused approach aimed at proactively managing a business through its growth path. “Lessons from global gurus on the science of scaling up present us with key disciplines, the rigorous application of which enhances the odds of success” says Mike Vacy-Lyle, CEO FNB Business.
He adds “that over 50% of the top 1% of businesses get stuck at a common point on their growth path. This point of “stuckness” does not manifest as a temporary circumstance which simply corrects itself over time or with a mediocre level of effort. The consequences of many businesses’ inability to navigate out of “stuckness” are grim. Avoiding getting stuck altogether or finding an escape route requires significant effort and skill from the business leadership”.
Vacy-Lyle shares some of the principles businesses can adopt to help steer them to the next level of their growth path. Focus
– A lack of focus results in a lack of progress in most circumstances. It is important that businesses don’t over commit themselves and to carve out time to apply sufficient focus on areas that require it. The road of business growth is littered with businesses that failed by entering new business lines, markets or committed cash flow on acquisitions. It is important to not only use turnover growth as a measure of business success. Manage execution
– Build a culture and management system to execute. Execution becomes exponentially harder as the business headcount grows. Make sure you have clear roles for people and proper accountabilities. Build an A-team
– Attract and retain talented people and help them thrive. Not all critical start-up team members will succeed in senior roles in a large and growing organisation. EQ is always more important than IQ. Harness your Board
– Many entrepreneurs are resistant to the idea of a Board, yet research shows that all successful scale-ups have built and maximised the use of a Board. Strong scale-up leaders know the limitations of having fewer decision makers that are deep in the detail and biased by short term pressures. Systematise customer delight
– Scale requires shifting from operations as a series of projects, to operations as a set of systems and processes. The business processes need to be built around and supportive of consistently delivering great customer experiences. Measure and reward customer service and not just sales growth. Manage money militantly
– Decisions that are not informed by accurate financial insight and businesses cases are expensive. It is important to build a robust financial function that is able to generate such insight. The returns on investing into sound financial systems and resources are high. You need a disciplined monthly management account reporting process and an organisation that is lead by well thought through businesses cases. Be investable
– Wealth comes through scale, and scale generally requires capital at some point. Capital comes on its own terms- learn the rules and language of investors and make the business attractive to investment. Bring your A-game
– Leadership needs to consistently perform at a high level and remain aware of less obvious detractors from peak performance such as insufficient rest, an unhealthy lifestyle and high stress levels. Most successful entrepreneurs have a lifestyle interest that keeps them energised. Choose success
– Leaders in a business need to operate with a mindset which seeks success for the business and which makes decisions prioritising the business needs over personal views.
“Scale ups require a focused mindset backed by a series of measured decisions and efforts to ensure that a business continues to grow - think big” concludes Vacy-Lyle.