Blue Elevator Blog

Scaling – How To

Are scaling and growth the same thing? Does one cause the other and vice versa?

If you are familiar with Blue Elevator®, then you are hopefully familiar with our trademarked phrase.  Innovate, Accelerate, Replicate®.

In addition, you may be familiar with our simple and illustrative scaling metric.  To wit, Level 1, 2, or 3.

Innovate, Accelerate, Replicate®

First, if you want to scale your organization, you will need to continually Innovate, Accelerate, Replicate®.  That means, you will need to follow this iterative process … over and over again.  And, it must be repeated at different levels of growth.

You can read more here. Innovate, Accelerate, Replicate

But, for now, we can use a simple, real-word example of this.

Throughout their life, certain spiders (e.g., tarantulas) and snakes continually molt.  This means, that they shed their skin.  When the spider or snake grows, it has to shed its skin in order to continually grow.  It’s an iterative process: eat, grow, shed.

The same is true in business.

Here is a recap:

• Level 1: Monetized Involvement.  You must be able to make money.
• Level 2. Passive Income.  At some point, you will run out of hours in a day.  To grow, you will need to hire others and train them to do the work.
• Level 3.  Recurring Revenue.  A hard and elusive level.  But, basically this means that your organization can run (and grow) without your direct day-to-day involvement.

This is the essence of Innovate, Accelerate, Replicate®.

Do you want to become a Level 3 organization?

The Three Ms

If you are familiar with Blue Elevator®, then you are hopefully familiar with another phrase: Making, Managing, Mentoring™.

We discuss this in more depth here: Three Dimensional Leadership .

As an organizational leader, your time and involvement can be categorized into one of those three areas.

Here is a simplified example:

• Level 1: Making.  Answering the phone and taking a customer order.
• Level 2: Managing.  Following up with the Controller or CFO to make sure he/she did their job.
• Level 3: Mentoring. Coaching your Director of Operations on problem solving.

In essence, you and your organization will be the sum total of where, what, and who you invest your time with.  You can read more about this here.  You Are What You Eat and Do

Playing the Game

If your goal is to become a Level 3 organization (e.g., Recurring Revenue).  Then, you will have to be a Level 3 leader. (e.g, who spends all their time Mentoring … not doing the hands-on work).

Scaling – How To

So, the question is this: God willing, how do I become a Level 3 leader and create a Level 3 organization.

You can see, by now, that business isn’t one dimensional.  It’s multi-dimensional.

Here is a simple (but far from easy) algorithm you can follow.  I call it TAP.

Following TAP

Think like this.  If you want a Level 3 organization, then all of your involvement has to be Level 3 involvement.

So, this means that you aren’t doing the work (e.g., making).  It also means that you aren’t overseeing the customer service department (e.g., managing).

This means that all of your direct reports (e.g., managers, directors, leaders, C-suite executives) are managing their departments.  And, that all of the departments integrate and work well together.  So much so, that your organization continues to grow (and scale).

In essence, you help cultivate vision and you invest your time coaching the leadership team (e.g., mentoring).

By default, you are going to have to ensure that all of the various functions of your organization have a leader.  And, these leaders can manage everything.

This means, in principle and practice, that all of your time is being spent mentoring.

To get there, you are going to need to hire, train, and mentor your down line.

Scaling – How To

Now, with all of that out of the way, here is how you go about scaling.

T = Time

Simply put, you are going to have to invest time.  Rome was not built overnight, and neither will your organization.  You are going to have to invest time with your leaders to ensure they are managing things the way they need to be done.

A = Agenda

You are going to have to have an agenda (or plan).  This will be what your manager will manage.  Being more mundane, each manager or department needs to have its own SOP (Standard Operating Procedure) for how to run things.  Back in the day, when I served as a Controller/CFO/General Manager, I kept and maintained a checklist of everything that needed to be done and when.

And remember, this means in such a way that there are no errors (or unhappy customers).  If there are errors or unhappy customers, your process must be fixed/refined and the SOP updated.

P = Person

Bottom line, you will need to have someone who is singly accountable for the area or department or function.

If you don’t have a single point of accountability, then its no one’s responsibility and all you’ll get is finger pointing when things breakdown.

Why Growth Isn’t Scaling

Now, we can answer the question initially posed in this article.  Are scaling and growth the same thing?

Hopefully you can see, an organization that is experiencing growth isn’t necessarily scaling. It’s possible to go from $30M in annual revenue to $40M in revenue and still be a Level 1 organization.  You can be a multi-million dollar company, but still be a Level 1 organization run by a Level 1 CEO.

Growth does not equal scaling.  But, it is true that scaling often brings growth.

Things may look good on paper, but if the owner has to take time off, or leave, then what happens to a Level 1 organization?  It stays a Level 1 organization (or even suffers worse).

Simply, scaling is the process of becoming a Level 3 leader and a Level 3 organization.

BE Level 3.

That isn’t a typo, BE = Blue Elevator®.  And, at BE, we want you to Be Level 3.

Contact us.  We’d love to help you get there.