As a company leaves the product market fit stage, many stumble as they try to scale.
As a company leaves the product market fit stage, many stumble as they try to scale. Based on our experience as operators and investors, we’ve discovered that the secret to scaling successfully is a CEO who understands three things:
Congratulations, you’ve overcome the pre-scale struggle and have determined you have something the world wants. But now, how do you not just fulfill demand, but stoke it so that the demand continues? The first thing CEOs need to do is embrace the fact that achieving and maintaining product market fit is an elusive feat. Markets are dynamic, complex systems with emerging needs that must continually be satisfied. There’s always going to be a diminishing return there. There’s no neutrality in customer relationships. Either you’re getting stronger or weaker. Every day, you must get 1% better and stronger with your constituents.
So, in order to scale and keep scaling, CEOs must promote a relentless thinking: whatever your company is today is inadequate for your future, and you need to stay at the helm of continuous innovation. You must keep evolving across all vectors, all the time.
With innovation, CEOs must also get super intentional about their internal growth system, anticipating what talent, skills, and systems are needed to fulfill next year's demand. Then figure out how long it’ll take to build, and hire accordingly.
Many CEOs fix problems as they arise. After you get past that one urgent thing, the next problem reveals itself, and so on. That’s not the right model. If you want to play a game of Whac-A-Mole, go to the arcade. To scale successfully and quickly, get really clear about your growth systems and understand their complexity. There are customer issues, employee issues, fit issues, go to market issues, macro environment issues, corporate culture issues and so on.
Your job as CEO is to anticipate the problems, then swap out a process, improve a leader, change the product dynamic, create a new tool, etc. before it breaks. CEOs must become holistic systems thinkers and look at their growth system as a multi-variable equation, understanding the interaction points and that fixing or removing one friction point doesn't necessarily accelerate the system. When you can get a heuristic that wraps around all that, then you can sustainably scale.
Continuous growth requires playing a short and long term game simultaneously. But focusing on getting better today while also maintaining that long term vision is an onerous balancing act. Start by having a growth mindset. Be open to data and information that conflicts with your core values and beliefs and act on that information opportunistically, not defensively.
Always consider the possibility that the tide could turn against you at a moment’s notice. Relentlessly prepare for it by developing contingency plans, and buffers. And when you inevitably go through a J-curve, combine that long-term optimism and grit to use it as another catalyst to drive innovation and deepen your purpose.
Use the following exercises to help you implement these ideas:
At start-up, you undoubtedly created customer profiles for your target audience. Treat these as a living resource that needs regular attention and upkeep. When updating your profiles, do not speculate. Your best source of information are your customers themselves. But don't forget to leverage your frontline employees and salespeople as much as possible to understand customer needs and pain points. Survey your employees quarterly with regards to their perception on the customer profile, and have a standing quarterly review of it.
Encourage employees to think beyond their roles and remove any fear factors that might make people hesitant to speak up. Revolutionary ideas don't always have a big enough voice to be heard, so lower the volume, open your ears and encourage lower level management to do the same. Go old school and set up a "suggestion" box (virtual of course). Consider putting some parameters in place: people can submit one suggestion a quarter and 10 will be randomly selected by the CEO to read and respond to.
Do it yourself or ask a trusted employee, an investor, or an advisor to take 12 hours, spread out over a few days, to put together the case for why your company will fail (no more than 2 pages). Also known as a "pre-mortem" in the investing world, you’re essentially trying to answer the question of, “if this ship goes down, what will have been the top 3 likeliest reasons?” Consider this an exercise in checking your blind spots - but one geared towards enabling you to spot areas for innovation.
