Before we dive-in to the depths of how Thought Leaders scale any business and / or alter its scaling based on various deterministic parameters, let us first know about the basic idea of scaling, the logic behind it as well as those deterministic parameters that scale any business. Related content given as follows –
What is Scale or Business Scale?
In simplest words of understanding, Business Scale is an advantage or disadvantage that the business entities comes face-to-face with as and while it expands or grows larger in the market. A “scalable business” enjoys accelerated competitive advantages as it grows. Scaling is now considered an important aspect in many phases of running a business like planning for it, strategy development and market competition evaluation. Following are the general types of Business Scale: –
Unit Cost –
A scalable enterprise experiences “declining” cost per unit as it grows. For example, soft drinks or any other beverages industry will cost LESS per unit if it produces a million bottles than it would have cost them if it was producing a few thousands, obviously MORE in the latter case. While it appears rather impossible for smaller companies to compete with the corporate giants on any basis, especially on the production and pricing, thought Leaders advise such smaller companies to “totally avoid” direct pricing-based competition with larger producers. Instead, they ask them to focus on a niche product, which the larger producer is not offering the customers. So, in this manner, the smaller companies will survive the competitive onslaught & remain in the market for a longer period.
Obscurity is the curse for any growing business. A business identity HAS to be known by people or MADE KNOWN to people. So, as the sales increases, Thought Leaders push the producers towards “adding value” or “value addition” to the existing product(s). The golden rule of the business is – “The value of the product or service grows as the sales increase.”
Often, it is easier to find support and complementary products for a popular product as opposed to an obscure one. Thought Leaders know this very well and implement the launch & marketing strategies accordingly.
Thought Leaders understand the concept of scalability very well and when to cash it to gain maximum output. A scalable business can efficiently bring down the costs of providing a service to its customers, as it grows in scale.
Let us understand this with an example – a multinational cloud infrastructure & services provider company may opt to build more efficient and more capacity-holding data centers. Then it can resort to pushing the services’ suppliers for providing the same services at cheaper prices to the customers owing to its scale.
So, Thought Leaders not only help in scaling a business, they also scale it as it grows, so that its growth does not become stagnant over time.
Brand Awareness –
It’s a known practice among customers that they buy the things they know. In fact, they are more likely to purchase the same product over and over again for many straight years. But in the background of this purchase, works a psychological mindset. This mindset “forces” the customers to rely on and believe in the brand name; even if the offered product(s) is/are suffering slight depreciation in quality.
Thought Leaders channelize this “psychological force” to the benefit of the business. They recognize that brand awareness in the customer-base and recognition in the market is necessary to gain leverage and scale over the competitors. Thought Leaders make sure that your brand gets the recognition, it rightfully deserves, by coordinating with the marketing and sales executives.
Operational costs decline, in a typical manner, as the business grows and / or achieves scale. This decline is measured as a percentage of the overall revenue to the business. Thought Leaders know it way better than the conventional managers, that those bottlenecks like legacy systems, excessively complicated processes and the perpetual resistance to change & adopt make the business suffer. So, to keep it functional, the Thought Leaders push towards initiatives like adopting a flexible system, modular processes and ability to adopt & change.
Complex operations cannot provide the desirable as well as deserving scale to the business; one has to slow down to deal with the bottlenecks at the time of requirement.
Innovation is by far the only parameter of providing business scale to a firm, which is difficult to maintain as the business grows. Big players in the market tend to inhibit creativity, risk taking capacity and divergent thinking when their businesses achieve a certain scale. While for small players, the field is although wide open, but the expenditure is one of the constraints that put a cap to the required R&D.
So, Thought Leaders offer a unique solution to this constraint. They advise to grow and develop as you innovate. This is easier said / written than done. It requires immense potential towards creative-critical ideas, risk taking as well as disparate thinking.
Organizational Culture –
It encompasses the values and behaviors that “make effective and visible contributions to the unique social and psychological environment of an organization.”
While larger firms are more susceptible to suffer from negative politics, smaller firms are generally partially/completely immune to this. This negative politics interferes with productivity, innovation and strategy implementation. Thought Leaders understand that business scale can be harmful for the business if not dealt with timely & efficiently. So, they offer solution to the firms that management needs to curb negative politics and penalize the personnel promoting it. Because it brings down the corporate morale & affects the overall business adversely.
Hence, these are the Business Scale parameters that Thought Leaders take note of and act accordingly in order to keep the business entities immune to adverse effects of scale at all times; at all costs.