As companies expand, they often face the challenge of maintaining healthy growth. This is especially true for scale-ups, which struggle to keep up with the increasing complexity of their processes and communication as they hire more employees. To address this issue, thousands of companies worldwide have adopted Scaling Up, a growth operating system designed by Verne Harnish.
Scaling Up offers a clear and effective blueprint for healthy growth, helping entrepreneurs answer critical questions such as: How can I sustainably grow my organisation in the next few years? How can I develop a clear strategic and operational plan for my company? How can I unlock my own and my team’s potential?
In this blog, we provide a comprehensive overview of Scaling Up, including its three-step growth formula and the Rockefeller Habits Checklist, a tool that can help you implement the methodology. We also introduce Verne Harnish, the mastermind behind Scaling Up, and guide you in identifying which phase your organisation is in. By the end of this article, you’ll understand how Scaling Up can help your organisation achieve healthy, long-term growth.
Table of contents
1. Scaling Up: A Proven Methodology for Healthy Business Growth
Scaling Up is a methodology designed for organisations that have entered the scale-up phase and are seeking sustainable growth. Developed by Verne Harnish, the methodology is based on a comprehensive set of tools and strategies outlined in his book, “Scaling Up: The Growth Formula.”
According to Harnish, the methodology is the result of 40 different books he studied and distilled into one blueprint for growth organisations. The book is packed with practical insights and real-world examples and includes references to the books and research that informed his methodology.
At its core, Scaling Up is focused on helping organisations achieve healthy, long-term growth by addressing the four key areas of people, strategy, execution, and cash. By following Harnish’s proven framework, companies can develop a clear roadmap for growth and overcome the challenges that often arise during the scale-up phase. Whether you’re an entrepreneur or a business leader, Scaling Up offers a valuable guide for achieving sustainable growth and success.
2. Verne Harnish: A Leading Voice in Business Growth
The writer of Scaling Up, Verne Harnish, is a respected business leader, author, and entrepreneur who has made significant contributions to the field of business growth. In addition to being the author of the best-selling book Scaling Up, he is also the founder of the Entrepreneurs Organization and co-founder and director of Gazelles Growth Institute. Scaling Up has become a global phenomenon, with more than 675,000 copies sold worldwide. Through his organisations, Harnish has helped more than 70,000 companies implement his methodology and achieve sustainable growth. His approach is based on three key principles: more money, more time, and more fun.
Harnish is a sought-after speaker and has delivered keynotes and workshops for many of the world’s leading companies and organisations. He is widely recognized as a leading voice in the field of business growth and has been featured in numerous publications, including The Wall Street Journal, Forbes, and Fortune. With his proven methodology and practical insights, Harnish has helped countless entrepreneurs and business leaders achieve their goals and take their organisations to the next level. Whether you’re a start-up or a well-established company, his principles can help you achieve healthy, sustainable growth and success.
3. The Five Stages of Growth
Before we dig into the fundamentals of the Scaling Up methodology, we will briefly outline a few of the five growth stages and their respective challenges. Every company goes through these five stages of growth, each stage with their own challenges. The stages are dependent on the number of employees a company has: the more people, the more complex communication becomes.
The Start-up Phase (1-7 employees)
As a start-up grows and progresses through different phases of growth, it encounters various challenges that require strategic and operational adjustments. In the first phase, the start-up phase, the customer proposition, and business model have been validated in the market. The next two phases, the rollercoaster phase, and the adolescent phase, bring their own unique challenges.
The Rollercoaster Phase (8-25 employees)
In the rollercoaster phase, which typically begins when a company has 8 to 25 employees, management processes become crucial, and the entrepreneur must shift from being a doer to a manager. The entrepreneur often struggles with juggling different hats, roles, and priorities, and functional responsibilities may be delegated to ancillary positions or employees. In this phase, making the organisation scalable and structured while maintaining flexibility are critical points of focus.
The Adolescent Phase (26-50 employees)
The adolescent phase, which usually starts when a company reaches 25 to 50 employees, presents even greater challenges. Although there is a bigger budget to hire professionals for specific functional sub-areas, the entrepreneur often continues to devote a lot of time to managing the company. This is the most difficult phase, as growth requires significant cash and hiring new employees creates complexity and alignment problems that can put pressure on the corporate culture. To address these challenges, hiring a second-in-command and forming the first management team are often effective steps to take.
The Scale up phase (51-150 employees)
The next phase is all about delegating on a larger scale. The executive and operation divide and as an entrepreneur, you mostly leave decisions to your team. The management team is complete, and processes and systems are in place, but they need to be constantly optimized and replicated. As an organisation, you are now also entering the war on talent: attracting and developing good people is vital. As an entrepreneur, it’s now up to you: stop managing and start leading.
Flow phase (more than 150 employees)
The final phase of the growth model is all about standardization. This is the optimal phase for growth. Everything revolves around one question: “how do we make everything we do scalable?” All eyes of the company are focused on the future. Balance is an important theme. Growth and innovation must go hand in hand, and the balance between people and processes must be carefully guarded. In this phase, managers develop into leaders. But be warned: stay hungry.
Challenges faced by scaling companies
Entrepreneurs in all phases often face similar challenges, regardless of industry or culture. The most common growing pains include:
- Difficulty tracking who is responsible for what in the company.
- Struggle to attract and retain the best talent in the right positions.
- Lack of clarity on what products or services to offer and to whom
- Working hard without clear key performance indicators (KPIs) for processes and personnel.
- Unclear mission and strategy that is not well understood by all employees.
4. Scaling Up: Three Steps to Healthy Growth
The Scaling Up method is a powerful answer to facing and overcoming the growth challenges in each growth phase. The methodology revolves around three core steps: Decisions, Disciplines, and Catalyst. These steps provide organisations with a blueprint for achieving healthy business growth. Here’s what each step entails:
Step 1: Decisions
To maximize growth potential, Scaling Up identifies four fundamental decision areas that should not be overlooked. These areas are collectively known as the Growth Flywheel:
- People: Getting the right people in the right place at the right time is crucial for building a harmonious culture with accountability. This step involves hiring the right team members and developing a winning culture.
- Strategy: A winning strategy means doing the right things today and in the future. It involves defining meaningful and sustainable revenue streams and capitalizing on opportunities.
- Execution: Running a business without drama and errors is essential for achieving the best profitability in your industry. This step involves ensuring that every process is executed correctly.
- Cash: Cash is the oxygen of growth. Knowing your cash flow and planning accordingly is essential to the success of your business.
Step 2: Disciplines
Discipline is key to successfully implementing strategic decisions. According to the Scaling Up methodology, discipline consists of three ingredients:
- Priorities: Having crystal-clear and razor-sharp priorities for the company, teams, and employees is essential for driving growth and success.
- Metrics: Key performance indicators (KPIs) that measure growth and bring transparency are important for every employee. They help keep everyone accountable.
- Meetings: A frequent and structured consultation rhythm helps keep the organisation synchronized. The Scaling Up methodology recommends holding annual, quarterly, monthly, weekly, and daily meetings.
Step 3: Catalyst
The driving force behind Scaling Up is a learning culture. To succeed in the coming years, organisations will need to embrace technology and invest in ongoing education. This involves using software that supports employee learning and hiring specialists who can bring fresh perspectives and new knowledge to the organizsation. A culture of learning in which every employee can identify their learning goals is key to staying ahead of the curve.
5. The Implementation of Scaling Up: The Rockefeller Habits
The Rockefeller Habits Checklist is a set of ten routines that are essential for achieving a perfect execution of your company’s strategy and fostering healthy growth. These habits form the core of a tight implementation framework presented in the book Scaling Up and are the reason why some companies thrive while others falter. As Jim Collins once said, greatness is not an accident but a conscious choice and discipline. Below are the ten Rockefeller Habits that can help you take your business to the next level:
- The executive team is healthy and aligned.
- Everyone is aligned with the #1 priority for this quarter.
- Communication rhythm is established. Information passes through the organisation accurately and quickly.
- Each department of the organisation has one person assigned with accountability for ensuring goals are met.
- There is a structured feedback collection from employees to recognize obstacles and identify opportunities.
- Reporting and analysis of client feedback is as frequent and accurate as financial data.
- Norms, core values, mission, and goals (including the BHAG) are alive within the organisation.
- Employees can accurately articulate the core components of the business strategy (which are on the One Page Strategic Plan).
- All employees can report quantitatively whether they had a good day or week.
- The business plans and results are visible to everyone.
The results of implementing the Rockefeller Habits can be impressive. On average, companies have seen:
- A significant increase in cash flow, up to twice their previous amount.
- A substantial improvement in profitability, often reaching three times the industry average.
- A remarkable increase in valuation, up to 10 times their previous value.
- A reduction of up to 80% in the time it takes to manage the business, allowing leaders to focus on growth and development.
A more enjoyable and fulfilling work environment, thanks to the support and streamlined processes that alleviate the burden on the leadership team
6. Start Implementing Scaling Up
Are you experiencing growth stagnation within your organisation? Are you constantly putting out fires and working long hours? Do you feel like your employees aren’t meeting your expectations and that the organisation is too dependent on you? If so, implementing the Scaling Up method can be the solution. By utilizing this routine in your daily operations, all employees can work towards achieving the strategic goals you have set with your leadership team.
Our experienced Scaling Up coaches have helped over 2500 scale-ups implement this method, and they possess the tools and knowledge necessary to help your company grow in a healthy manner. Learn more about the services we offer by clicking the link below.
