Distinctions Between Growth and Scale

Distinctions Between Growth and Scale

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to grow, or to scale, THAT is the question - An entrepreneur-inspired alter ego of Hamlet

One of the paradoxical dualities of entrepreneurship is the timeless question of whether your organization should be growing or scaling.

The answer, is YES.

Today, I’m diving into the distinction between these two fundamental principles and explore the significance in driving organizational development

This article will cover:

  • The definition of growth and scale
  • The types of projects within these two categories
  • Who is primarily focused on these

To help illustrate these concepts, we’ll use the metaphor of a restaurant since everyone can connect the universal concept of going out to celebrate life over a meal.

Let’s dive in

What is Growth and Scale?

Both of these terms are associated with expansion, and every founder seems to be obsessed with chasing them,

Growth refers to increasing revenue (the “top line”), customers, and or market presence.

It is the natural result of any business looking to expand its operations. The teams most closely associated to Growth are named: Marketing, Partnerships, Sales, Go-To-Market, Demand Generation, or Conversion Designers.

In our restaurant example, Growth would be associated with being able to seat more diners.

Growth projects/iniatives typically result in an increase in sales, more customers, and/or new markets.

Again to keep it simple, Growth strives to create demand for 200 guests a day

Scale, on the other hand, focuses on creating efficiency and reproducibility to improve the operations without proportionally increasing resources.

Scale is about creating twice the outputs with the same inputs.

In the restaurant, Scale is around being able to improve how we serve those 200 guests with the same resources-servers, chefs, amount of food etc…

Scaling is when businesses maintain or improve profit margins while serving a growing guest base.

Growth & Scale Initiatives

There are plenty of Initiatives that fall under these two categories

The key is to focus on choosing to focus on 3-5 initiatives at a time so that you can effectively measure their impact

The below examples show the results from Growth and Scale Initiatives in your business

Results from Growth Initiatives

  • Increase Followers
  • Increase Discovery Calls
  • Increase Revenue

Results from Scale Initiatives

  • Increase in Profitability
  • Increase Labor Utilization
  • Increase in Net Promoter Score (Reviews)
  • Increase in Referrals

Since every business is different, it’s difficult ot prescribe a blanket list of projects

If you are genuinely curious, send me a message and I will let you know my insights for your own business

Thinking of the restaurant, here are some initiatives that can drive Growth and Scale

Restaurant Growth

  • Creation of Social Media Campaigns
  • Paying for Advertisement on Reservation Channels
  • Creating new menu items

Restaurant Scale

  • Creating recipes to increase quality and consistency
  • Creating schedules to measure labor productivity
  • Using robots in the kitchen to decrease labor costs

Who Focuses on Growth and Scale Initiatives

While every organization is different, my general recommendation is that CEOs focus exclusively on Growth initiatives and COOs focus on Scale.

As the Visionary, CEOs can speak with customers, present at conferences, attend industry events, promote on podcasts, and be the face of the company to attract new leads across all areas of the business.

As the Internal leaders, COOS can measure, manage, and improve everything happening within the company.

If your organization doesn’t have a COO, you can train your Ops Manager to fulfill on these responsibilities and empower them to drive the change needed to increase scaling potential

In our restaurant example, the General Manager and the Executive Chef do play both parts of the CEO and COO, speaking publicly with the media and different outlets to attract new business opportunities AND managing their teams within the business.

While t IS possible for multiple people to play multiple roles, I invite teams to clarify what the responsibilities across roles are before attempting to split roles.

So What’s Next

After reading this article, consider what the 3-5 initiatives you are currently focusing on with your company.

Are you leaning more into Growth or Scale?

There is no right answer here…

Currently, I am running a training program with 3 senior operations leaders that are learning how to integrate Scaling principles into their business to reach $10M in Revenue.

If you have a operations leader that you hope to one day elevate into a senior role to support you as your grow your organization, send me a message as I’d love to chat and get to know you!

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Thanks for reading, Ernesto

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