The Difference between Growth and Scale
Many people confuse between Growth and Scale. There is a massive difference and understanding this will be critical to some of the decisions that you take.
As you grow, so does your Expense.
On the other hand when you scale your Revenue grows faster than your Expenses. Thus, it is critical to aim for Scale and not just Growth. However, Scale does not mean thousands of team members and creating a very complex structure. Scale can come from simple organizational design (a topic to be covered in the future) with limited high-quality team members. Scale essentially comes from the following levers of our favourite word “Leverage”.
The ancient Greek mathematician Archimedes is known for his explanation of the physics of lever (where the word leverage comes from) – applying a lesser force to produce an outsized change. Archimedes had said “Give me a lever long enough, and a fulcrum strong enough on which to place it, and I will move the world.”
The Levers for building scale are the following:
- Client Experience
- Marketing (Covered in my book “The HappyRich Advisor”)
A successful cricket team is not just about the 11 players. There is an entire hidden ecosystem behind these 11 people including coaches, infrastructure, training, mental conditioning coaches and many others. Likewise, a Business that Scales up successfully has the right combination of the above Levers. It is not enough to have technology. The critical part is why this technology and how it impacts all the other levers. The same goes with every other Lever.
The era of revenue compression and increasing costs that we live in today makes Scale a Necessity (and not a choice).