Thoughts On How to Scale the Organization

When to Build

If work is established and continuing If new equipment, technology,

process can improve profitability If cost & control are critical issues If expanding service lines to meet

customer proven wants & needs When to Borrow

If times are turbulent & uncertain If need immediate ramp-up or rapid

expansion If need to quickly get needed

expertise or process If need to staff or equip for a short- to

medium-term project When to Buy

If fulfills strategic plans & goals

If establishing in new market(s)

If goal to acquire key experience, innovative new technology, or industry leadership

If eliminating competition

Completing today’s presentation Please comment on the nuggets you have taken away from this presentation at http://bit.ly/9CeRJi

Thank you! This work is licensed under the Creative Commons

Attribution-Noncommercial 3.0 United States License.

WWW.SALESLABDC.COM/LEADERSHIP

and

WWW.SALESLABDC.COM/RESOURCES

How to Scale Your Organization

Build, Borrow, or Buy?

Jack Gates

JACK.GATES@SALESLABDC.COM

Scaling Organizations A popular axiom is a business must always grow. The revised rule is that business is in constant change. Recently, growth is hard to achieve. Leaders have to navigate world competition, world labor market for knowledge and administrative workers, changing market demands and a changing domestic & world economy. How do you scale to meet economic conditions? Traditionally, growth was by adding employees and resources. This requires capital investment and a commitment to greater labor costs – affecting flexibility of the organization when agility is needed. The organization was building to create growth. In uncertain times, flexible growth looks like an accordion – economy expands; markets contract; hiring; layoffs. So leaders would borrow people and resources using contract employees and leased equipment for flexibility to expand & contract quickly.

Strategic growth is to buy growth through merger and acquisition. By acquiring (or being acquired) an organization you gain employees, resources, technology, market share, customers, and critical mass.

Each approach has strengths and risks, which create a new dynamic for the organization.

Pros & Cons of Build-Borrow-Buy

Traditional Build Growth ▲ Pro – greater control ▲ Pro – minimizes initial cost ▲ Pro - strengthens internal

development ▲ Pro - experienced in process ▲ Con – commitment over flexibility ▲ Con - capital asset investment now ▲ Con - ramp-up existing productivity ▲ Con - staff defections & raids Flexible Borrow Growth ▲ Pro - instantly productive staff &

equipment ▲ Pro - flex up and down quickly ▲ Pro - quick ramp-up for productivity ▲ Pro - new expertise & technical

know-how ▲ Con – more costly per hour

▲ Con - outsider aloofness – hired gun

▲ Con – reassignment of staff

▲ Con – extra layer of management

Strategic Buy Growth ▲ Pro - immediate productive presence

in new location ▲ Pro - ‘inherit’ trained staff,

equipment, facilities, technology ▲ Pro - expanded customer base &

inventory or achieves ▲ Pro - increased market share &

ranking ▲ Con - EXPENSIVE in $$ and time ▲ Con - high rate of non-completion ▲ Con - lost of focus on business ▲ Con - missing projections & goals

What Are the Things You Would Look at to Make Choice for Growth? Traditional Build Growth ◘ ◘ ◘ ◘

Flexible Borrow Growth

◘ ◘ ◘ ◘

Strategic Buy Growth ◘ ◘ ◘ ◘