The secrets to successful scaling

November 26, 2019
The secrets to successful scaling

[ 16 min read ]

Scale Space Executive Chairman, Mark Sanders shares his thoughts on his experience successfully leading businesses through high growth.

Could you describe for us your role within Scale Space?

I’m the Executive Chairman of Scale Space and I’m responsible for our new flagship site in White City which is a joint venture with Imperial College London, as well as developing a network of innovation hubs throughout the country.

Tell me about your experience and expertise in working with scale companies?

All of my career I’ve been involved in what I describe as “innovational growth”. I was the Chief Executive of a business that was backed by Blenheim Chalcot, that we took to 400 employees and we sold in 2014 to Equifax for £200 million.

So, I had all of the excitement and fun and games of taking a start-up and running it through the scaleup phase. Then having exited that business, I’ve been involved with the businesses in the Blenheim Chalcot portfolio. Over the last 20 years Blenheim Chalcot have helped start up and scale something like 43 companies. One of the nice parts of my job is not only progressing the work that we’re doing on Scale Space, but also being able to support the Blenheim Chalcot venture companies, watch them grow and help them navigate the challenges of growth.

Picking up on your personal experience having successfully scaled a company, if you were to give your younger self some advice based on what you know now, what would you have done the same and what maybe would you have done differently?

That’s a great question. Something I would certainly do the same, is really focus as you grow on not only the product and the business, but also the way the business works. Something that I found really interesting as a company grows is the way it operates has to change. How you hold onto the sense of a family environment and maintain the culture and the values that you had when you were 20 people, when you’re 100, that takes quite a lot of thinking about. So, I would definitely tell myself to invest in a team of people who value and care about the way the business works.

What I would have done differently? I think I would have made more time to go and get advice. I think it’s really easy in a fast-growing business, where there’s always something else that needs doing, to just focus on the task. Actually, what I’ve learnt is that there are people out there who have got experience of doing what you’re doing, and making time to think about how to connect with others for help or advice might have helped us to avoid some of the mistakes that we made.

If Scale Space were launching back when you were leading a high-growth company, what would you have found attractive as a business owner?

I think this idea of a community that you can be part of, where other like-minded people are going through the same sorts of challenges that you’re going through, I think that’s actually very appealing. I also think that for early stage businesses, having a nice environment where you don’t have to go and invent it yourself is actually quite novel. Because as you’re scaling you want to attract talent, you want to have a place to bring your clients where you can make them feel comfortable and confident in you as a company. If you’ve got the wrong environment you’re not sending out the right signals.

I think having the right environment for growth is more impactful than you might think – both in terms of hiring, but also for meeting with clients if that is a part of your sales process. Then there’s this piece in Scale Space around access to Blenheim Chalcot and university expertise. As a Chief Executive of a Blenheim Chalcot backed business, I had access to the Blenheim Chalcot know-how, and I think that’s really valuable.

Returning back to my reflection of taking a bit of time to think about where you need help, one of the nice things about the Blenheim Chalcot approach is it is hands on. They are involved, and it isn’t just board meetings where you’re either praised for success or given a hard time because you haven’t. It’s actually very, very collaborative, very engaged. Having access to people who have know-how that you can call on, I think is really helpful. And then the university collaboration, I can’t tell you how useful or how excited we would have been about that. Having the ability to get access to some of the leading thinking and research and also, potentially access expertise and resource for specific challenges that we were facing, would have been incredibly valuable. Add to that, opportunities to get great students or leading academics to come and spend some time with us to try and solve those problems, we would have certainly been very attracted to locating at Scale Space.

When looking across your experience with Blenheim Chalcot, what do most of the successful scale companies you’ve worked with have in common?

I think there’s a few elements to this. We’ve always had a strong view that the team is critical. When we look at businesses that are scaling, a kind of prerequisite is you’ve got the right team in the leadership positions running the organisation. So you’ll see they have strong leadership, they have really thought about the team they need to grow the company, they’re very focused and they’re very on it.

Then, there’s the benefit from having real clarity and purpose. I think companies who know what they’re about and what they’re trying to do, where everybody can galvanise and rally around that is really important. Lastly, product. We spend a lot of time thinking about this, you really need to have a product that genuinely solves a customer’s problem or creates value for customers. And, I think it is critical that you can explain it in ways that customers understand.

And then finally, which I think sometimes scale companies overlook, is being able to do that repeatedly and profitably. So, for me the three things really are, the right team, with a common purpose, with a great product.

What, in your opinion, do you think are the biggest barriers that scale companies need to overcome?

There’s a lot of research and literature around about this. I look at the ScaleUp Institute Annual Review as an example. What they think about the idea of leadership and finance, along with access to markets and how it helps to have the right infrastructure. They’re things that I can’t argue with.

I would call out a couple of others that I think personally are also really important. One is, and I say this again with a bit of experience under my belt, sales is really critical for scaling companies. Sometimes we meet really bright people, with really good ideas but they haven’t quite figured out that to grow the company you’ve got to be able to take a product to market. It’s not just about having a great product, but can you get people to buy it? And I think that’s often a barrier to growth. I’ve heard pitches from Bleinheim Chalcot businesses and others where I know it’s a great idea, but for some reason they can’t explain it in a two or three minute conversation. I think scale companies should probably over-invest in how they think about going to market because that’s ultimately going to be critical to your success.

I think another one, is understanding your economics. We meet lots of people who talk about a business that’s currently losing money, but they believe that once it’s big enough it will be profitable. And that can often be very true, but if you haven’t actually figured out the economics of your product and you can’t demonstrate how you’ve got the path to profit, then I don’t think that it is very credible just to say that scale is going to get you there.

I think the final aspect, which talks to my experience and learning, is that when you’re growing something you’re really busy. Making sure you do make time for the organisation, for the people, for communicating. When there’s 10 people around a table it’s really easy to manage the organisation and make sure everyone’s aligned and working on the right thing. When you get to 50 to 100 people, you might still know everybody and that’s great, but you do have to invest much more in communication and updates to make sure everybody’s with you on the journey. And again, if you neglect that, that becomes a real barrier.

What do you think is the hardest aspect going from a startup to a scaleup?

It would be easy for me to say that depends on what the nature is of the business. But I think part of it is ambition. One of the things that we see in this country is lots of really good ideas, and actually reasonably good startup businesses that never really scale because the founders are happy with them being small enterprises, that are steady and generate a return that funds their lifestyle. So, part of it is ambition, you’ve got to be willing to invest, not only the capital, potentially, but you’ve got to be willing to invest the blood, sweat and tears, of getting your business from a startup through the scaleup phase. Asking, am I, my organisation and my backers ready for this leap? Are we able to fund it and are we able to deliver a plan that’s going to scale the business?

And then. once you’ve got your common purpose and your ambition, with everybody aligned against it, then I think it really comes back to customer acquisition. I think if you can’t see a path to acquiring customers profitably and delivering a product that ultimately solves a problem successfully, then you’re just not going to scale, it’s just not going to happen. What’s the right strategy and what’s the right approach, I think that’s very contextual for the nature of the business. But I do think you’ve got to be willing to evolve your sales strategy, because you’re going to be operating at a different scale. You’ve got to revisit your customer management, because that’s going to be at a different scale. And you’ve got to be confident that your delivery can scale to meet the promise that you’re making with your product. We’ve all seen businesses that scale very quickly, and then fall apart under the volume that they generate.

How important is the role of leadership in achieving high growth? How do you judge the point where, as founder, you need to take a step back and build a senior leadership team?

I think there’s often a fear of breaking what you’ve built. Founders who get a business to profit, a business that’s successful in delivering a return, there’s a very real risk, or a very perceived risk, that trying to take it further, then overreaching and failing is worse than staying as you are.

Personally. I think, there’s a piece in there where getting really honest guidance and the support is key. Someone that can say, “actually, you have got a great business, and this can succeed, so here’s some help that you need.” If you’ve got the right level of ambition, the delivery against that is entirely feasible. I do think you need people who are going to drive you towards that, having external investors in your business, and a board that has some broad representation on it as you grow is also very useful.

We try very hard with the Blenheim Chalcot businesses to make sure that the boards have got external representation on of people who know something about the subject that the business is operating in. But all of that is around having somebody that can independently and dispassionately say, “Actually this could be bigger, or we could do better, or there is a real opportunity here.” When you’re busy and time is scarce, it is hard to have the ability to stand back and say, “My business is growing quite nicely or I’m succeeding, now I’m making money, but my scale could be 20 times bigger.” This idea of external influencers, advisors or guiders, who can show you the different opportunities, offer a different path, is very important.

Sometimes the founder is not the right person to run the business in the scale phase. And indeed, when you’ve gone through the scale phase and you’re heading towards being a big organisation, I think that requires a different kind of leader again. Speaking for myself very personally, the company that I ran, I think it had probably got to the point where it needed a different kind of leader than the leader that I was, because of the just sheer scale and breadth of the company. I think this goes back to what’s the right team, what’s the right organisation, what’s the right leadership, and I think that changes as the company evolves, I think you’ve got to be really alert to that.

You’ve touched on quite a personal point in somebody’s journey, from coming up with an idea to being able to step back and not feel that they’ve failed. That it’s actually the fact that if they want the business to grow, then different skills and different qualities and approaches are required.

Absolutely. When you get the business going and you’re starting out, you want to be creative and innovative, try lots of things, have a team that’s very flexible, learn lots, fail fast, get out and talk to the market and talk to your customers. Really build something that is a business with a product and economics that can work. That is a period of really high energy, real excitement and that requires a certain kind of management and leadership. But there comes a point you have a significant number of customers and you’re delivering a service, or you’re delivering a product at scale, where the idea of going to tinker with it every five minutes and try lots of things runs the risk of breaking the core product that you’ve been offering. And that’s really bad.

The organisation that can simultaneously deliver reliably and robustly to customers, whilst innovating, is a different organisation to the one that started just by being innovative. That could be the same leader, or there comes a point where it might have to be entirely different.

What type of company culture do you think is best for scaling success?

I’ve always had the view that you want to hire great people and you want to have an organisation where they’re engaged and able to contribute. I think there’s a need for organisations to lean toward creating some sense of hierarchy and responsibilities. But actually, what you really want are fluid boundaries and an organisation where the right people can get focused on the right projects, at the right time. So, the agile methodology and some of the more modern ways of working I think are really positive.

Creating a culture of engaging with your people, really making it a part of your journey and allowing them to give input and feedback, I’ve always thought was really, really important. The idea that people are just work units doesn’t really work for me. I hire people for their talent, their intellect and their ability. You therefore want to have an organisation culture that taps into that.

Returning back to a point where you were speaking from personal experience to the benefit of being able to access external resources and advice. How do you feel the community that you’re creating at Scale Space is really going to bring that aspect to life?

I think there’s a lot of participants in the community. As we launch Scale Space in White City, we’ve partnered with a leading university in Imperial College London. Clearly, they bring massive amounts of energy, they bring super talented people, that’s really exciting, so their input is really important. You’ve got Blenheim Chalcot’s businesses in the building, at varying stages of growth, so there’s a wealth of experience there. Also, bringing in other companies to be part of that, I think that’s a really key part of the story.

We know participation is crucial, everybody is quite understanding of why they’re part of the Scale Space community, in principle this means that when we’re bumping into each other, or having a cup of coffee, we can talk about stuff. However, I think there’s a level of formality that we need to deliver, which can be around events and encouraging meaningful connections.

One of the things we have found is really helpful, is rather than having general discussions, you focus on very specific topics. For example, if we ran a session on artificial intelligence, we can bring somebody in from the university, we can bring people in from the businesses in the building, anybody who’s interested in that topic, then can participate. We know that is very appealing, because it’s efficient from a time point of view, but it’s also highly relevant content people are going to benefit from.

Now, all of that takes a lot of work, in the background in Scale Space, a lot of the work is around engineering, how to get access to our shared knowledge, how we connect into our members and allow them to contribute, and how we can share and signpost others. And, part of that is a technology solution that will underpin the Scale Space ecosystem, where people can see our content, university content, their own content and they can share it. Part of it is people meeting, part of it is events. We’re investing a lot of time and effort in how we build the engineering that enables all of that to happen in a way that’s really productive for the people in Scale Space.

What makes Scale Space different from other flexible working spaces?

I think it’s different because it starts from a completely different perspective. Scale Space starts from a desire to support businesses to innovate and scale and succeed. It’s borne out of a business builder and leading universities, our primary purpose is around supporting businesses to be successful with innovation, growth, and creating new ideas. The building, and not to be critical or to demean any of the hard work that goes in to build buildings, but the building for us is just a container.

I think the difference between other flexible space providers and us, is that they start with property and then they lay on some services. We start with business building and that is the problem we’re trying to solve. We’re trying to create the conditions to support people to grow their business and to scale and be successful.

I do think that there’s room for flexible, we’re not trying to outcompete every flexible workspace provider in the world. But I think we start with a very different mindset, Scale Space is backed by Blenheim Chalcot, the UK’s leading digital venture builder and nowhere else is. Our effort and focus is on connecting scaling businesses to leading universities, so in White City, the joint venture we have with Imperial is for us a fantastic proof point for what we’re trying to do. That combination of practical business building, alongside academic input, with access to research and talent, I think makes us very different and hopefully very interesting to the people we want to help.

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