The Challenges of Scaling: Culture, Communication & Misalignment
Speaking at Startup Summit 2019, Current Health COO Richard Lennox detailed the pitfalls and challenges of scaling businesses.
Scaling a business can often be similar to coordinating a rugby team, says Richard Lennox, COO of Edinburgh-based MedTech firm Current Health.
It creates a few sore heads, presents trying moments and can be a bit of a slog. However, success lies in the alignment and communication of the team, as well as a concerted focus on customers and products; get your tactics right and you could be on a winning side, Lennox insists.
“Rugby is a simple game,” he says. “It’s 15 guys or girls running forward with the ball and passing it backwards. But if you break that down into the scrum, then that’s eight different skills.”
“Without the hooker, or without an experienced prop, you can’t have a scrum. Product development is no different – you need that diversity of skills and behaviours in order to keep moving your ball forward,” Lennox insists.
Lennox has worked extensively in the technology sector and spent several years at Edinburgh’s famed tech unicorn, Skyscanner – from its early days through to the global profile building. Now, he has moved onto another rising star of the Scottish tech sector, Current Health (formerly Snap40) – known for its groundbreaking automated remote patient monitoring device.
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Speaking at Startup Summit yesterday, Lennox outlined his experiences helping businesses scale – detailing the key challenges, pitfalls and dangers that organisations, founders and teams face.
Workforce alignment, culture challenges and chasing money over solid product development are all areas he believes lead scaling businesses down a perilous path.
“Scaling is actually harder than starting up,” he asserts. “Communication is more challenging, you have larger teams, different people, different priorities and different customers.”
“A lot of startups and scaling organisations will talk about ‘how do we go and raise more money’, ‘how do we go through Series A, Series B or raise that seed fund’,” Lennox adds. “That capital, that injection of cash, it only buys you the time and capacity to do what you need to do – the real capital of a scaling business is time, talent and energy.”
One of Lennox’s key lessons from his time at Skyscanner is that communication is a serious challenge. As organisations continue to grow and burgeon, communication can become contorted, warped and often misaligned. This is an issue that many founders and core team members fail to realise during those nitty-gritty bootstrapping days.
“A typical startup is four or five people, sitting in the same room at the same time. And that’s okay when you’re starting up,” he explains. “You understand exactly what is happening and know every minute detail of what’s going on in that business.
“If you extrapolate that out, there are three people in your organisation then you have three direct lines of communication. When you get to seven, that’s 21 and at 11, there’s 55.”
Early-days communication is a walk in the park compared to when a business begins to scale and reach workforce upward of 50, he notes.
“When you reach 100 employees, that creates 4,950 direct lines of communication between a team,” Lennox says. A monumental task which is impossible to handle and often leads to each individual having their own work queue. A company can easily lose its common direction, its desired destination and, once this begins to fester, the focus on product and customer deteriorates.
Building cross-functional teams and capitalising on the diverse talents of the scale-up ‘scrum’, as he previously details, is critical. However, with cross-functionality comes additional challenges; misalignment of these teams is equally detrimental to the development of a young company.
“You need that level of cross-functionality in those teams, otherwise you start to get these hand-offs between different teams. As soon as that happens, you are going to slow down product development to a complete stop,” Lennox explains.
“Misalignment is probably the most dangerous symptom for a scaling organisation. If you don’t focus that time, talent and energy on a single point and to that same directional heading, or principles, your company will start to unravel as you grow bigger and bigger,” he insists.
Company culture, too, proves a troublesome aspect of scaling for founders across the technology sector. Ensuring you retain that core vision and those fundamental principles is key, but it’s not as simple as just outlining your values. As your company expands and evolves, the values and culture often do so with it.
Senior staff at these organisations often feel they have a choice; focus on culture or strategy, never both. Lennox feels this is another pitfall which founders and organisations fall into. You can focus on both – they are intrinsically linked and should be addressed in equal measure.
“It’s often about who you employ, finding the best people and the right network of teams to get the stuff done,” he explains. “That’s the ‘who’ but then you add the ‘what’ – what are we trying to achieve? What is our directional heading? What is our strategy and what are the goals?”
“Often we hear that ‘culture eats strategy for breakfast’. I actually disagree with that to some extent,” Lennox adds. “Culture is more important than having the right strategy. You can work through a strategy.
“More importantly, they can actually go in tandem. They are a pair. One drives the ‘what’, and the other drives the how do we behave to achieve that ‘what’.”