According to Chris Zook, an Advisory Partner at Bain & Company, corporate scale-ups should have 1,700 times more chance of succeeding compared to green field start-ups. Yet a staggering seven out of eight fail.
For organizations to succeed in an increasingly competitive digital economy, they must be capable of scaling-up an idea to a viable product or service. But many are falling at this final fence due to a lack of management alignment, resources, skills and cultural understanding.
Scaling up happens when a proven idea, be it a product or service, passes the proof of concept (PoC) stage and is deemed ready for use by many users across the organization. The object being to produce business benefits, such as reduced costs, streamlined processes, increased productivity and a boosted market position.
“Depending on their level of maturity, organizations generally find scaling up hard,” explains Edouard Barbier, Principal Consultant at Orange Business Services. “The problem is many organizations don’t think to identify a relevant business issue linked to innovation at the beginning of the journey. This makes it a real challenge to scale-up as management can’t clearly see what business benefits they are going to get from rolling out the new product or service.”
Scaling is a big step and a large investment for organizations. It requires budget and careful planning.
According to Gartner, CIOs must focus on three elements to scale proven ideas successfully: ownership, behavior and process. Each one incorporates “scale breakers” and “scale makers.” Turning these into “scale makers” requires strong ownership of projects. Here, project managers must take responsibility for on-going development and not see it as a simple dotted-line role. They must avoid ideas being diluted and be prepared to bring in expertise where required. “Scale breakers” tend to resist change.
“It is imperative that organizations don’t focus first on the complexity of scaling up. Instead, focus on the viability and value it will bring to the business. This way, senior management is much more likely to buy into the idea and add budget and resources for scaling up,” adds Barbier. “Organizations must be truly committed to scaling up, otherwise it will most likely fail.”
This commitment must come from all levels: senior management, the business departments who will be responsible for ensuring mass adoption of the product or service and, of course, IT.
Defining the challenges
Orange works on a very ambitious target of scaling one in every three PoCs. Barbier, however, cautions that the product or service must identify a need within the business to have any chance of scaling up. To this end, Orange utilizes a minimum viable product (MVP) concept taken from Lean Startup methodology that stresses the impact of learning on new product and service development. Lean Startup is an approach designed to shorten product development cycles and rapidly discover if a proposed business idea will work.
By using an MVP, the customer and Orange can work out if there is any future for a product or service. That way, minimum effort and budget is spent on an idea that will not succeed. If the MVP is successful, a PoC follows. “PoCs are important as senior management often doesn’t understand scaling; it is too abstract. They want to see something concrete before moving ahead,” explains Barbier.
An organization must be convinced a PoC is viable as scaling is expensive. There are still further challenges in the scaling stage that may include security, compatibility or integration issues that need to be overcome.
Orange ran a PoC and rollout for a financial institution that wanted to pull out greater insight from economic studies into tourism. The company wanted to use big data analytics to build new economy activity indicators. This involved inventorying data sources and identifying indicators in the tourism industry.
The data science and big data PoC was carried out over three months. Following the PoC, the financial institution had all the elements to source data internally and independently analyze. But to scale up the project, further elements had to be considered, including identifying required resources, securing data feeds, internalizing data collection and developing dashboards and alerting systems for data collection to make sure the solution was secure.
This business example went straight from PoC to scaling up, but in some cases, Barbier maintains the best way forward is to run an additional PoC if an organization isn’t sure it will easily integrate into their ecosystem or still isn’t totally committed. “Here we can add an intermediary PoC, jumping from 20 to 500 users, for example, allowing us to test different perimeters before making the decision for a full scale,” explains Barbier.
Successfully managing change
Scaling also encompasses behavioral and cultural change. An organization can’t simply expect to roll out a new product or service and expect employees to adopt it without question.
Often it is not a technical issue that stalls scaling, but a process-driven or user-adoption issue. “Scaling up may meet the needs of the organization, but it is also important that it meets the needs of the users, or they won’t use it. Change management is an important part of scaling and one that in my experience organizations often forget,” adds Barbier.
Scaling up can create complex organizational changes with multiple interdependencies that need to be looked at. Organizations need to prepare their employees for change, for example, by managing any resistance from the beginning.
This is where consultancy can be hugely beneficial. “To progress our customers innovation strategies, we help them build innovation governance in an innovation ecosystem made up of processes and methodologies that will enable them to integrate and manage their innovation in a more independent way. Change management is a key part of this ecosystem,” explains Barbier.
Unlocking the most valuable innovations
Every CEO and CIO today knows the importance of innovation to their success and roadmap. But, when it comes to scaling up, uncertainty and lack of commitment is still holding back good ideas from succeeding.
Driving a scale up of innovation is not easy. With experimentation now part of the course for organizations, few managers yet have the experience of pushing through complex scaling up projects. This is where consultancy comes in. It is the safe and sensible choice for organizations on a learning curve to a future of greater innovation independence
For more information, read Edouard Barbier’s advice on co-innovation and partnerships. Then, find out how we can help you with innovation management focusing on business models, methodologies, customer journey, marketing and post-PoC engagement with our consulting services, and finally, read our brochure on B2B Co-Innovation Management Ideation Workshop.