Simple Scaling: Ten Proven Principles to 10x Your Business

SIMPLE SCALING

SIMPLE

SCALING

TEN PROVEN PRINCIPLES TO 10X YOUR BUSINESS

BRENDAN McGURGAN

CLAIRE COLVIN

Copyright © 2022 Brendan McGurgan and Claire Colvin

Simple Scaling: Ten Proven Principles to 10x Your Business

All rights reserved.

Hardcover ISBN: 978-1-5445-2590-7

Paperback ISBN: 978-1-5445-2589-1

eBook ISBN: 978-1-5445-2591-4

This book is dedicated to all of the fantastic clients of Simple Scaling, our ScaleX ™ Tribe. Thank you for giving us the honor and privilege of serving you.

Contents

The ScaleX™ Framework

Note on Coauthorship

P0

Introduction

Theme 1

Inspire

P1

Psyche

P2

Purpose and Vision

P3

People

Theme 2

Orientate

P4

Planning

P5

Process

P6

Performance

Theme 3

Accelerate

P7

Proposition

P8

Place

P9

Partnerships

Theme 1

Re-Inspire

P10

Positive Growth Culture

Acknowledgments

About the Authors

The ScaleX™ Framework

Note on Coauthorship

Throughout this book, Brendan and Claire speak in the first person, delivering insights and revealing lessons learned from their combined experience. Brendan’s expertise derives from his many years as an award-winning CEO, while Claire’s perspective is that of a high-caliber talent leader with a successful career across a range of business sectors. In a small number of episodes, names and personal information have been changed to preserve anonymity. A number of exchanges are re-created from memory. We have rendered them to the best of our ability.

P0

Introduction

—BJ McGurgan & CEJ Colvin, August 2021

Everything should be made as SIMPLE as possible, but not simpler.

—Albert Einstein

This book has been written in response to a failure at the heart of the small and medium enterprise (SME) sector. Only a tiny percentage—estimated at between 2 percent and 4 percent—ever achieve scale.

Think about that.

The vast majority of founders and entrepreneurs, despite making great strides forward in the early years, hit a brick wall and stagnate, denying themselves, their teams, and their communities a golden opportunity to create something special. A ScaleUp Institute report found that if the number of scale-ups in the UK rose by just 1 percent, 150,000 net jobs would be created by 2034, generating an additional £225bn GDP.¹ And that’s just the UK!

What is the reason for this failure? Why do so many otherwise excellent, high-potential startups end up treading water?

Another UK ScaleUp report cited lack of ambition as the number one impediment to scaling success.

We disagree.

It’s not ambition that’s missing; it’s the know-how required to scale successfully. The reality is that traditional thinking and long-established conventions are no longer serving us. To break through the ceiling and shoot for long-term scaling growth calls for a new set of principles.

Our company, Simple Scaling (simplescaling.com), exists to enable the success of would-be scalers, to allow them to deliver immense value to themselves, their shareholders, their team, their communities, and to society at large. Our ScaleX™ Accelerator is an exclusive program delivered across the globe to CEOs and managing directors of SMEs who have the ambition to scale with purpose.

Just to be clear on exactly what we’re talking about here, the Organisation for Economic Co-operation and Development (OECD) defines a scale-up business as one that has seen average annualized growth of at least 20 percent over three years and that has ten or more employees at the start of the observation period.

This is the world Claire and I have been immersed in for over twenty years. The company in which we met grew from a workforce of fifteen in a small business park in Northern Ireland to employ 700 people across six continents. In fifteen years, we went from being a locally focused company to being a global industry leader. Along the way, we won a host of awards: the Deloitte Best Managed Company for twelve years running, and the Sunday Times Profit Track 100, to name just two.

We were not a tech unicorn. We were not one of those business-world lottery winners, the ones who make sensational business news headlines.

We created a moonshot vision in which we would become the number one company in our industry in every country in the world. Then we went on to develop a plan to make that happen. Was it plain sailing? Hardly. Not only did we navigate 9/11, the dot-com collapse, and the global financial crisis, we also made bags of mistakes and took a lot of wrong turns. But we were a win or learn company, and that mindset was critical to keeping our vision in focus when things went wrong.

This book, in addition to our ScaleX™ Accelerator Program and our ScaleX™ Insider Podcast show, speaks to the 400 million leaders of SMEs out there who wrestle with their businesses day and night in hopes that things will get a little easier and that sustainable growth can happen. These are SME artisans who dream of greater success but can’t drag themselves from the everyday slog of their businesses or are paralyzed by the fear of growth. Like so many others, I graduated to the CEO position and immediately felt pressure to provide inspiration, direction, and a plan. Our ScaleX™ Framework is a playbook of sorts, one that I would dearly love to have had when I stepped into the CEO role all those years ago.

We have packed this book with clear calls to action, techniques, and real-life stories that will help you scale your organization. What’s more, our website, simplescaling.com, features a range of tools and templates that will support you on each step of your journey.

According to the Herrmann Whole Brain model, I’m blue brained: rational, logical, analytical, fact based. Claire brings a red brain to the table. She’s a champion and lover of people: expressive, supportive, and emotional. One thing we both share, however, is the love of a good framework!

We have combined our perspectives to create the ScaleX™ Framework. This puts a logical, intuitive order on the scaling journey. We want you to learn from our many mistakes. We want to simplify the wonderful scaling journey that lies ahead.

What’s more, we want you to take this journey with joy, flow, and ease.

As performance guru Enda McNulty, whom we talk to in P6 Performance, asserts, reading the book is not enough. You need to take what’s here and put it into practice. Don’t just read the material; be the material.

A New Mindset

Growing up in the ’70s and ’80s, LEGO (a great scale-up case study, by the way) was my go-to request for birthdays and Christmas. I would tear open the box, carefully unseal the plastic bags full of bricks and sort them into different bowls, which I had taken from the kitchen cupboard. With everything laid out in front of me, I would open the instructions, and moving slowly from page to page, I would work through them, watching the model evolve and grow. I wasn’t the kid who abandoned the instructions and built a dinosaur from what should have been a fire engine. Those dinosaur builders are the startup entrepreneurs, the creatives, and the igniters. We need those people—badly—but when it comes time to scale, a different mindset is required. You need discipline, structure, and a large dose of stick-to-it-iveness. One thread you’ll find running through this book is this: what got you this far won’t get you the rest of the way.

As you move from startup to scale-up, the focus is less on experimentation and more on establishing, refining, and standardizing the processes, which enable repeatable, scalable, and profitable business. It is about embedding the right level of governance to manage those processes and putting in the performance metrics that will help validate their efficacy and success. Scaling happens when your gains begin to outpace your losses. It’s about moving from the potholed laneway where you could only trundle along, and turning onto the scale-up freeway. It’s about moving smoothly up through the gears without losing a wheel in the process.

This book was created by business leaders for business leaders. Although there are other books out there that take in elements of what we’ve created, none provide a comprehensive, holistic, down-to-earth guide to all of the challenges you’ll meet as you set out to scale your business. We walk with you through each stage of the scaling process.

How to Use This Book

The ten principles (10 Ps) are discrete and independent, which means you can reference each separately if you wish. Taken together, however, they represent an integrated framework for scaling success—the ScaleX™ Framework.

They are divided by three actionable themes. Beginning with the Inspire section, P1 Psyche focuses on developing the mindset needed to successfully scale a business. P2 Purpose and Vision is all about creating an inspirational vision of the future, one that is rooted in a strong purpose. Once crafted, it is time to bring the who. P3 People looks at those you will need to get you where you need to go.

In the Orientate section, we zero in on P4 Plan, which plots a course toward the vision. P5 Process explores how you develop a template for repeatable success, while P6 Performance looks at how you execute.

Last, we deal with how you Accelerate your scaling ambitions. This begins in P7 Proposition with a clear articulation of your value proposition. To scale significantly, you will need to take your product or service beyond your borders into a new region and/or industry. We discuss this in P8 Place. Next comes P9 Partnerships, where we look at the broader business ecosystem that will play a part in achieving your vision.

Finally, we return to the beginning and Inspire once again with P10 Positive Growth Culture and look at how establishing the right culture holds the entire framework and indeed the entire scaling organization together.

By understanding how to navigate the growth phases that all SMEs go through and by implementing a more predictable, repeatable cadence across your business, you will be on your way to building a successful, profitable, and sustainable business. You will be on the road to realizing your vision.

Scaling is not easy.

There is no magic formula for delivering exponential revenue growth without exponential increases in costs, but the truth is that every Fortune 500 company began where you are.

There will always be things that lie outside your control. Technological advancements, such as virtual reality, blockchain, robotics, biometrics, and so on, have given us a world in constant flux. Changes in consumer behavior, employment trends, new product development, competitor activity, and government policy have to be captured and assimilated. You must adapt or die.

In all of this, there is one thing you can control: the fundamental principles on which your business is built. They will secure the foundation for your growing business and provide the basic truths to guide your decision making, behavior, and processes. They will allow you to cultivate the culture for sustainable growth and prosperity. In times of volatility and uncertainty, the ScaleX™ Framework will be there to focus you.

In addition to our own experience, we have incorporated the testimony of a host of experts and SME leaders who have also successfully scaled their businesses: Vishen Lakhiani of Mindvalley, Cameron Herold of COO Alliance (previously of 1-800-Got-Junk), JT McCormick of Scribe Media, and Brendan Mooney of Kainos, to name just four.

The most important piece of advice that we can offer on this challenging journey is to keep it simple, keep it honest, and keep it real. Being able to share complex matters in a simple (but not oversimplified) way requires a level of maturity and clear understanding of the situation.

Beware, however. Simple does not mean easy.

Simplicity can often require the most advanced thinking. Make it part of your business’s DNA. Once you embed it in your culture, you will move mountains.

As Henry Ford once said, Whether you think you can or you think you can’t, you’re right. If you believe you can, you will. We believe that with the right levels of ambition and belief, these ten principles will get you where you want to go.

THEME 1

INSPIRE

P1

Psyche

What man actually needs is not a tensionless state but rather the striving and struggling for some goal worthy of him. What he needs is not the discharge of tension at any cost, but the call of a potential meaning waiting to be fulfilled by him.

—Victor Frankl

It all starts in your mind. The success or failure of your scaling journey starts with the thoughts you think. What you believe you can achieve sets the limit on what you will achieve. To become a successful scaler, you will need to work on your mindset. Don’t underestimate the extent of that inner work. And don’t underestimate the magnitude of the challenge you face. Successful scaling is incredibly challenging.

But the rewards are also immense.

Before we delve into the operating principles of scaling your organization, you must first decide if scaling is a journey you truly wish to embark on. Before business scaling, you must be committed to personal scaling. You must level up in order to scale up.

As it stands, your business may be delivering a certain level of comfort. You’ve graduated from startup school or have taken over the reins from the founder and are now running a successful SME. Turnover is in the seven figures; you have a small team of capable people delivering decent results. After years of hard work, there’s cash in the bank, and you’re finally able to stop and enjoy the view. You have a nice lifestyle: the car, the holidays, the home—perhaps even a second home. Maybe you’re finally able to engage in some philanthropic activity, giving you a certain standing in your community.

Do you want to stay in this zone and maintain what has become a lifestyle business? Nothing wrong with that. Maintaining the status quo when things are in constant flux is challenging in its own right. But if that is your decision, be clear about it. Be deliberate.

Or are you feeling stuck? Trapped by the constant demands of the day-to-day business, unable to lift your head and work out where you want to go next?

Or maybe you are dissatisfied. Uneasy. Do you have a sense that there’s a greater purpose out there? Something that goes beyond simply maintaining a standard of living? Something that will allow you to work on rather than in the business? Do you feel passionate about your proposition and the value you deliver to your customers? Have you relished the challenges you’ve faced and overcome to date? If so, you now have a responsibility to scale. You’re standing at what I call Scaleverest base camp.

Remember, many SMEs have got to this point before, but according to UK research, only between 2 percent and 4 percent ever go on to scale successfully.² An OECD study asserts that companies that grow rapidly represent a tiny fraction of all startups.³

Before you set out to scale your business, you need to take an unflinching look at your lifestyle, your habits, and your mindset. You need to conduct an honest appraisal, and ask yourself if you are ready to make the fundamental changes necessary to help you get where you need to go.

Nor is it all about finding the drive and the self-belief to join the elite. Other facets of the CEO mindset have to shift, too.

For instance, if you’re at the helm of a successful startup, you’re probably in control of every aspect of the business. When the business begins to scale, it becomes impossible to exercise that level of control. So many CEOs we’ve worked with have struggled with letting go and trusting others in the business to deliver what they can no longer deliver on their own. Attempting to do so is a sure path to burnout.

Imposter syndrome is also an issue; the sense that you’ll never be good enough, that you’ll be found out at any minute. We’ve worked with many CEOs who feared that they weren’t smart enough, or prepared enough, or strong enough to succeed.

Simply shifting your mindset to one of exponential growth from one of incremental growth requires an altered perspective—a reconfigured mindset. You have to do something different, not more of the same.

Do you wish to lead yourself, your team, and your business to the top? If the answer is yes, then your commitment must be unshakeable. If you’re only half-committed, you will fail. It’s that simple.

So let’s look at what getting to the scaling summit entails.

1.1 Scale with a Bruce Lee Mindset!

If you always put limits on everything you do, physical or anything else, it will spread into your work and into your life. There are no limits. There are only plateaus, and you must not stay there; you must go beyond them.

—Bruce Lee

I’ve been practicing martial arts for more than twenty-five years and have always been fascinated by the importance of mindset in performance and the many parallels between performance in elite sport and elite business. Take tae kwon do, the martial art that I’ve concentrated on. It is based on five principles: courtesy, integrity, perseverance, self-control, and indomitable spirit. You could just as easily ascribe these values to that of any successful scaling organization.

Growing up, Bruce Lee was my hero. His many films inspired my big vision: achieving a black belt. In practice, tae kwon do is a mix of self-defense, competitive sparring, patterns, physiology, the Korean language, and structure. With practice, desire, and focus, you can secure a colored belt every three to six months over a four-year period. I loved how these mini goals allowed me to measure my progress toward the ultimate ambition. At the age of forty-one, having attained my third-degree black belt, I took part in my last competition, the Northern Ireland Championships. By then, I was accompanied by my two daughters, who were competing at junior level that same weekend. After three bouts of competitive sparring, I made it through to the final, where my opponent was five inches taller and half my age. That day, I had to concede that this was a younger person’s game, and I proudly accepted my silver medal.

Giving back is part of tae kwon do’s admirable tradition. Since achieving my black belt, I have coached the sport in my local community. I’ve noticed, over that time, just how many students quit at green belt stage. Progressing from white through yellow to green is, well, easy. You can secure your grading and be awarded your belt even if you miss classes, fumble your patterns, and get pummeled in sparring. To progress to blue, red, and black, however, requires so much more: discipline, dedication to a vision, the ability to listen, perseverance, desire, faith, an unwavering attitude, and a willingness to learn. Not everyone has this mindset.

Progressing to the later belts—and the black in particular—is very much like the choice facing entrepreneurs who are deciding whether to try to hold what they have or to scale.

It’s fifty years since the untimely passing of Bruce Lee—or The Dragon as he was known. He was only thirty-two when he died, an age at which many of us have not figured out what we want. Yet, in those short years, he made a huge impact, not only on sport but also on film, on philosophy, and the study of mindset. Bruce was passionately connected to something that was much bigger than himself. It wasn’t just about being rich and famous.

The scaling entrepreneur needs the Bruce Lee mindset:

• A can do, will do attitude.

• A win or learn mentality; mistakes are an opportunity for self-improvement and adaptation.

• Being formless, that is, not stubborn. As Bruce put it, flexible like water.

• An insatiable appetite for learning as the sustenance of personal growth.

• Make your best effort each day: Do just a little more than what’s required.

• Take personal responsibility for the outcome.

• Be a source of uplift. Your positive attitude and positive energy will raise those of your team.

The obstacles we think are impeding our progress are almost always self-imposed. We focus energy on the problem, not potential solutions. To knock down those walls, we need to adopt the Bruce Lee mindset—the growth mindset.

1.2 Ignite the Power of Yet

I am also defined by my curiosity and thirst for learning. I buy more books than I can finish. I sign up for more online courses than I complete. I fundamentally believe that if you are not learning new things, you stop doing great and useful things.

—Satya Nadella, CEO, Microsoft

I had just finished a meeting in the business lounge of my hotel in Dubai when my coauthor, Claire—then talent director of the company we both worked at—called with bad news. A crucial member of our team had handed in his notice. He had been leading a business unit delivering revenues of nearly £10 million ($15 million), one that we had grown almost from scratch. He had been progressing steadily through the company and had been appointed to this role only six months before.

I hung up and called the guy right away. In the course of an emotional conversation, he told me that he was broken. Despite having cleverly disguised the fact for some months, he was completely overwhelmed by the job.

I feel suffocated by it, he said. I’ve bitten off way more than I can chew. I can’t do it, Benny.

Things had gotten so bad that as far as he was concerned, his only choice was not only to leave the role but to leave the company as well.

As we talked through his experiences over the previous six months and the heady mix of emotions he was still going through, it emerged that he still wanted to do the job. The passion and ambition to make it work remained, but he felt he just couldn’t do it anymore. I agreed with him. He couldn’t do it.

Yet.

We talked on for about half an hour and agreed that he would take time out from the business. Then he could return to a different, less-pressurized role and take it from there. Three years later, the same position became available. He went for it again and got it. I called him up after a couple of months to see how he was getting on and, more particularly, how he was feeling.

Like Robocop, he said. It’s great. I’m loving it. Couldn’t be better.

What had generated this transformation in ability?

He used his time off to develop his mindset and transformed his energy levels. By doing the inner work and taking on different roles in the company, he built his competence, confidence, and capability to the point where, when the opportunity arose again, he was ready to seize it with both hands. And this time, he was more than equal to it.

Mindset

In her now-famous 2007 book Mindset, Stanford psychologist Carol Dweck created a new psychology of success. Following decades of research, Dweck proved that a small psychological change in how we approach challenges can dramatically impact outcome. She identifies two mindsets: the fixed mindset and the growth mindset. Students who have a fixed mindset believe their intelligence, basic abilities, and talent are unchangeable. They are predetermined. If you have a fixed mindset, you tend to avoid challenges so that you don’t have to deal with failure, because failure, as far as you’re concerned, means you’re stupid. By contrast, if you have a growth mindset, you believe that you can develop your talents and abilities through effort, good teaching, and persistence. You believe that with the proper focus, you can learn anything. You embrace challenges because you see them as an opportunity to learn and improve. Effort is worthwhile because it is seen as a path to mastery. Getting things wrong and receiving feedback is seen as positive because it guides further improvement.

In one famous experiment, students attending a high school in Chicago who would otherwise be issued with a failing grade were instead given a grade of Not Yet. The clear implication was that they were on a learning curve. The grade might not be right, but the trajectory was, and knowing that dramatically improved these students’ perseverance, application, and ultimately their success.

If we don’t engage the power of yet, our ability to dream becomes impeded; our desire to explore the what-ifs is neutralized. A fixed mindset doesn’t look for solutions; it only seeks validation.

The Warrior Academy

The Warrior Academy is an international business developed by Sebastian Bates, one of the many successful scalers who generously contributed to this book. The academy offers martial arts classes to children, courses designed to develop kids’ confidence, conduct, and concentration. The story of how he drove the growth of that business is fascinating in its own right, but right now, I want to say something about how he reacted when the COVID-19 pandemic struck at the beginning of 2020.

In late February, he was on a business trip to South Africa. He had just landed in Johannesburg when he turned on his phone to a message from his wife—then seven months pregnant—to say that the academy had been shut down. They had over 400 students in Dubai alone, where he and his wife were based, but as and from that day, all children’s activities ended summarily.

The problem—well, one of the problems, he explains, was that they shut us down on payday. We were expecting £180,000 ($270,000) in end-of-term fees, and we had a lot of checks going out. So we pivoted, very, very quickly.

Sebastian got back to Dubai on one of the last planes to leave Johannesburg, and in the ten days that followed, he spent twelve hours a day filming. He and the team at Warrior Academy filmed every single class, from white through to black belt. Within two weeks—just as the most severe lockdown restrictions were announced—Warrior Academy went online.

The COVID-19 pandemic struck so quickly that most of us were left standing like deer in headlights, but Sebastian’s quick thinking and tremendous drive meant that his business didn’t skip a beat. That’s the growth mindset in action.

Breaking Up Negative Self-talk

What is perhaps most profound about Carol Dweck’s research is that mindset itself can be changed and that this change can happen in either direction. She has found, too, that simply being conscious of the two mindsets can prompt a shift in how you think.

How many times do we look in awe at the achievements of others and think, I couldn’t do that! Our minds shift automatically to justification mode.

"I could never run a marathon, but Tommy was always a great runner at school. I’m not surprised he’s training for that."

Bill’s company just topped $10 million in sales? That’s no surprise. Didn’t his father give him the money to start that business in the first place?

Think of all the stories we tell to keep ourselves locked, comfortable, and unchallenged. As Dr. Jim Loehr, the world-renowned performance psychologist and executive coach, puts it, The power broker in your life is the voice that no one hears. How well you revisit the tone and content of your private voice is what determines the quality of your life. It is the master storyteller, and the stories we tell ourselves are our reality.⁴

Simply recognizing that you’re adopting a fixed mindset in these scenarios can be enough to jolt you toward growth. Next time you think I couldn’t do that, don’t just accept this instinctive, thoughtless assessment. Challenge it. Challenge all negative self-talk. Journaling is a great way of focusing attention on that insidious negative voice. Write down your most prominent negative thoughts and then critique them. Hold them up to the light of day. Are they really based on fact? Are they just negative interpretations? Engage the power of not yet, and if there are gaps in your skillset, find a way to fill them.

Now, while activating your growth mindset, ask yourself the question, Do I want to scale my business? You may not have everything in place to scale yet—in fact, you almost certainly won’t—but if you think resolutely with a growth mindset, you can and you will. Remember, many, many people