Stephen AdamsEmily Burrill

Lexi CrawfordWade Reese

Ken Self

IntroductionBasic Strategies for Growing a Business

ScalingDuplicationGranulation

Supporting PrinciplesOrganizational LearningKnowledge AcquisitionKnowledge Transfer

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Introduction

Is This Presentation Going to be Fun?VideoActivity

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Managing Fast GrowthVideo: Starbucks

Report about Starbucks growth into Asia Starbucks Video

How does this relate to our topic?

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Managing Fast GrowthStarbucks: How does this relate to our topic? "To grow steadily and avoid stagnation, a

company must learn how to scale up and extend its business, lengthen its expansion phases, and accumulate and apply new knowledge to new products and markets faster than competitors."

 

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Managing Fast GrowthStarbucks: How does this relate to our topic?

Management can't leave growth to chance.Focus comes from within the Organization for

planning.Size does not matter, sharing knowledge and

implementing ideas does. Management must use supporting principles:

Organizational LearningKnowledge AcquisitionKnowledge Transfer

 

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Managing Fast GrowthLearning by Doing – Stage 1Divide into three groupsRemove the inner bag of LEGOs and set it

aside for later useUsing exactly 14 pieces, build a model that is:

Wholly connectedHas a minimum of 4 pieces touching the tableTouches the table in at least two places (not

immediately side-by-side)

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Managing Fast GrowthLearning by Doing – Stage 2

Without changing the foundation of your business (in this case, the pieces already assembled) add the remaining pieces from the first bag.

Continue to leave the second bag sealed

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Growing Select Business Cells

Scaling

Doing more of what you’re good atSupports commitment to growth

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When is scaling the right strategy?When the market is large enough for rapid

growth in a focused product lineWhen the product creates unique value (in

the customer’s eyes)When the company can distribute products

widely at low cost

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Netscape

1994 Founded by Jim Clark and Marc Andreessen1995 $80 million in sales1998 $500 million in sales (acquired in the Fall by

AOL with a value of more than $10 billion)

“In our business, stability comes from doing things quickly.” -Jim Clark

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Strategies for scalingInvest aggressivelySpecialize and standardizeHire the right mixAdapt the (organizational) structuresFind ways to learn from customers early

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Managing Fast GrowthLearning by Doing – Stage 3

Open the second bagAs closely as you can, create a second model

that matches the first

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Growing Select Business Cells

Overview• Definition: A strategy for managing quick

growth that is often used by businesses expanding into international markets

• Often franchises and overseas subsidiaries

• “Packaging” of company’s core competencies—keys to successful execution

• Standardization vs. Adaptation• Types of duplication

• Manufacturing, HR, Marketing, Management, etc.

Duplication

Nature of the business requires a physical presence—IKEA example

A need exists for better distributionvs. scaling

The company is skilled at adapting/adjusting to different markets and customer needs

When is it best to use duplication?

Overview—duplication of key elements of the company’s infrastructure

Formal vs. Informal information sharingIKEA’s use of Black Boxing

“Knowledge Marines”Limitations of black boxing

Diversity of customer needs in different regions

“Black Boxing”

Managing Fast GrowthLearning by Doing – Stage 4

From the second bag, use any remaining pieces to:Connect the two modelsBuild one model as tall as possible

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Growing Select Business Cells

GranulationUsing knowledge and resources to explore

new territory with new autonomous business units, independent subsidiaries, or corporate spin-offs

Each new venture should reuse existing product technologies, manufacturing process, organizational processes, and consumer information, but combines them in new ways

SAPStarted out by scaling growth with ERP R/1-

R/3Then duplicated by reorganizing into business

units, from one product to multiple productsAs they matured, used granulation creating

new business unitsmySAP.com and SAP marketsNow moving to incorporate business using

text messages

Dow Chemical CaseHad declining growthSaw the Internet as a new source for

businessStarted a couple different venturesManagement decided which ones were best

to continue to pursue

3MUses current technologies in new waysUsually forms a new venture in the companyHas built a business model upon using

granulationWebsite

Is Granulation right for you?Mature marketNew Substitutes could obsolete your businessAbility to monitor new markets and share

informationRelies on having entrepreneurs in the

companyKeeps a mature company from going extinct

Recap of ConceptsScaling

learn how to do more of what you already do

Duplicatinglearn how to apply what you know in other

geographical markets

Granulationgather substantial info about new competitors

and new product and market opportunities in order to grow

Strategies for Growing & LearningMeans of Learning Scaling Duplicating Granulation

Experience Sharing Sharing core business knowledge

Share know-how of selecting entrepreneurs and managers

Sharing entrepreneur knowledge in new biz cells for new markets

Externalization:

Making experiences explicit

Making entrepreneur know-how in product dev., manufacturing, and sales clear

Making the knowledge of entrepreneur in new cells clear

Formal Sharing of Knowledge

Sharing knowledge about procedures that work and those that don’t

Building on & recombining clear knowledge across cells to enhance creativity & create new business

Devoted practice: Learning by doing

Developing different routines, practices, functions & disciplines

Applying black-box procedures & knowledge

External knowledge acquisition

Acquiring knowledge about the appropriateness of products, services & processes in local context

Developing procedures for industry learning

Establishing formal market connections to ensure customer feedback to product development

Devoting attention to evaluating & monitoring new biz opportunities

Black-boxing entrepreneur know-how & applying across new markets

Sharing within & between functions

Differing StrategiesLarge Companies

with business units or subsidiaries in different growth stages can focus on all three at same time – 3M

New Companiesmay need to take it one step at a time,

progressing from duplicating to granulation – SAP

Requires continuous sharing of knowledgeCommitment to growth

Essay questionsQ1: When is scaling an ideal strategy as

compared to duplication or granulation? When is it best to use duplication? When is granulation the best strategy of the three?

Q2: When your business is focused on learning by doing, how does scaling lead to duplicating, and duplicating lead to granulation? How are they related (i.e., circular, linear), please explain.

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