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There are few better ways to improve margins, promote growth, and truly scale a business than by focusing on processes. And yet, there are too few businesses that really master this critical facet of structure. To be fair, operational excellence requires work, and if you’re not used to it then you are likely to encounter the organizational equivalent of technical debt. But quite often, benefits aren’t realized because companies pull up short of the finish line due to fears of loss of flexibility, employee short-sightedness, or internal power struggles.
Of course, you don’t have to focus on processes, but making that choice is essentially foregoing the possibility of real scale.
Here are my thoughts on this important topic. Let me know what you think.
The Value of Process for Scale
One of the keys to achieving scale is embracing a process orientation. When businesses find themselves in the position of struggling to grow revenue without incurring additional costs or complexity, one of the usual suspects is weak processes. To understand this, let’s define what we mean by processes.
What processes are we talking about?
Everything we do at work can be described by a process. Processes are essential to creating structure in a business, which is one of my four factors of great execution. The most common processes we are familiar with are things like:
- Go to Market (GTM)
- Product development
- Service delivery
- Employee experience
Building effective and efficient processes starts by taking a top-down view of your business. Below is a simple flow diagram of virtually any business.
Within each of those four phases—lead, order, delivery, and cash—are further processes. By way of example, the lead-to-order process will usually look something like the following:
Lead → Order → Delivery → Cash
Within each of those four phases—lead, order, delivery, and cash—are further processes. By way of example, the lead-to-order process will usually look something like the following:
Any Lead → Marketing Qualified Lead (MQL) → Sales Qualified Lead (SQL) → Solution Agreed → Deal closed
The Connection between Process and Scalability
There is a straight line we can draw between processes and scalability, and it arises from the notion of consistency.
Eliminating variability through consistent processes ensures that every aspect of the operation is predictable and efficient. This means a business can expand its operations without fearing quality degradation or service inconsistency, which are critical for sustaining customer satisfaction and retention. From a financial perspective, reducing variability leads to more predictable and improved margins by minimizing and stabilizing costs and reducing the need for corrective actions that can be expensive.
Standardizing processes also helps businesses scale more rapidly because, when they do need to hire, they can onboard new employees faster and with less cost. This uniformity reduces the learning curve and operational errors, directly improving margins by lowering training costs and minimizing lost productivity.
With consistent processes in place, a business can then undertake work to optimize those processes to improve margin, better respond to clients’ needs, or accommodate growth. One way businesses choose to do this is by driving toward simplification. Simplification reduces the barriers to expanding operations into new markets or segments, thereby enhancing growth opportunities. Moreover, by making processes less complicated, businesses can reduce operational costs and errors—key factors in maintaining healthy margins as the company grows.
Another way business do this is through automation, which directly contributes to scalability by enabling businesses to handle increased workloads without proportionately increasing their operational costs, thereby improving margins.
Challenges to Building Strong Processes
While the benefits of strong processes are simple to understand, they are difficult to unlock. The value that processes create is not linear. Put differently, you can’t do process half-way. Unlocking efficiency benefits requires discipline and ironing out variability in how the work gets done. Unfortunately, as you’ll read below, companies all too commonly create “half-baked” processes that inevitably don’t deliver the expected benefits. In my experience, there are three challenges to building strong processes:
1/ The Flexibility Bogeyman
Whether it is someone’s personal preference for or experience with certain ways of working, or a client’s insistence of how something should be done, the most common inhibitor to achieve scale through strong processes is the belief that process reduces flexibility. That’s not what processes actually do. Processes aim to eliminate variability in how work gets done. We want John to run his projects and track customer interactions the same way Jane does so that it is easier to hire, train, troubleshoot, and oversee that work, and improve how it is done. Likewise, processes allow for flexibility when you build them to do so. You can create processes that allow a company to manage edge cases by making them easier to identify and creating predictable action, which will lead to better outcomes. (The question then becomes whether it is worth it to the company to allow for these edge cases to begin with. The question is never, however, whether consistent processes inhibit John’s creativity and therefore impinge on his freedoms.)
2/ Complexity and Complication
Whether an existing process is genuinely complex or needlessly complicated, it is often quite hard to work through the details to find ways that processes may be improved. It may take time and require resources who, naturally, are engaged with production work already.
Change Management
Process improvement, particularly where significant change is expected, exhibits all the challenges of any transformation project in terms of change management. There will be implications for budgets and resources. The dynamics of power may shift. Clients may be impacted, which, even if it is for the better, needs to be managed. People may be anxious about how their jobs will change, and what that means for their ambitions.
Metrics
There are essentially four categories of metrics you should be tracking for any process you develop.
- Cycle time, or how much time elapses from start to finish
- Process quality, or what proportion of the work being performed is successful. (In an operational environment this might be projects run without errors, while in a sales environment, it might be the conversion rate of any leads into sales qualified leads. We can also consider NPS and other satisfaction metrics in this category.)
- People required, or how many people it takes to achieve the desired outcome (how many sales people to reach a given revenue target, how many customer success managers are needed to service how many clients)
- Costs incurred, or how much it costs to achieve the desired outcome (the cost of the sales people or the customer success managers needed)
Keys to Successful Process Improvement
Any process improvement initiative will need a few things to succeed:
- Senior enough sponsorship to say “yes”, or provide a forcing function when people dig in their heels, and to ensure that the work is prioritized, funded, and resourced
- Diligent project management (scheduling, accountability and oversight)
- Good communication to drill into thorny problems, address anxiety, and unblock bottlenecks
- Attention to metrics to understand the projected benefits, and then deliver them
I’m conscious of the fact that a strong process orientation can seem like a steep climb for a business. For sure, businesses that are not used to focusing on operational excellence (which is what this is) will find it a harder and longer road. But over time it becomes far easier, for the approach becomes a natural way of approaching the work. Of course, it’s entirely possible to run a business without strong processes, but this is tantamount to choosing to run an unscalable business.
Conclusion
We embrace strong processes not merely for operational efficiency, but as a cornerstone for growth and scalability. They ensure that quality remains high, costs are low, and that the business remains agile and responsive to market changes. Without them, businesses risk stagnation and eroded margins. The challenges—be they flexibility fears, complexity, or change management—are hurdles that, when overcome, unlock significant value. Strong processes, therefore, are not just operational necessities; they are strategic assets that drive competitive advantage and long-term success.
LinkedIn Roundup
Here are the things I talked about this past week on Linkedin.
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