Scaling the Enterprise: What Went Wrong?

• Author: Hall, Robert
• Position: Bank growth - Brief Article

Recently in this space we noted that in banking, small seems to be trumping large. When it comes to growing revenue and attracting key segments, small banks are out-competing large.

Banking is not alone in seeing this phenomenon. The vast movie malls were expected to dominate the theater scene, yet two of the biggest chains face serious financial difficulty. Shopping malls themselves are struggling with their largeness. Increasingly, size, despite its apparent advantages, seems to carry a market penalty.

Scalability has been a leading business theme for years. Scale and dominance were expected to be fast companions. And in the early stages over the past few years, big looked good: more selection, better technology and more information. But something happened on the way toward big.

It looks like in the rush to scale for size, companies de-scaled for organic revenue growth. Why? What went wrong?

Looking back, the key seems to be in how scale has been defined. Scalability meant, "Can you grow your business fast?" But that often came out as, "Can you make it simpler, more efficient, more one-size-fits-all?' The problem is, much of the best revenue the kind that customers begrudge the least--is found in the crevices of difference in customer uniqueness. The best revenue comes from the slight but telling tweaks in the company's value proposition that make it "just right" for each targeted segment.

So when we most needed to be scaling to reveal the differences, we scaled to obscure them.

When companies go for rapid growth, what do they typically do? They automate, seeking to minimize differences instead of surfacing them. They press for consistency--for ways to make processes repeatable despite dissimilarities. They narrow the options to make production and delivery faster, cheaper and simpler.

When customers show up, what they are looking for usually falls into one of three categories at any given time:

* Sometimes they want to self-serve. That is, they want to conduct their own transactions in a fast, accurate and efficient way.

* Sometimes they want to learn or explore. That is, they want access to information

* Sometimes they want some version of relationship--an interaction in which...