“Investing in management means building communication systems, business processes, feedback, and routines that let you scale the business and team as efficiently as possible.” @fredwilson

So what really hinders companies from progressing successfully through the scale-up phase?

One of the fundamental potential barriers is process. A technology start-up can afford to be relatively relaxed on the process front. After all, it is small, with physical proximity and regular contact between leaders and employees. Everything is focused on launch, the visionary entrepreneurialism of the leaders keeps everything on track.

But scale-up requires formalisation of processes in a very new way. Suddenly, the emerging size of the business and the creation of new corporate functions means that the organisation has to lose its free-flowing, creative, passion-driven nature and become more structured and carefully managed. Whereas a start-up can afford to make mistakes to get to the right business model and launch, a scale-up has to operate in a way that minimises those mistakes and allows revenue to become consolidated and maximised.

In terms of internal processes, all TMT start-ups will have some common needs. A start-up will begin with a founder and some original, core staff. Over time, additional functional staff will create teams for finance, sales, marketing and operations. If products diversify then there is the need for customer services managers, product managers, quality control, and so forth. The hiring, management and development of staff requires HR teams. Legal staff are needed as contracts are created and executed.

For B2B technology companies responding to tenders for new business, the need for process – accredited, regulated process along the lines of ISO 9001 – will be absolutely essential as a pre-requisite for tendering. Suddenly, the scale-up needs to be able to evidence the quality and application of processes.

Each company will have a series of ‘process engines’ that drive forward each of its functions. Customer services will ask what metrics will be used to know that customers are happy with the service. IT will want to know whether the systems are secure and how customer data can be kept safe. Finance will want to know which staff will have authorisation to raise POs and pay suppliers. HR will want to know how new staff will be on-boarded and trained to deliver to a high standard… and so forth.

These high-level questions may identify a number of scale-up process issues. There may be times when a customer experience has been compromised because the growing business isn’t growing in a smooth, logical way that puts the customer first.

At this point, good leadership means that process must suddenly become a focus. Innovation is still essential and engagement with employees is a must to help the new company culture take shape and come to life. But in the background, the structure of the organisation must become formalised with the right processes.

A quality management system such as ISO is a good way to begin the process of formalising the way in which the company will operate. It will give a robust framework that allows functions to ask the right questions, to engage with other functions to get the answers, and to begin to agree and document the way that ‘things will be done around here’. This, in turn, will support the work of corporate culture development and leadership as a whole.

In that sense, process can be said to form the third underpinning structure of a successful scale-up, and it must be treated with the same focus and determination. Yes, corporate culture and leadership are the fun and exciting sides of the scale-up challenge. But without the rigour and formalisation of process, the new entity will never have the strong foundation upon which it can stabilise, grow and ultimately, thrive.

This article was written by Gary Reeman, MD, AlpinaSearch. If you’d welcome advice on attracting and retaining A-Players to implement strong processes at your TMT scale-up, head over to www.alpinasearch.com/clients