There are 3 things that we need to take care of when scaling a company:<ul><li>Specialization is needed because everybody cannot know everything. As you scale you will need people focused on bits of the org. Specialization creates complexity and the need for organization design.</li><li>Organizational design tells how the organization talks between the different components.</li><li>Process defines how communication actually happens.</li></ul>

How to Scale 

Often board members give entrepreneurs two bits of advice regarding scale:<ol><li>Get a mentor.</li><li>Find some “been there, done that” executives who already know how to scale</li></ol>These answers, while fine as far as they go have some important limitations. First, if you don’t know anything about scaling an organization, then it will be very difficult for you to evaluate people for that job. Second, many investor-board members don’t know anything about scaling a company either.

Time to scale a company

The following things that cause no trouble when you are small become big challenges as you grow:<ul><li>Communication</li><li>Common knowledge</li><li>Decision making</li></ul>Specialization, organizational structure, and process all complicate things quite a bit and implementing them will feel like you are moving away from common knowledge and quality communication. It is very much like the offensive lineman taking a step backwards. You will lose ground, but you will prevent your company from descending into chaos.

Give Ground Grudgingly

The first rule of organizational design is that all organizational designs are bad. With any design, you will optimize communication among some parts of the organization at the expense of other parts. Your goal is to choose the least of all evils. The basic steps to organizational design:<ol><li>Figure out what needs to be communicated;</li><li>Figure out what needs to be decided </li><li>Prioritize the most important; communication and decision paths;</li><li>Decide who’s going to run each group;</li><li>Identify the paths that you did not optimize;</li><li>Build a plan for mitigating the issues identified in step 5.</li></ol>

Organizational design

A process is a formal, well-structured communication vehicle. It can be a heavily engineered six-sigma process or it can be a well-structured regular meeting. The size of the process should be scaled up or down to meet the needs of the communication challenge that it facilitates. For new companies, here are a few things to keep in mind:<ul><li>Focus on the output first: what should the process produce? </li><li>Figure out how you’ll know if you are getting what you want at each step:</li><li>Engineer accountability into the system – Which organization and which individual is responsible for each step? </li></ul>

Give Ground Grudgingly

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