Internal growth capacity

I believe that a company can’t grow beyond its internal growth capacity. There is a certain breaking point when the people, processes and/or the product itself can’t withstand the ongoing growth rate (causing things to fall apart) or can’t effectively lift growth bottlenecks (causing growth to stagnate).

To know your internal growth capacity, you need to take into account three things:

  • the quality of your internal processes

  • the capacity that you have to carry out those processes, and

  • the complexity of your service

Internal growth capacity

Internal growth capacity

In short, increasing process quality and/or capacity increases overall growth capacity, whereas increase in complexity decreases it.

These three areas consist of (at least) the following components:

Capacity

  • people’s domain expertise (skills)

  • headcount (brute force)

When capacity grows beyond what your processes can withstand, its effect starts to be negative (think about hiring 20 customer support representatives at once and putting them to work on day one with no written customer support manual).

Complexity

  • # of processes

  • # of people required per process

  • working time required per process

  • % of processes documented

  • growth rate of complexity vs. business growth rate

Keep in mind, that processes come in very many different shapes and colours – spanning from fully automated and machine-operated (servers handling your customers logging in) to fully manual (commuting to the office for that compulsory team meeting).

Process quality

  • Focus

  • Internal communications

  • Speed and quality of decisions

  • Uninterrupted working time vs. Total working time

  • Clearly defined responsibilites and expectations

  • Continuous improvement

Process quality is the most abstract yet the most timeless part of the equation: when done right, its impact spills over to all parts of your operations and creates a positive upward spiral of improvement around you and your teams actions, whatever they might be.

So here’s my suggestion: Next time, when you find yourself wondering about why things are not moving forward, the answer might be closer to you than you think. Take your eyes away from your consumer-facing dashboards – it might just be you’ve hit your internal growth capacity.

Simple prioritization framework for making better guesses

Simple data taxonomy spreadsheet