When you start noticing a steady stream of revenue flowing into your startup, it's a clear sign that your company's existing processes are starting to feel inadequate, and the expectations of your users are growing. At this point, it's likely time to consider scaling your operation.
Scaling a startup is both an exhilarating and challenging journey that can add a few gray hairs to your head, as expanding into new horizons inevitably involves taking calculated risks.
As a team of product designers, we firmly believe that having a dependable product team and a well-thought-out approach to product design can help mitigate the risks associated with scaling and bring your business closer to success.
While there is an abundance of articles on the internet offering general tips on scaling your startup, our focus here is on two critical challenges from a product design perspective:
Growing Your Team
Expanding Your Product
Before we delve into these challenges, let's clarify our understanding of the term "scaling" and differentiate it from "growth."
The Difference Between Growth and Scaling
Although the terms "growth" and "scaling" are often used interchangeably, they do carry a nuanced difference that's important to grasp.
Growth entails generating more income by adding new resources, such as materials, office space, employees, and clients. However, this typically results in increased expenses. For example, if you generate an additional hundred thousand dollars in revenue but it costs you eighty thousand dollars to do so, you've achieved growth but with substantial associated costs.
Scaling, on the other hand, involves generating additional revenue without proportionally increasing expenses. Spendings either rise incrementally or remain relatively stable. For instance, you could increase your income fourfold without hiring additional staff by automating processes at a minimal cost. Scaling essentially means exponential growth.
It's essential to note that scaling isn't inherently better than growth; the choice depends on your company's specific needs, team, and customers. Scaling is particularly effective in the tech industry, which is our primary focus in this article.
Before embarking on the scaling journey, a tech startup owner should ensure two prerequisites:
Product-Market Fit: Your product should have a stable audience that genuinely needs it.
Stable Revenue Flow: This not only proves your product-market fit but also attracts potential investors.
Now, let's explore the challenges you may encounter when scaling your business from a product design perspective and how to address them.
What You Can Do to Scale Your Business from a Product Design Perspective
Product design often receives less attention than engineering in SaaS companies, leading many to underestimate its role in a project's success. Some prioritize hiring additional engineers over investing in a strong design team. However, product design plays a crucial role in scaling success.
In 2018, McKinsey conducted research that assessed the value of design for businesses and introduced the McKinsey Design Index (MDI). The study revealed that companies with top-quartile MDI scores outperformed others, achieving annual growth rates as much as two times higher.
Airbnb's scaling story provides a concrete example. By targeting the same audience as Craigslist, Airbnb initially reached out to Craigslist users. However, what set Airbnb apart was its exceptional product design. When users visited Airbnb, they were captivated by visually appealing property images and an outstanding user experience. This combination of design and user experience fueled rapid growth for Airbnb.
Good design is essential for product adoption and retention rates, making products more useful, understandable, aesthetically pleasing, and innovative. Therefore, when devising your scaling strategy, expanding your product design team should not be overlooked.
Growing the Design Team
Product designers must deeply understand users and the value your product offers. They should align design decisions with the company's business goals. In the scaling stage, the role of product designers is not merely to make the product aesthetically pleasing but also to ensure that new features align with your business strategy. A larger design team enables quicker idea generation and validation, which, in turn, helps assess user and market needs, preventing your startup from straying off course.
However, growing the team presents its challenges:
1. Organizing and Optimizing Work Processes: What worked for a small team may not suffice for a larger one. You must establish clear processes, including research, ideation, validation, testing, communication, and idea exchange. Some processes that served well in the past may become redundant and need optimization.
2. Hiring: The temptation to hire quickly can lead to hiring the wrong talent. Maintaining high standards when recruiting is crucial. Ensure new designers understand your product vision and have relevant experience.
3. Structuring the Team: As your business scales, hierarchy becomes essential. The roles within the team should be well-defined, and designers should ideally possess expertise in one area while having a broad knowledge base to adapt to various roles if necessary.
Expanding the Product
Scaling your startup means more team members, lines of code, and features, making it challenging to maintain design standards and consistency. Distributed teams might end up repeating tasks, wasting time and resources, and harming the user experience.
To address these challenges, consider establishing a UX design system when your product team exceeds 15 designers and your company has over 500 employees. A UX design system standardizes all aspects of your product, including colors, typefaces, and illustrations, ensuring consistency and a unified visual language. This streamlines the design process and aids in building a scalable product.
Investing in product design can set your company apart in the market and positively impact overall business growth. To navigate the challenges of scaling, having a reliable and skilled team by your side is crucial. Consider hiring a Digital MacGyver to help propel your scaling journey forward.
In summary, scaling a startup is a significant undertaking that demands careful consideration of product design. By expanding your product design team, optimizing processes, making thoughtful hires, and implementing a UX design system, you can navigate the challenges of scaling and propel your business toward success.