How to scale up the business successfully

How To

Michael Xie

The founder, president and CTO for one of the biggest names in cyber security worldwide, Fortinet , Michael Xie shares his experience as he discusses key points about how to scale up a business successfully, especially the tech startups which has been the eye of storm for every investor in the town.

As many teenagers can attest to, growing up isn’t easy. In my experience, neither is nurturing a tech business. As firms that find success as start-ups develop into mid-sized and eventually large companies, they run into growing pains of all ilk that call for the right strategies, processes and decisions to alleviate.

For example, to be successful, tech businesses need to recognise change and react swiftly. As they expand, however, they often lose the ability to perform quick pivots, or even to recognise that a pivot is needed. Start-ups, on the other hand, tend to be much more agile – it doesn’t take much deliberation for them to do a pivot and create a new product to fill a gap they see in the marketplace. This is largely due to their singular, focussed business direction. Start-ups typically aim to do one thing only − not many things, which may cause indecision.

The other obstacle that companies face as they grow is that their decision making chain gets fuzzier. In larger firms, this chain often gets extended, and trying to ensure that decision makers both understand and have a global view of the issues they are deciding is tough. Larger organizations may also need to manage conflicting agendas from different members of the team. These constraints delay the entire decision making process, or worse, lead to the wrong decisions.

Related to this is communication, which typically slows down or gets distorted to a greater extent as a company grows. When Fortinet was a small firm comprising a few dozen staff, communication was a breeze among the team members. Things changed as we evolved to become a 5,000-staff company, and I expect further changes as we head towards the 10,000 mark. Figuring out how to get the entire 10,000 workforce to align behind the company’s goals, letting each individual understand what his role is, and securing his buy-in to work together effectively as a team to deliver on the bigger corporate goals, are some hurdles I see us needing to cross.

On the R&D front that I primarily look after, there is the challenge of maintaining our pace of work as the company grows. Researching, innovating, developing and testing products quickly were a relative cinch when we were small. Now, it requires significant investment to maintain the speed (or “Forti-Speed” as we call it) of this process, and that investment continues to rise as we expand.

All these challenges come naturally as a tech company expands, and cannot be completely eliminated. The best way to deal with them is to understand the advantages that the organisation’s greater size brings, and try to magnify those advantages to compensate for the headwinds faced.

For instance, larger tech firms typically have more resources. They can magnify this advantage by putting in place competent leaders to manage those resources. That way, the company will be able to fully capitalise on the resources to journey towards their desired objective for a longer period of time. This gives them an advantage over smaller firms which have shorter runways and slimmer margins of error for their products to take off.

A big company’s war chest can also be used to build its brand. A stronger brand increases a company’s appeal to customers, prospects, investors and potential employees, serving as a magnet for business and talent. Additionally in the business world, size matters, and large firms are able to attract bigger and more strategic partners to its ecosystem, thus enhancing its overall value proposition to the industry.

Beyond amplifying the advantages that come with greater operational scale, another vital thing “newly big” tech companies must do is to update its management mind-set. Leaders of larger firms need to adopt a genuinely open mind, and objectively bring in the best expertise to promote growth within the organization. Management has to be flexible, and be able to learn how to adapt to changes by changing their own processes or mentality to make things scale in a larger environment. Recognising where to apply process, when to formalize structures, and how to create operational efficiencies is key to sustained success. This was how Fortinet managed to stay agile over the years and respond quickly to market and customer demands.

As Charles Darwin astutely pointed out, the most survivable species is the one that is most adaptable. The same advice goes for tech businesses. A company that is able to adapt to change − including changes that comes with its own growth − perceive market demand and execute well will succeed. Growing up is an evolutionary process and as with evolution, some aspects of the process become dead-ends. Recognizing those evolutionary cul-de-sacs swiftly is vital to continued success. The unicorn does exist − it’s just that it has adapted itself into a rhinoceros.

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