Transactions or Transformations?
By Chuck Cusumano and Jillian Broaddus
As a business consulting company, we often find ourselves asking our clients – or sometimes, they ask us – something along the lines of: “Can we do this at scale?”
We even catch ourselves saying to clients on occasion, “This is great – but it is not scalable.”
Maybe sometimes questioning the scale is the right answer. But maybe the more correct question is: “Should it be scalable?”
Like most things, there is an assumption hidden beneath the surface of these questions.
In fact, it is an implied assumption that is so invasive to how we think that most of us do not even realize we are making an assumption in the first place.
What exactly is that assumption we are talking about? It goes something like this: if something is good, then more of it must be better.
That is why we want to scale it, right?
Think about it: if we can hypothetically make a profit on something, then making more of a profit is better, yes?
If an effort can help some people, making it bigger can mean helping more people. Right?
Or this example: if one candy bar tastes amazing, there is no doubt that 5 will taste amazing and we will be happier, too. Yes?
Whether it is a candy bar or a business deal, the story always seems the same: it always gets better – until it doesn’t anymore!
Finding the Scalable Line
So, the question is: where is the line? At what point did we cross the invisible line from helper to enabler? Tough to harsh? Frugal to stingy?
Believe it or not, scale and exponential growth can destroy as quickly as they can produce.
The biggest challenge with doing anything in great volume is that when small, incremental changes occur, they can outpace our own ability to see the positive and negative changes that result. It is impossible to understand the magnitude of it all.
Think about it this way:
In 1929, Alexander Fleming discovered penicillin. It was perhaps the most significant medical achievement of the 20th century. The discovery of penicillin led to the invention of our first antibiotic, and by the 1940s, penicillin was widely accessible and known as the “miracle drug” in national newspapers. Fleming was awarded the Nobel Prize in Physiology and Medicine for his historic work and discovery. But it was not just the awards that were notable. Fleming changed lives.
In fact, before penicillin, 90% of children that contracted bacterial meningitis died, according to HealthyChildren.org. Strep throat was considered a potentially fatal disease. Tuberculosis, whooping cough, and pneumonia were all caused by aggressive bacteria that had few treatments and a poor outlook – until penicillin.
It is not outlandish to say that penicillin (and later the manufacture of many types of antibiotics) truly were the “miracle drugs” of the time.
So, why not manufacture and prescribe antibiotics at scale?
By this logic, it makes sense, right? Antibiotics are good; more of them would be better!
So, that is what we did.
From the 1950s up until the mid-1980s, if there was an infection, then U.S. doctors could choose from dozens and dozens of antibiotics to prescribe to their patients.
However, our over-use of a good thing helped to create a new bad thing as mutated strains of bacteria became resistant to penicillin.
As late as 2019, the CDC reported that more than 2.8 million antibiotic-resistant infections occur in the US each year, resulting in over 35,000 deaths. In fact, there are now 18 antibiotic-resistant bacteria and fungi that we track because there is no known antibiotic to fight them.
Scale & Efficiency: Where is the Breaking Point?
How did all of this happen with penicillin?
Scale and efficiency.
Scale can be good if you can control and predict the end result. Efficiency is wonderful until you squeeze it past the point of actual effectiveness.
For example, we are now so efficient with growing almonds in California, a place the almond tree is NOT native to, that California produces 100% of the commercial supply of almonds for the United States and approximately 80% of the world’s supply of almonds.
That is scaling a product if there ever was one! On the surface, this seems amazing. And it is – until it is not.
With almost all of the almond trees grown by large, commercial farmers in efficient rows and efficient massing – all in a controlled geographic location – a new challenge has reared its head.
Almond trees need to be cross-pollinated. Almond trees need to be watered. Commercial almond production produces lots of hulls and leftover shells. The problems? There are currently not enough honeybee colonies in California to cross-pollinate all of the trees. They now have to ship in honeybee colonies from all over the U.S. just to handle almond blooms each spring.
Almond blooms alone do not provide enough pollen and nectar for honeybees to work all day, so the beekeeper has to supplement the bees’ work with sugar water when they return to the hive.
More honeybees are needed to keep up with demand, but the production of more bee colonies coming in from all over the country has revealed yet another problem: colony collapse disorder. Bee colonies are disappearing at an alarming rate.
And remember when we mentioned that almond trees – like every living plant – need water to thrive? Well, almond tree cultivation consumes approximately 10% of California’s water – a place that has frequently seen years-long droughts.
The fight for water is on. Who gets it? Trees, people, lawns?
No one can agree, but one thing they can agree on is this: there is not enough water right now, and it is likely only going to get worse.
What started out as a wonderful agriculture tree crop that added to California’s agricultural strength and diversity has arguably pushed out many other crops, taken over the landscape, and pushed California over its tipping point of sustainability.
Almonds are a good and profitable thing. Until they – or their overproduction – no longer are.
Transactions vs. Transformations
What is the moral of this story? What is the lesson here?
Are we trying to push the idea that scale is a bad thing?
No, not always. The answer lies in this question – what are you trying to scale?
People are not very scalable.
You can produce droves of graduates from your institutions or your company, but in the end, we are all different and we regularly resist scaling. Inherently, we do not want to be treated like a number. Even if we are 99.9% biologically the same.
Systems and processes are very scalable.
Although you must look far into the future to see if the resources and capabilities may be the limiting factors. Additionally, your processes must be broad enough and resilient enough to flex and change as the scale grows.
Products and services are scalable.
They are limited by your ability to define their use and to redefine their usefulness over the lifetime of the product or service.
Companies are very scalable…
…if the mission and vision are adaptable. If the leadership has a vision, if the company’s culture encourages innovation, and if the hubris of short-term success does not destroy the company itself.
Penicillin was transformational to medicine and health – until we almost destroyed the transformation by making it transactional and prescribing it in large quantities.
The introduction of the almond tree to California’s agricultural community was transformational in its productivity and profitability – until it was produced at such a rate that it may be detrimental to the communities and farmers that grow it.
The same could be said of Sears, Blockbuster Video, Krispy Kreme Doughnuts, Borders Books, Pan Am Airlines, Toys R Us, and Howard Johnson’s Restaurants. These were all transformational companies that scaled well – until they did not.
Our best advice to our clients is this: Be transformational.
In all of your interactions with your customers, your team members, your vendors, and most of all, with anyone who is close to you, focus on being transformational.
Transformational is what the world needs. Transactional is on the edge of being a commodity, and when you, your product, or your company becomes seen as a commodity, the only option for you then is in price or scale. Those options can be brutal to live by.
Have questions about this blog? Want to talk about how to be a more transformational organization? Looking to learn how to navigate growth effectively? We are here for you. Drop us a line at email@example.com