Scaleups and scaling in an uncertain world
Scaleups propel economic growth, drive innovation and generate greater social impact on a global scale. But navigating the trade-offs of scaling demands strategy and geopolitical awareness.
This article is part of the ‘Inspiring Transformations’ series promoted by Esade Entrepreneur Institute for its 30th anniversary.
Scaleups are new ventures that have achieved product-market fit and exhibit fast-paced and exponential growth. They operate under extreme time pressure and constraints to penetrate markets and become large national, regional, or global players.
Indeed, scaleups provide an outsized contribution to employment, wealth creation, tax revenue, and overall economic development, which is increasingly recognized by businesses, academia, and governments around the world.
Therefore, business and policy leaders are increasingly shifting their focus of attention from merely supporting the creation of new businesses to helping them scale.
Balancing scaling trade-offs
Scaling is essential not only for entrepreneurial ventures but also for established corporations as they seek to rapidly deploy innovative products, solutions, or business models across markets to create and capture value at scale.
Organizations need to take into consideration the role of political risk and geopolitics
When scaling across borders, their scaling strategy and processes have to navigate and balance key trade-offs of international management. These trade-offs include the ones between replication and adaptation or between coordination and control, as well as between global, regional, and local value creation.
Businesses, governments, and NGOs or hybrid organizations are increasingly in need of taking into much greater consideration the role of political risk and geopolitics when developing their scaling strategies. Moreover, each scaling setting (scaling an initiative, organization, or ecosystem) and scaling purpose (commercial, social, or hybrid) have its own challenges, playbooks, and success strategies.
A strategy for social impact
As a matter of fact, scaling is key to success not only for commercial but also for not-for-profit or hybrid organizations that seek to address society's grand challenges by generating a substantial social or environmental impact. It is now widely recognized that addressing the United Nations' sustainable development goals requires not only innovating new solutions but strategically scaling them broadly and rapidly to grow their social impact.
Yet, being deliberate and strategic about where, when, and how one scales will be even more valuable in the onset of a new era of uncertainty and turbulence brought about by the world's economic and geopolitical realignment. Thus, it is very welcome and timely that, having been overlooked for decades, a modern science of scaling is emerging that has the potential to substantially enrich and revise our existing understanding of scaling and scaleups.
Recommended readings
- Tippmann, E., Ambos, T. C., Del Giudice, M., Monaghan, S., & Ringov, D. (2023). Scale-ups and scaling in an international business context. Journal of World Business, 58(1), 1-10.
- Jansen, J. J., Heavey, C., Mom, T. J., Simsek, Z., & Zahra, S. A. (2023). Scaling‐up: Building, leading and sustaining rapid growth over time. Journal of Management Studies, 60(3), 581-604.
- Giustiziero, G., Kretschmer, T., Somaya, D., & Wu, B. (2023). Hyperspecialization and hyperscaling: A resource‐based theory of the digital firm. Strategic Management Journal, 44(6), 1391-1424.
- Tatarinov, K., Ambos, T. C., & Tschang, F. T. (2023). Scaling digital solutions for wicked problems: Ecosystem versatility. Journal of International Business Studies, 54(4), 631-656.
- Ringov, D., Asija, A., Joseph, J. & Szulanski, G. (2023). Having your cake and eating it too: Speed of scaling and adherence to operating routines. Esade Business School working paper.
- List, J.A. (2022). The Voltage Effect: How to make good ideas great and great ideas scale. Currency.
- West, G. (2018). Scale: The universal laws of life, growth, and death in organisms, cities, and companies. Penguin.
- Chliova, M., & Ringov, D. (2017). Scaling impact: Template development and replication at the base of the pyramid. Academy of Management Perspectives, 31(1), 44-62.