Scale
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In The Personal MBA a scale is defined to be the ability to reliably duplicate or multiply a process as volume increases. Scalability defines your maximum volume. If you have multiple customers they sometimes need to be served at the same time. If your business goes up you risk introducing an undesirable level of Scarcity. Scalability is typically limited by the number of human resources involved in the process. Automation therefore helps make you business more scalable. People's time is limited making their availability an important Constraint. Peoples Performance level goes down if the demand on them increases
- Products are easiest to duplicate
- Shared Resources are easiest to multiply
- Services are most difficult to scale as they usually depend on human resources.
Key Points:
- Scale is the ability to reliably duplicate or multiply a process as volume increases.
- Scalability is limited by the amount of human involvement required in the process. The smaller the level of required human attention in the process, the more the business can produce.
- Products are easier to Duplicate, while Shared Resources are easier to Multiply.
- People don’t scale. On the contrary, the bigger the demand on them, the lower the effectiveness.
- The smaller the level of human involvement, the more scalable the business.
Questions for Consideration:
- Is your business system scalable?
- What is the maximum volume your business system could currently deliver?
- How would you go about expanding the business as volume increases?
