The trick to scaling platforms

Forget about fancy technology, automation and six sigma when it comes to scaling platforms. The real trick is to think of your platform business as one long, interconnected and interdependent system. Along that system there are blockages, things that take time, energy and effort to resolve and slow down the overall system. This leads to delays, errors and ultimately disappointed customers. These are your bottlenecks.

As a rule of thumb assume that the throughput through your system is limited by the slowest part of that system. By addressing the bottleneck you speed up the entire system. Or at least you shift bottleneck to some other place within it. Shifting bottlenecks are a good thing. It means you are moving forward. This is a powerful concept. As once you find the bottleneck you can influence the throughput through the entire system by fixing that one part.

The problem for many platforms is that they see ‘efficiency’ through a project lens. i.e. if I spend x on IT investments I will fix my efficiency problem. Sadly it doesn’t work that way. While the technology is a contributing factor, in most cases the issue is a broader one. Interestingly, in many platform businesses there are only a handful of bottlenecks which are getting in the way. Finding them is the key.

The way to think of it is to imagine the work being pulled through the system rather than pushed. Imagine a piece of string. If you push the string the other end doesn’t move, or, if it does it does so in some small way. But, if you pull the string, the ends move together. There is no waste in the middle.

This is what you are looking for in your business. A more direct relationship between inputs and outputs. One where you know, reliably, what the output will be for any given input. And, most importantly, where your customers know what to expect each time they do business with you.

Most platforms compare themselves against a feature set. Do they have portfolio management tools, do they have a cash account, do they have the range of investments. Few of them compare themselves in terms of the ratio of inputs to outputs (other than in their financial statements). This is in part because that information is not readily available, and because it’s just too darn hard to compute.

In any event, why do you need to compare yourself? The platform you have today is as a result of decisions you made long ago. Some you need to live with and some you can do something about. So stop complaining that your IT team aren’t doing enough and start looking for the bottlenecks you need to fix. Many of which don’t need an IT investment at all.

By the way, if you can deliver for your customers reliably, they keep coming back. You save on sales and marketing costs and build a strong relationship of trust. This is ultimately what provides the real value for your business. Not the amount you spent on IT.