Getting to scale ... and model trains

Scalextric celebrates its 60th birthday this year. For those who missed this toy fad as you grew up, there was a surge of toys in the frst half of the 20th century made by Hornby, Meccano and Scalextric (which shared ownership, bankruptcy, takeovers etc) which were very popular. They were game changers (disrupters?) because they allowed kids (and a lot of adults) to acquire a ‘beginner’ set of carriages or a pair of racing cars, a single controller, and some track and create a working model. But then, over time, it was possible - necessary in fact - to add to the set to create more interesting and unique racing courses or train landscapes.

There were no limits, other than the money you’d saved or birthday gifts you received - and of course the permission of your parents to extend the set into the lounge room, kitchen, bathroom, etc. And so the creative expression was to build out from the original set, whereas other toys to that time were based on growth, not expansion. The acquisition of more books, more dolls, more puzzles were replaced for some kids by an ever expanding but singular idea.

An analogy lies in the increasing number of mega-charities in Australia which have emerged, in part, by their appeal to funders (particularly government) as organisations which "can scale”. Governments and other funders are attracted to the presentations by organisations that contract to do their social work -  not just because they offer to do the work efficiently - but because they claim to be structurally scalable. the more money they receive, then theoretically the more services they can provide at increasing levels of efficiency. Like Hornby trains, once the practical limits are overcome, then there is no stopping the expansion. 

So what are the characteristics of a scalable organisation?

The practical question that the funder wants answered is, what can be achieved if this organisation was given an additional $50,000 or $250,000 or $1m? Could this organisation actually manage additional funds, and also increase the service offering?

Scalability is reflected in the organisation’s capacity to manage more funding and therefore more services. Apart from the funding, there are also other limits to the scale of growth.

Here are some questions which the organisation needs to answer beyond marketing spiel to convince stakeholders that it is able to scale with more resources.

Does the Board have the experience, range of skills and the diversity to take responsibility for a much larger organisation than that when it was smaller? Has it been able to rise above operations and appoint and manage a CEO of a high calibre, and remain focussed on managing the greater risks and implementing a greater strategy? Does the Board reflect a culture of seriousness and responsibility about the organisation, and propagate this culture from the top all the way through the organisation?

Will the clients and service consumers benefit from this larger organisation? If so, how? and what are the risks for them?

Is the management infrastructure robust enough to manage the scale-up? Are the financial systems and reporting able to manage a larger number of cost centres or more complex funding structures and acquittal obligations? 

Are there HR systems in place to ensure that onboarding (and off-boarding) of staff are well managed so that staff engagement is optimum? Is there an efficiency around the HR so that resources are not wasted on duplication or manual processes.

Can the organisation recruit sufficient new staff with the talent and skills to meet the demands of additional work? How will they be motivated and supervised in a larger organisation? 

Similarly are there document management systems in place which are the 'best of breed’, together with other technologies such as client management systems, communication which take advantage of seamless integrations between systems; are there hardware and software acquisition policies which contribute to a smooth expansion.

And is there an investment in evaluation and measurement so that the organisation can demonstrate that the increased scale has been efficient and effective? How does the cost-benefit profile change for service consumers?  If administration costs move from 30% of expenditure to 25% if the revenue doubles, does that demonstrate an achievement through scaling up? Is it sufficient? What was missing in the scaling?

And finally can a larger scale be achieved without a corresponding increase in unhelpful bureaucracy and diminution in flexibility and responsiveness? If so, can the organisation demonstrate this benefit through data?

Being able to demonstrate a fitness to manage more funding and deliver a better service through a larger organisation is the test of scalability.

Thank you Hornby and happy birthday Scalextric.

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if(ratio1 < 15) { status1 = 'bad';status1a = 'red'; } else if(ratio1 >= 15 && ratio1 < 18) { status1 = 'average';status1a = 'yellow'; } else if(ratio1 >= 18) { status1 = 'good'; status1a = 'green'; } $('#status1').addClass(status1); $('#status1a').val(status1a); //2 var ratio2 = 0; if(currentLiabilities <= 0){ ratio2 = 0; } else { ratio2 = currentAssets / currentLiabilities; } $('#ratio2').text(ratio2.toFixed(1)); $('#ratio2a').val(ratio2.toFixed(1)); var score2 = Math.round((((ratio2-wcRatioMin)/(wcRatioMax-wcRatioMin))*9+1)*10)/10; if(score2 < 0){ score2 = 0; } if(score2 > 10) { score2 = 10; } $('#score2').text(score2); $('#score2a').val(score2); var status2 = '';var status2a = ''; if(ratio2 < 1){ status2 = 'bad'; status2a = 'red'; } else if(ratio2 >= 1 && ratio2 < 2) { status2 = 'average'; status2a = 'yellow'; } else if(ratio2 >= 2) { status2 = 'good';status2a = 'green'; } $('#status2').addClass(status2); $('#status2a').val(status2a); //3 var totalExpenditure = parseInt( safeVal($('input[name="annualspend"]').val()) ); 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} var ratio4 = profitmargin; $('#ratio4').text(ratio4.toFixed(1) + '%'); $('#ratio4a').val(ratio4.toFixed(1) + '%'); var score4 = Math.round((((profitmargin-prRatioMin)/(prRatioMax-prRatioMin))*10)*10)/10; if(score4 < 0) { score4 = 0; } if(score4 > 10) { score4 = 10; } $('#score4').text(score4); $('#score4a').val(score4); var status4a = ''; if(score4 < 1) { status4 = 'bad';status4a = 'red'; } else if(score4 >= 1 && score4 < 6) { status4 = 'average'; status4a = 'yellow'; } else if(score4 >= 6 ) { status4 = 'good';status4a = 'green'; } $('#status4').addClass(status4); $('#status4a').val(status4a); //5 var ratio5 = 0; var staffcosts = parseInt( safeVal($('input[name="staffcosts"]').val()) ); if(totalincome == 0) { ratio5 = 0; } else { ratio5 = staffcosts / totalincome; } $('#ratio5').text((ratio5 * 100).toFixed(1) + '%'); $('#ratio5a').val((ratio5 * 100).toFixed(1) + '%'); var score5 = 0; score5 = Math.round(((1-ratio5)*10+3)*10)/10; if(score5 < 0) { score5 = 0; } if(score5 > 10) { score5 = 10; 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