Figure Outers vs Scalers vs Business As Usual
Parts of your business require a different culture, team and process to succeed
TL;DR
There are broadly three different modes of operation that parts of your business can assume: Figure Outers, Scalers, Business as Usual. The mode will determine the type of culture, team and processes these units will require to work efficiently. Using a uniform approach for your whole business will lead to inefficiency and frustration, which you can avoid through thoughtful organisational design.
One Size Doesn’t Fit All
Defining an overall company culture and a set of uniform reporting and goal setting processes across an organisation is an important foundation for running a startup well. In reality, though, we all know that parts of the business operate differently. Often the differentiation is along the lines of functions e.g. “the engineers are less flexible that the business folks” trope. However, the differences are not only tied to team functions but to business units/problems. Depending on how mature the business units are and how ambiguous the problem they are trying to solve, the needs for the culture, team and processes within them differ.
Let’s assume you have a b2b startup and your product has early product market fit. In other words, you have found something that solves a client need and is sticky. However, you haven’t figured out product market business fit yet, meaning the go to market (GTM) strategy is not clear. The team in charge of the product surely has a development roadmap that needs to be worked on but since the customers have their needs fulfilled with what’s delivered, it is no longer a Figure Outer but rather a Business as Usual. GTM, on the other hand, is a Figure Outer and needs to experiment, report more often and get a different level of attention from leadership.
So while you may have defined an overall operating system for the company by setting its processes and culture, keep in mind that different business units or business problems can and should deviate from the overall system.
Figure Outers
The main feature of Figure Outers is that you are operating in an ambiguous environment. You know what problem you want to solve but you don’t know how. Solving these problems is usually key for your company to succeed. To progress effectively you need to adapt this part of your org by tweaking its culture, placing the right people in it and adjust its processes.
When operating in ambiguity you need to be unemotional about failure. Every failure is an opportunity to learn (yes, the cliche is true), nothing more nothing less. As a matter of fact, you want to as inexpensively and quickly cycle through as many failures as possible to get to a suitable solution. Apart from resilience, this type of working also requires a strong ‘disagree and commit’ type culture. Furthermore, you need to operate an environment of cognitive safety and radical candour. Cognitive safety allows for out of the box thinking and “stupid” ideas to be heard. Radical candour allows for “stupid” ideas to be discarded efficiently. Again not being territorial and emotional helps when working like this. Alignment is crucial when attempting to cycle through experiments quickly, as you want to make sure that everyone is clear about what is tested and how specifically.
It goes without saying that this type of working requires an emotionally mature and entrepreneurial minded team that is accustomed to a high pace. As such, what you want to likely do is rotate your early team members (assuming you hired well and got entrepreneurial folks into your business early on) through Figure Outers. They should be used to this type of working. If you are hiring new folks for this team I suggest that attitude is more important than experience. Sometimes experience hinders you to think outside the box and find the right solution to your flavour of the problem.
Figure Outer departments need to run fast and therefore you need reporting as needed. What that means is there shouldn’t be a weekly meeting scheduled, rather you should meet as soon as there is progress. That should ideally be multiple times a week so that you can continuously align and course correct if needed. You also want to ensure to be specific about the parameters of the experiments you are running. So for instance if are trying to prove the viability of a distribution channel then set the budget and timeframe. After the timeframe assess if the channel was viable - you can either chose to run the experiment for another cycle with a different approach or move on to the next experiment (a different distribution channel in this example).
Figure Outers are usually important problems that need to be solved to ensure business success, which means they also require the attention of the senior leadership team. This means you should be spending more time on Figure Outers than on Business as Usual.
During my tenure at Citymapper we treated monetisation as a Figure Outer. We ran discrete experiments like selling software cities/operators, running a night bus, running a responsive mini bus network and introducing a multi-modal subscription to all your transport needs (which was the winning model - well, until the pandemic hit). The cap-ex requirement for these experiments was high, which is why we ran these longer than merely testing a distribution channel. Regardless, the team and processes devoted to solving monetisation adopted a different approach than other parts of the organisation.
Scalers
A Scalers environment is characterised by having a proven playbook that needs to be executed upon tightly with slight adaptations to meet specific regional or particular user/client needs. Usually the problem you are solving with Scalers is that of growth.
Scalers are more straight forward than a Figure Outer. As such putting someone with previous experience in the required field in charge and letting them run your playbook is a good approach. While the playbook must be adapted, this will happen in tight confines of what makes sense. Deviation from the established strategy creates friction and should only happen if worthwhile (i.e. adopting a certain privacy feature to operate your product in Europe or introducing a specific reporting feature to be able to sell to enterprise clients). This means you don’t need as much out of the box thinking. As a matter of fact, you are looking for people that like to stick to the script and execute at high velocity. Hiring is important while scaling and doing so with a clear understanding of who you need and what skills they need to bring is crucial to keep the momentum while onboarding.
Regular reporting on specific metrics at a previously agreed upon cadence (i.e. weekly) is key both for motivation and for alignment. Tight cost control needs to be top of mind when it comes to Scaler challenges. It is far too easy to succumb to a ‘scale at all costs’ mentality. I’m not suggesting to step on the breaks but scrutinising metrics like client/user retention/engagement, CAC/LTV ratio, burn multiples, etc. continuously while scaling is key. Don’t assume things will work out just because you have a proven playbook. If you sacrifice any metrics, you should do so with intent.
Launching new cities and regions at Citymapper was a Scalers endeavour. We knew what we were doing and what type of people we need to hire to launch new cities. We adapted our approach to different regions but usually within the confines of what made sense for the scale of the user opportunity a city presented us with.
Business As Usual
Most central departments that are concerned with running your company are going to run on Business As Usual mode e.g. Finance, Legal, HR etc. The problem that is being solves is one of maintenance. Of course there will be projects that might require you to adopt a different mode for those central functions (a fundraise, a hiring spree, office setup in a new country, an acquisition). Depending on whether you’ve already created a playbook for the particular problem or not you’ll have to treat this as a Scalers or Figure Outer exercise.
Other departments that operate in Business As Usual mode are those that are working to maintain something that’s working fine (i.e. your infrastructure team, your customer support department, Google search’s design team, etc).
The Business As Usual mode should be closest to the operating system and culture you have define for the company overall. If your overall culture is one that for instance ‘moves fast and breaks things’ then these teams should embody that culture. Processes and reporting should mirror the company benchmark that you’ve set.
To be clear, being in Business As Usual mode doesn’t mean there is no need to optimise and innovate, that’s what all parts of an enduring organisation should do at all times. It just means that the culture, people and processes in these departments can be comparatively less entrepreneurial and hectic.
Conclusion
Being more thoughtful about designing different parts of your company to adapt culture, team and processes to the problems they are solving, will help being more successful. You may do this subconsciously already but being deliberate about it will allow you to make much more meaningful and effective decisions.
There are of course moments when you run most parts of your organisation in Figure Outer (pre product market business fit) or Scaler (post a growth funding round expansion spree) mode. Under normal circumstances, however, it is good to keep this differentiated framework in mind so that you can distribute your limited attention and resources according to the problems you are solving.