Innovating While Scaling Up

By Jeff Stickel, Kerauno Chief Technology Officer

Imagine you’re a small tech company that has enjoyed some early stage success in your market.


You saw an opportunity in the right part of the market. You had an innovative idea. You assembled the right team of young, fire-eating engineers to build a clever product and figured out how to take it to market on a thin budget. You even earned some recognition from the local tech community and were asked the question, “How did this happen so fast?” You first credited your amazing team and probably said “innovation” at some point during your speech at the awards dinner.

At this point, you’ve created a nice customer base with decent (but not explosive) growth and adoption of your product. You’ve established a cash flow that can help sustain some investment in your product, additions to your staff, and even extra spending on this year’s company holiday party. You’re not a startup anymore, but you’ve not yet “broken big” as the saying goes.

Hitting the Inflection Point

At the risk of oversimplifying, innovation just means coming up with new ideas or new products, or finding creative ways to solve problems. In your own beginning, you just did that — you innovated — whether you knew it or not, because you built upon your idea. Ta-da! Innovation! Fast forward, and now it’s one of your company’s stated “core values.”

In the software world, everyone wants to be known as being innovative. You put it on your job postings. It’s on the back of your business cards (if you still use business cards). It’s one of the industry’s favorite buzzwords. But at some point, you have to put forth effort to make innovation actually happen.

Trawl the Internet for 30 seconds, and you’ll find all manner of articles on “inflection points” in reference to the growth curves for businesses. All successful tech companies experience multiple inflection points during their growth. This is the point where a company’s growth starts to level off or decline, before it begins to accelerate again. (Remember, I said this happens to successful tech companies). What is the cause for the turn-around in these scenarios? The answer is simple: Innovation!

The answer is simple, but innovation doesn’t just flow when you’re out of start-up mode. In the beginning, all you did was innovate. But now you have customers. Now you have a backlog of work that looks more like a collection of bugs, performance issues, (security vulnerabilities… shhhh!), customer support issues, package upgrades … and your architects are talking about some sort of “wholesale refactor” because of the crushing volume of transactions against your platform. Wait a second… wasn’t our architecture a market differentiator just last year?!?

Moving Forward

Now is a good time to pause, reflect on your success, and remember that creative problem-solving requires innovation, and innovation goes well beyond having a collection of engineers in the lab working on the next big thing. Business Consultant Clayton M. Christensen of Harvard famously described “sustaining innovation” as leading or being competitive in the market (e.g. new and improved product offerings) and “disruptive innovation” as disrupting or creating markets (“change the world” type stuff, e.g. iPhone, Model T, polio vaccine). Each requires different business models and investment strategies. Disruptive innovation isn’t for the weak. It requires vision, a high tolerance for risk (the odds are always against you), extraordinary leadership, and personal sacrifice.

First, if your company is in an “all hands on deck” situation, then your business is at substantial risk and you’re probably not talking about innovation, and certainly not reading this article. However, if you want to move beyond the inflection point, then you need real sustaining innovation. You need a measured approach to how you prioritize your investments. You need to keep the lights on (deal with the nasty backlog!), and you need to incubate product ideas. If you want a tested, formal method for dealing with these challenges, management consultant and author Geoffrey Moore offers a popular framework for innovation in “Zone to Win,” in which he discusses strategies for handling all of these challenges — staying competitive, keeping the lights on, and market disruption.

Back to your situation. Your growth is leveling off, while others have started to build on your ideas and compete in your space. Maybe some portion of your offerings has become commoditized and price pressure is eroding your margins. You need to turn the corner, inject life into your product, and reboot your growth curve.

If innovation truly is in your culture, your team will get on board quickly. But what happens next?

  • First you need to prioritize your biggest issues and opportunities, and staff them accordingly.

  • Set aside an R&D team and give them some resources and a space to incubate ideas in a fail fast/fail often environment.

  • Dedicate some portion of your sprints to building new ideas.

  • Form SWAT teams to deal with your backlog issues in a programmatic fashion instead of spreading them across the organization.

  • Make hard decisions about end-of-support and end-of-life within your existing product portfolio.

No problem for your team though, right? After all, “Innovation” is printed on your business cards.