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Scaling Up Excellence

Stanford University Professor Bob Sutton stopped by AMA recently to participate in a webcast about his new book Scaling Up Excellence: Getting to More Without Settling for Less (Crown Business, 2014), which he coauthored with Huggy Rao. The following has been excerpted and adapted from his remarks.

The scaling challenge is a very common organizational or management problem. You’ve got a little bit of goodness in an organization―a pocket of excellence. Essentially the challenge is, how can a leader spread it from the few to the many without screwing it up? Our core message is that scaling is not just a matter of running up the numbers as fast as you can. It’s also about sustaining a mindset, a set of behaviors or beliefs.

Some of the Big Lessons We’ve Learned:
1. Excellence is propelled by individuals. A lot of times when people hear the word “scaling,” they think of it as something that top management does to everybody else. And I suppose in many cases that’s true. But one of the things that we see over and over again is that when scaling works effectively it actually boils down to individuals. In particular, there’s a sense of mutual obligation, a feeling that you own the place and it owns you.

2. Scaling is a problem of both more and less. The best leaders in the best organizations and teams are constantly thinking, “Well, we’ve added some stuff, we’ve extended our footprint a little bit wider; what can we get rid of that’s in the way, that we never should have been doing in the first place?”

3. Figure out what no longer works. Sometimes stuff that used to work great when you were smaller, or maybe in a different marketplace, is no longer effective. When you’re scaling an organization, you’ve always got to keep in mind what used to work but doesn’t anymore, and be quite mindful about the danger of traditions and past successful strategies that no longer work.

4. Avoid long-held practices that don’t make sense. If you’re trying to spread excellence, think about the things you do that every other organization does, but actually turn out to be dumb or ineffective. One of my favorite whipping boys for this purpose is the annual performance evaluation. One of my standard jokes—and there’s actually evidence to support this—is that if annual performance evaluations, as they are done by most firms, were a drug, they would not get FDA approval because in about 20% of cases they make things better, 20% of the time they make things worse, and 60% of the time they have little effect at all.

Catholicism vs. Buddhism
When Huggy and I were working on our book, at one point we had a list of about 50 key scaling decisions that folks make as they try to spread excellence. But when we’d go back and write, we kept coming back to the same one, a distinction we call “Catholicism versus Buddhism.” It was first brought to my attention at Stanford back in 2006 by a local venture capitalist named Michael Deering. Michael said, “So, are we going to be Catholics where what we do when we start out small will be replicated at Stanford and everywhere else? Or are we going to be Buddhists, where we have a general philosophy, and sort of spread this philosophy and mindset, and people can riff on it in different ways?”

We spent quite a bit of time talking about this, and we realized that as we looked at the process of either strategic decisions by organizations or even sometimes moment-to-moment decisions, this question of whether we replicate a riff comes up over and over again. Some organizations, like In-and-Out Burger or Intel, replicate the same thing everywhere, and that works for them. But sometimes there’s an issue where an organization has had a long history of being successful at replicating the exact same thing in many places, and then it doesn’t work when they enter a different market.

A great example is what happened with Home Depot versus Ikea when each moved into the China market. Home Depot tried to replicate the do-it-yourself stores that we have in the United States. That didn’t work at all, because China is a do-it-for-me culture. In fact, the 12 stores they opened in China have all closed. Ikea, in contrast, even though in the United States and other western markets it’s very heavily based on the do-it-yourself, assemble the furniture yourself model, made some important adjustments in China. They provide great delivery services and great assembly services that they don’t have in other markets. As a result, they’re enormously successful there.

Some Additional Advice on Scaling Excellence
  • One big challenge is that some people think they’re so special that the rules don’t apply to them. Sometimes this is true because of the local needs of customers, or the kind of skills you have. But in a lot of cases, it’s because we human beings think that we’re so special that the rules don’t apply to us.
  • Large teams are very difficult to deal with. Keep in mind that Navy Seal Spider teams have four members. Studies show that as you add team members, especially past double digits, organizations start spending more time on coordination and less time doing the work at hand. They start having dysfunctional conflict, because it’s a lot harder to maintain social relationships with 11 or 12 people than with three or four.
  • Finally, there’s a lot of evidence that shows success depends as much on eliminating negative behavior as it does on accentuating the positive. It turns out that any kind of bad behavior—corruption, stealing, incompetence, laziness, bad mood, etc.—is more powerful than good behavior. It’s longer-lasting, it’s more contagious, and it distracts us so much that if we don’t remove it, the good cannot spread. Bad interactions in the workplace can pack five times the wallop of good interactions. If you’ve got one deadbeat or jerk in the team, it cuts performance by 30 or 40%. That’s why organizations that succeed at spreading excellence understand the importance of getting rid of bad situations as soon as possible.

You can further explore the ideas discussed in this article at these AMA seminars:
Leading in a Global Environment 

Strategic Thinking

About the Author(s)

Bob Sutton is Professor of Management Science and Engineering at Stanford University, where he is cofounder of the Center for Work Technology and Organizations, the Stanford Technology Ventures program, and the Institute of Design. He was named as one of the 10 B-school All-Stars by Business Week, described as “Professors who are influencing contemporary business thinking far beyond academia.” His books include The Knowing-Doing Gap (with Jeffrey Pfeffer), Weird Ideas that Work, and two New York Times bestsellers, The No Asshole Rule and Good Boss, Bad Boss. He is coauthor, with Huggy Rao, of the new book Scaling Up Excellence: Getting to More Without Settling for Less (Crown Business, 2014).