Operational Scalability: Josh Hurewitz of GrowBridge Consulting On How To Set Up Systems…

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Operational Scalability: Josh Hurewitz of GrowBridge Consulting On How To Set Up Systems, Procedures, And People To Prepare A Business To Scale

… Organize people. This is always the most challenging aspect of a company to change. People are set in their ways, and functions and organizational structures (and heels) can get dug in against change unless a compelling reason for the change is communicated. Generally, the scope of responsibility of individuals narrows as companies scale, but that requires a commensurate increase in communication.

In today’s fast-paced business environment, scalability is not just a buzzword; it’s a necessity. Entrepreneurs often get trapped in the daily grind of running their businesses, neglecting to put in place the systems, procedures, and people needed for sustainable growth. Without this foundation, companies hit bottlenecks, suffer inefficiencies, and face the risk of stalling or failing. This series aims to delve deep into the intricacies of operational scalability. How do you set up a framework that can adapt to growing customer demands? What are the crucial procedures that can streamline business operations? How do you build a team that can take on increasing responsibilities while maintaining a high standard of performance?

In this interview series, we are talking to CEOs, Founders, Operations Managers Consultants, Academics, Tech leaders & HR professionals, who share lessons from their experience about “How To Set Up Systems, Procedures, And People To Prepare A Business To Scale”. As part of this series, we had the pleasure of interviewing Josh Hurewitz, M.B.A., Ph.D. Josh is the founder and managing director of GrowBridge Consulting, which focuses on assisting middle-market businesses to scale up for growth. He has consulted in aviation, security, defense, healthcare, power, construction, agriculture, distribution and other industries. Prior to GrowBridge, he directed corporate business development for ARINC, a $1 billion aviation services/product company, and worked in the strategy function for two of the largest healthcare organizations in the United States. He has launched new businesses, led acquisitions, formed alliances and directed capital investment activity. He earned a B.S. and an M.B.A. from Cornell University and a research Ph.D. from Rutgers University.

Thank you so much for your time! I know that you are a very busy person. Our readers would love to “get to know you” a bit better. Can you tell us a bit about your ‘backstory’ and how you got started?

I grew up as a city kid, but fell in love with plants and nature. I spent time working on farms and learned that even if farmers did everything correctly, they were at the mercy of things that he or she could not control. It generated in me greater humility and a recognition of the need to adapt to change. I earned a Ph.D. studying how plants adapt to new environments. After earning an M.B.A., I worked in the healthcare industry and the aviation industry. Both industries were then experiencing rapid changes:

  • Managed care entered healthcare, bringing an entirely new way of looking at how medical care was delivered and its outcomes — and new payment incentives for providers.
  • The aviation industry underwent dramatic change after 9/11, with a complete reevaluation of security.
  • At the same time, within the aviation space, new communications technologies (Ku-Band and adoption of digital) opened a wide range of opportunities for air traffic control, airline operations and passengers. I focused on developing approaches to leverage new technologies into new business opportunities within aviation.

It has been said that our mistakes can be our greatest teachers. Can you share a story about the funniest mistake you made when you were first starting? Can you tell us what lesson you learned from that?

People are most likely to make a mistake when trying something new to them, in an unfamiliar environment, with only a partial view of the potential consequences of their missteps. At one point in my career, I did that a lot, so I have an extensive list to choose from. The “big one” happened when I had just started working for a large, publicly traded healthcare company. I was presenting the results of a pricing study and suggested a sophisticated, data-driven way of setting prices by market. After presenting it, one of the companies commented that he thought that the method was pretty “blue sky,” meaning he did not believe in the proposed method and instead set prices by gut. I performed an exercise with him over the next three minutes that showed that he was inconsistent in setting price using his gut method. This happened in front of all the executives. The president pulled me aside afterwards and whispered, “Great analysis and presentation — but don’t do that.” The lesson I learned was: Being right is not the only thing that counts.

What do you think makes your company stand out? Can you share a story?

I developed some sophisticated but simple-to-apply methods of understanding a business such that the leader can clearly see where to focus to grow. The methods are similar to those used by the largest consulting firms, but are geared specifically to middle-market businesses. One of the most common behaviors I see with founders/leaders is that they tend to retain their day-to-day roles and do not actively change their behaviors regarding scope or responsibility. I had a client whose company I helped to grow dramatically. The leader insisted on reviewing every invoice before it was issued. As a result, his cash flow suffered because the invoices piled up. I asked him two questions: Of the invoices you review, what percentage do you modify, and what is the magnitude of the modification? Both answers were percentages in the low single digits. The moral of the story is this: Do not continue to do things because you used to do them. Instead, use your time to accomplish things for which you have “superpowers,” meaning: what you uniquely are there to do. Do not invest your time in things that really can be delegated or turn out not to be a productive investment of time.

You are a successful business leader. Which three character traits do you think were most instrumental to your success? Can you please share a story or example for each?

I’ll hone in on qualities, not strictly traits. They are as follows:

1) Listening and observing body language. Because I focus on growing businesses of all kinds, I work in many industries, and I need to learn about them. While I do in-depth research and get background material from outside sources, I interview my clients about their situations. Listening and watching how the person responds is critical to my getting to the truth of the matter. One client responded to every question by stating what he believed I wanted to hear to demonstrate that he was doing what he was supposed to, as opposed to telling me the truth. I had already studied the FBI’s interrogation methods, so I could easily see that this interviewee was playing to me instead of telling me what I needed to hear to help him.

2) Focusing on facts and structured thinking. I am well-versed in data analysis, with a research background in both hard science and market research. I understand how information is evaluated. Information is only useful if it is decision-relevant, and I try to make sure that the facts support a decision — if hard facts are not available, then certain assumptions need to be established as true to support a decision. A company was selling a service to another company, which simply relabeled it and sold it to its end customers. Market research of the end customers indicated that they were largely satisfied with the service. I asked whether customers had anything to compare it to. Customers did not. That told me that we could go directly to the market and eliminate the middleman. The company concurred, and the move was highly profitable. By offering the service directly to the market without going through another vendor, we were able to establish and grow a huge division of the company.

3) Willingness to be wrong. When I ran a department of a company, I liked to say that “I was wrong half the time, but I didn’t know which half.” I expected my staff to challenge me with new ways of thinking, with the best idea winning in the end. When brainstorming, it is critical to generate a lot of ideas, even knowing that most will be shot down. After one of my own ideas is shot down, I like to joke that “I said I had an idea, not necessarily that it was a good idea.” I once made a presentation to executives of a large company, who accepted my well-thought-out recommendation. My summer intern, who was only peripherally involved in the project, told me afterwards that he thought I made a mistake, on the basis of which the recommendation should’ve been very different. He was right. I told the executives this and changed my recommendation — giving my intern credit, of course.

Leadership often entails making difficult decisions or hard choices between two apparently good paths. Can you share a story with us about a hard decision or choice you had to make as a leader? I’m curious to understand how these challenges have shaped your leadership.

I have had the immense pleasure of witnessing leaders making bold choices that reflected their fine character. One client once walked away from a $17 million government contract because he felt it wasted taxpayers’ money. The withdrawal crippled his company for a while, but he preserved his honor. Another client learned that some employees were working in an unsafe manner to meet a deadline. He told them directly that he was responsible for their safely getting home every day, and that they would be fired if they took those risks ever again. These leaders set examples, and each company’s culture benefited. I also have witnessed some people who really did not understand what it means to lead and get the most out of their staff. Leadership needs to be learned and honed, and it is important to recognize that not everyone is cut out to be a true leader.

Thank you for all that. Let’s now turn to the main focus of our discussion about Operational Scalability. In order to make sure that we are all on the same page, let’s begin with a simple definition. What does Operational Scalability mean to you?

This simply means that to accommodate a greater volume of activity, the way you operate will likely need to be different. It means trying to be more efficient and effective and typically requires making changes to many parts of the company. The challenge is deciding which aspects to change, how much to change and whether the changes fit together so the company can perform well in a higher-volume environment.

Which types of business can most benefit from investing in Operational Scalability?

Any business, really. It is a question of whether a company is growing 1%-5% and can make minor adjustments to accommodate growth, or is growing more dramatically and will start to feel the wheels come off if it operates the same way with the burden of “more of everything.” Certainly, companies that are growing, or that plan to grow, 10s of percentages year over year need to have a plan to scale. But even companies that have grown incrementally reach a breaking point that suggests that a significant shift needs to be considered. My primary clients are those that are growing 30%-100% per year, and it is obvious that what got them here will not get them there.

Why is it so important for a business to invest time, energy, and resources into Operational Scalability?

I’ll use an analogy. Learning how to ride a bike usually requires training wheels. After mastering a two-wheeler, children might outgrow their bikes, with knees hitting handlebars. They’ll need larger bicycles. When they become adults, they need larger, better bicycles. Ultimately, if they aim for the Tour de France, they need the best bicycles. Same thing with business. When a company grows, it needs to employ new methods and new tools to increase efficiency and decrease costs. Deciding which aspects of the business to focus on first is the only question, not whether to employ new methods and tools. Also, when I assess a company, I find weaknesses and cracks that may not be severe enough to warrant attention. But as the company grows, the cracks become gaping holes that need to be addressed.

In contrast, what happens to a business that does not invest time, energy, and resources into Operational Scalability?

I could write a book on this! There is a strong status-quo bias, where change is avoided due to risk of the unknown, the threat of unintended consequences and the fear of change. Holding on to the old way because it worked, or even if it is still working, provides strong resistance to change even if it is well understood that change is almost certainly required. Either growth is limited by not being ready to accommodate it or it happens; the latter, though, can overwhelm a company and drive it to chaos.

Can you please share a story from your experience about how a business grew dramatically when they worked on their Operational Scalability?

I have many of these, thankfully. One of my marquis clients was a medical-products producer. It was a typical company that used spreadsheets and QuickBooks. The project involved upgrading virtually all internal processes, reorganizing staff, increasing the level of interaction of senior staff to make some joint decisions more transparently and introducing a software system that unified all activity, generated operational and strategic reports and enabled staff to be not as extensively trained/downgraded in its required knowledge because the software included standard customer offerings. The company grew, became much more profitable and was better able to compete in a growing market by leveraging its internal operational strengths.

Here is the primary question of our discussion. Based on your experience and success, what are the “Six Important Things A Business Leader Should Do To Set Up Systems, Procedures, And People To Prepare A Business To Scale”? If you can, please share a story or an example for each.

  1. Understand your current cash cycle, that is when is cash going out and when is cash coming in. If a company is planning on growing, how will the cash cycle support or limit growth? For example, if a company sells more and has a higher working capital cash could be reduced to a level that hinders operations. The first thing to do is to project cash availability for the period of anticipated growth and determine how much growth the cash cycle can support. Outgrowing the cash cycle is the fastest way to “grow broke” — er, go broke.
  2. Communication and coordination across the company. Companies that grow typically have departments responsible for different aspects of the business. While this is efficient and effective, the department heads need to discuss with each other their challenges and plans. In that way, they’ll make sure that everyone is pulling in the same direction. I have a process that I call “Sales and Operational Planning” which facilitates this interaction in a productive way.
  3. Develop a strategy on the relationship between the company’s assets, capabilities and strengths, the detailed processes employed to leverage those assets, the expected reaction of the market to the processes and the expected results financially and regarding market reputation, market penetration or other strategic goals for the next two or three years. The next three elements are tackled together in an iterative method, because they can be traded off each other to some extent.
  4. Document the ideal processes for everything. This means making sure the workflows make sense and are assigned with functions. This also includes the data flow, so if a system is part of the growth transformation plan, an appropriate software system can be selected.
  5. Select software systems that streamline operations and provide management with clear data and possibly an understanding of trends
  6. Organize people. This is always the most challenging aspect of a company to change. People are set in their ways, and functions and organizational structures (and heels) can get dug in against change unless a compelling reason for the change is communicated. Generally, the scope of responsibility of individuals narrows as companies scale, but that requires a commensurate increase in communication.

What are some common misconceptions businesses have about scaling? Can you please explain?

The most common misconception is that a company can handle a lot more by just working harder. Nothing is further from the truth. The consequences of trying this are dissatisfaction among staff and lost opportunities for growth.

How do you keep your team motivated during periods of rapid growth or change?

This gets to the heart of the matter. Generating a simple strategy map of the future, and communicating the process of implementing it as it occurs, helps to keep staff on board. The alternative, which sometimes needs to be implemented, is to use a stick instead of a carrot. It works, but not as well — and there are casualties along the way.

Can you please give us your favorite “Life Lesson Quote”? Can you share how that was relevant to you in your life?

“Just because you know something does not make it true.” Many people function in life with baseless or incomplete information or information that is simply not true. The assumed truth about things leads to many wrong decisions.

You are a person of great influence. If you could start a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. 🙂

I grew up with very modest means. I have had the good fortune to be the recipient of many generous people in my life: parents, yes, but many others as well. I devote myself to giving — not with an expectation of reciprocation, simply giving with an open heart. Yes, it boomerangs sometimes, but I try to keep my “giving account” well above the balance with my “taking account.” I think that we have lost a lot of connectedness in modern times and people feel they’ve grown apart from each other. We tend to psychologically isolate ourselves from people with problems to relieve ourselves of their burden. To make the world a somewhat better place, we need to make other people’s problems our own problems. Even if we cannot solve their problems, encouraging and supporting the people facing challenges goes a long way to making the world a better place.

How can our readers further follow your work online?

I compile and distribute a newsletter that focuses on the issues that I encounter at work. My newsletters can be found on my website: www.GrowBridgeConsulting.com.

Thank you so much for sharing these important insights. We wish you continued success and good health!

Operational Scalability: Josh Hurewitz of GrowBridge Consulting On How To Set Up Systems… was originally published in Authority Magazine on Medium, where people are continuing the conversation by highlighting and responding to this story.