Scaling vs. Growth: The Hazard Most Leaders Don’t See Coming
“More companies die from indigestion than starvation.” — David Packard, Co-founder of HP
There’s a moment in every executive’s career when they realize that “growing” a business and “scaling” a business are not the same thing. Usually, that moment happens when they look at their financials and see that, despite increasing revenue, gross margin remains stuck in neutral—or worse, in reverse.
Let’s be clear: rapid growth—especially accelerating to high growth mode—is a transformation. It’s hard and high risk. Finding product-market fit, acquiring customers, expanding into new markets, creating a high-functioning sales and marketing function and fending off competitors all require exceptional strategy and execution.
But don’t confuse “growth” with “scaling” — yet leadership teams do it all the time.
Often in the same meeting.
Often in the same sentence.
Growth is about getting bigger—more revenue and more customers. Scaling is about getting bigger and better—growing revenue faster than costs, creating leverage in the business model, and improving margins along the way.
Both are difficult. Confusing the two can be deadly.
As we emphasize in Big Bet Leadership, great transformation leaders develop three habits that separate them from the pack:
Creating clarity – Do you know whether you’re driving growth, scaling, or both?
Maintaining velocity – Are you moving fast in the right direction with clarity in “inputs”, or just moving fast hoping for the “outputs”?
Prioritizing risk and value – Are you solving the right problems, running the right experiments, or just setting lofty goals?
Let’s break it down.
Growth vs. Scaling: The Core Difference
Shifting to high growth mode is an art. It’s about expanding market share, acquiring customers, and driving top-line revenue. It takes strategy, execution, capital and operating expense investment. The problem? If costs rise in lockstep with revenue—more people, more infrastructure, more marketing spend—growth can become a treadmill rather than a flywheel.
In fact, often we become less effective with growth as the organization slows down. The friction and complexity is amplified and wins out. Yesterday’s operating model and ways of working do not expand with the growth.
Scaling, on the other hand, is about getting more output with less input. It’s about increasing revenue at an accelerating rate while becoming more efficient. The hallmark of scaling is declining unit costs —meaning each sale, customer, or transaction becomes cheaper to serve as volume increases.
Here’s the difference in action:
A retail chain opening ten new stores grows—but if each store requires the same level of staffing and operational overhead, it’s not scaling.
A software company adding thousands of new users without a proportional increase in support costs? That’s scaling.
A manufacturer automating production to double output without doubling labor? Also scaling.
These terms are not equivalent or interchangeable. They are often both big bets as they have high ambition with a number of calculated risks. But the execution of the Big Bet Playbook is distinctly different.
The Ultimate Scaling Metrics: “Revenue Growth + Declining Unit Costs”
The best way to know if you’re truly scaling is to track one these two metrics: revenue growth and unit costs.
Why is this so important? Because existing businesses don’t often fail from lack of revenue—they fail from lack of sustainable economics.
Revenue Growth – More customers, more sales, more market share.
Declining Unit Costs – The defining characteristic of scaling. If your cost per unit sold or serviced, per customer acquired, or per transaction processed isn’t dropping, you’re not scaling—you’re just spending more to make more.
Companies that scale effectively engineer their business models for efficiency. They invest in infrastructure (and advisors!) to simplify, redesign, automate, and optimize. They are playing the long game, as these investments take a longer time horizon to payback.
Amazon's Shareholder Letter -- Why are we discussing "unit costs" and "primitives"?
Strategies and Techniques for Change Agents, Strategists, and Innovators
The Organizational Impact (or, Why Scaling Is Harder Than Growth)
Scaling isn’t just a financial equation; it’s an organizational transformation. Growth is often additive: more people, more locations, more revenue. Scaling, however, requires a rethink of how work gets done. The “inputs” need to change in order to get different “outputs”.
And that comes with risks.
Big Risks in Scaling:
Change Management Overload – Automating processes, redesigning teams, and integrating new technology sounds great—until employees start resisting the change.
Cultural Resistance – Shifting from a resource-heavy growth model to a leaner, scalable model can feel threatening. Employees may fear job loss, and leaders may struggle to let go of legacy ways of working.
Customer Impact – If you scale carelessly, cutting costs in the wrong places, you risk damaging customer experience—the one thing that made your growth possible in the first place.
Complexity vs. Innovation – Over-standardizing can kill innovation. If teams become too focused on process efficiency, they may stop experimenting, learning, and adapting.
Technology and Re-Platforming — Scaling often requires the investment and hard work to rip-out and rip-in new platforms. This is open heart surgery!
Scaling is typically an even harder Big Bet. It requires clarity, speed, and a relentless focus on risk and value.
Balancing Growth and Scale: A Strategic Roadmap
For most companies, the question isn’t whether to focus on growth or scaling—it’s when to focus on each.
Growth Mode – When entering a new market, launching a new product, or seizing a time-sensitive opportunity, you prioritize market penetration over cost efficiency. It’s an aggressive land grab, and maintaining the current cost structure meets your goals.
Scale Mode – Once you’ve gained traction, you shift to improving efficiency. You automate, refine processes, and optimize costs. This is where you turn momentum into long-term competitive advantage.
The best leaders know when to toggle between these two. They recognize when to fuel growth and when to engineer scale—without confusing one for the other.
Final Thoughts: Avoiding the Traps
Growth is hard. Scaling is hard. But confusing the two? That’s the start of the real danger. Why? Because we don’t have clarity. Clarity on the diagnosis of the central challenge or market opportunity; clarity on leverage or philosophy to overcome the central problem; clarity on the steps to execute.
We don’t have clarity on our strategy.
The companies that thrive over a long period of time don’t just grow—they scale. They make Big Bets with clarity, velocity, and a focus on risk and value. They don’t just chase top-line revenue; they design their businesses for leverage, efficiency, and sustainable economics.
They often create a cost model advantage along with a customer value proposition advantage. This is the path for sustained competitive advantage.
Be clear about your mission — accelerating growth, or scaling. Use Big Bet Leadership to create clarity, create velocity and accelerate risk and value.
Onward!
John
About The Digital Leader Newsletter
This is a newsletter for change agents, strategists, and innovators. The Digital Leader Newsletter is a weekly coaching session focusing on customer-centricity, innovation, and strategy. We deliver practical theory, examples, tools, and techniques to help you build better strategies, better plans, and better solutions — but most of all, to think and communicate better.
John Rossman is a keynote speaker and advisor on leadership and innovation. Learn more at www.johnrossman.com