Smart Scaling: Mastering Growth, Risk, and Innovation

Discussion with Victor Milligan

Driving growth by being attentive to risk is paramount, whether scaling a startup into a thriving enterprise or managing enterprises in today’s disruptive markets where “unprecedented” has become common. Milligan, a seasoned leader with a career spanning roles in Forrester, Booz Allen, Gartner, and with Nexage, a start-up in the mobile advertising space, brings a wealth of experience in organizational transformation, and growth and risk management strategies. This article explores two elements of driving growth: scaling start-ups when markets shift; and prudently managing risk in a disruptive-laden market to deliver sustained revenue and margin growth.

Start-Ups: Building for the Long Term

Startups often begin with a market that is hungry for innovation. This initial demand-driven success can create a false sense of security, potentially leading to complacency. “The startups that succeed in transitioning from early funding stages to sustained growth are those that proactively prepare for a shift in market dynamics”, Milligan explains.

To thrive, startups must integrate demand analysis early, even when the market is favorable. This involves more than just understanding customer workflows; it requires a deep dive into decision-making processes, identifying latent needs, and forecasting future trends. By anticipating changes, startups can pivot strategically, ensuring their offerings remain relevant even as the market evolves. Additionally, ruthless prioritization is essential—focusing on high-impact activities and aligning resources effectively to avoid overextension.

As demand shifts, infrastructure must evolve to support sustained growth. Milligan emphasizes, “The clever startups build processes that scale and adapt, ensuring they are ready for the equilibrium or even oversupply scenarios”. Establishing structurally sound systems for sales, customer care, and operational processes that can scale with minimal disruption is crucial to drive persistent revenue and margin growth.

Milligan underscores the importance of this proactive approach, stating, “The startups that succeed are those that realize early that demand-heavy markets are temporal and can’t sustain high growth indefinitely. Building scalable, customer-centric processes prepares them for when the market shifts”.  By embedding these mechanisms, startups can transition from reactive market participants to proactive leaders, capable of sustaining growth even in competitive landscapes.

Fostering Innovation Without Losing Control

Innovation is the lifeblood of startups, but as companies scale, maintaining a culture of innovation while implementing robust systems can be challenging. Milligan identifies the importance of balancing creative freedom with operational discipline.

Encouraging internal competition of ideas can spur innovation. “Companies must challenge their own ideas consistently”, he says. “Even if alternative paths don’t pan out, they reveal vulnerabilities or opportunities”. Structured debates and quarterly market assessments can help mitigate confirmation bias, fostering a culture of constructive dissent that drives continuous improvement.

Establishing dedicated teams focused on long-term innovation ensures that growth does not stifle creativity. These teams operate independently of daily operations, focusing on identifying market voids, developing disruptive solutions, and ensuring alignment with overarching business goals. “It’s no longer about change management but adaptive management”, Milligan asserts, highlighting the need for organizations to remain agile and embrace continuous learning.

Adapting to change is often misconstrued as a straightforward process, yet it demands a profound cultural shift within organizations. Milligan offers a compelling perspective: “I don’t think it’s right to say that humans are resistant to change. I think that they’re resistant to failure and they equate change with failure”.

This resistance stems from fear—fear of the unknown, fear of losing status, and fear of making mistakes. To overcome this, leaders must foster an environment where experimentation is valued, and failure is seen as a steppingstone to innovation. Building collective confidence through small, incremental changes can help individuals and teams navigate larger transformations with less apprehension.

Managing Risk to Deliver Sustained Growth

While risk management may not be front and center for startups, it becomes a critical priority for sustained growth in today’s climate. “Risk must become part of the organization’s DNA, integrated into everyday decision-making processes”, Milligan asserts.

Traditional risk management often relies on periodic reviews. However, risks evolve rapidly, and organizations must adopt a forward-looking approach to risk. Modeling how risks may develop over the next 12 to 18 months allows businesses to anticipate and prepare for disruptions. This transformation from reactive to proactive risk management is key for established organizations navigating complex external challenges such as geopolitical issues, deglobalization, new trade realities, environmental disruptions, and shifting regulatory landscapes.

Milligan notes, “Surprises are no longer surprising. Disruptive risks have become the precedent”. Embedding risk management into the fabric of the organization not only safeguards against potential pitfalls but also creates opportunities to leverage disruptions as competitive advantages, ensuring that the company remains adaptable and resilient in an unpredictable world.

Sustainability as Strategy, Not Obligation

The current political landscape may suggest that sustainability will shrink into the background. Milligan asserts that would be “short-term thinking and counter-productive strategically”. Sustainability was never about moral obligation or strategic necessity. It was a financial decision that calculated that the combined risk of the rising cost of climate change (and associated carbon costs) combined with subtle but material changes in consumer preferences “simply created a practical reason to invest prudently”.

The goals are two-fold: (1) to predict and account for direct and indirect costs (e.g., transport, obvious and unobvious carbon taxes, insurance, etc) that will impact margin; and (2) to identify those customer or consumer microsegments that will begin to prefer and reward more sustainable offerings. This targeted approach allows companies to innovate effectively, driven first and foremost by financial interests.

This approach also counters the idea that anything green is more valuable. Milligan points out, “The EV market illustrates this balance - it thrives among high-discretionary-income consumers but struggles to penetrate cost-sensitive segments that can’t overcome the cost-premium compared to gas-powered or hybrid equivalents”. This is made clearer as subsidies lessen.

Key Takeaways

Success in today’s unpredictable landscape requires leaders to think beyond conventional frameworks. Scaling Startups: Thriving startups build demand-centric organizations with scalable processes that anticipate market shifts, avoiding overextension and remaining agile in response to evolving dynamics.

Innovation: Consistent innovation thrives in a culture that balances operational discipline with creative freedom, fostering constructive dissent and continuous learning.

Risk Management for Established Organizations: Mature businesses must embed risk management into their day-to-day operations, ensuring resilience against disruptions and leveraging challenges as opportunities.

Sustainability: Businesses should approach sustainability as a strategic opportunity, using data-driven insights to align with customer values while ensuring economic viability.

Victor Milligan’s insight encapsulates the path forward: “Disruption isn’t an anomaly anymore; it’s the norm”. To navigate this reality, organizations must strike a balance between agility and discipline, creating a framework for sustainable growth and ongoing innovation.