Business Capacity & Organic Business Growth Framework - Aditya Yadav

1. “Running an Agile Fortune 500 Company”
Aditya Yadav, aditya.yadav@gmail.com
in.linkedin.com/in/adityayadav76
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2. *
*A Typical Global Company
*Fortune 500/1000
*200 Divisions
*40 Countries
*25000 Employees

3. @ Acme Inc.
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4. *
*Original Question “Our growth is adhoc, how do
we look at Growth? What should be our Growth
Strategy?”
*The Correct Question - “Lets discuss one such
Model that links Business Capacity to Organic
Business Growth.”

5. And The Philosophy Behind The Answer
*

6. *

7. *
*Business Performance is NOT CONSTANT w/
Utilization
*Given a specific Capacity the performance
deteriorates w/ Utilization
*And the deterioration is not Linear
*Golden Rule: The best Strategy in ANY
ORGANIZATION is To NOT operate anywhere
near Capacity

8. *
* Google’s 70:20:10 rule needs to be modified… slightly
* It stood for 70% of effort on Current Business Needs, 20% on Related Business Needs and 10%
on Unrelated Business Needs
* We have discussed Arbitrary Numbers in Business, so this might seem arbitrary, but this is not.
This has an empirical basis
* Given a work week of 5 days, 8hrs/day = 40 hrs/week
* Lets focus 4 days on Current Business Needs, and 1 Day on Related and Unrelated Business
Needs
* Ofcourse Managers would go: Yes and we need to measure and account for the 5th day… we
need to guide employees and monitor what they are doing… we need to manage and allocate
tasks in the Related and Unrelated business needs category… Blah! Blah! Blah!
* No! Managers Need To Stay Away. This Rule is a guideline not the Law of God written in stone.
We will not Manage the 5th Day because (i) we don’t want to add 60% Administrative Overhead
(ii) we don’t want to throttle innovation and creativity
* Yeah but now the Rule Becomes 80:10:10
* Rule: The biggest policy problem is to SORT OUT THE IDIOTICITY BEHIND THE CONFLICT OF
INTEREST and IP POLICIES. I would leave that upto you… to figure that out… That’s a known
impediment.
* Rule: Avoid Administration and Command & Control over the 5th Day

9. *
* If Leadership is summarized as
* Change
* Learning
* Innovation
* Growth
* Mentoring & Coaching
* Then the 5th Day is (i) not a holiday, (ii) out of bounds of Managers (iii) doesn’t require
approvals of any sort
* This is a two pronged Strategy (i) The Organization avoids severe Organizational
Performance Deterioration shown in the Capacity Chart Slide. And (ii) It is used for
Growth and other Leadership Activities
* This completes the Model of Integration of Management (Status Quo) & Leadership
(Growth & Innovation) in the same company
* This also implies that the company bills at New Billing Rate = Older Billing Rate * 5/4
and that would percolate up in Costing and Pricing of Products & Services to the End
Customer
* Note: R&D Is a Vertical (Organizational Slice) Model. This is a Perforated Across
Organization Model. Across Divisions and Functions like HR, Marketing, Finance…

10. *
* Current Business Capacity = C
* Free (Utilization) Fraction = F ….e.g. 0.20… 1 of 5 days free
* Growth/Opportunity Leverage = L = Growth Divided by Free
Capacity…. E.g. 1.1/0.2 = 5.5 … the max theoretical
possibility of growing using the free capacity fraction
assuming all ideal conditions otherwise.
* Scale Leverage Constant = k = f(C) i.e. Leverage from already
Existing Scale, Cash, Capacity, Knowledge etc. e.g. 1.052
* Time Periods = T years
* Therefore Organic Growth = kCFL
* Future Capacity = C x ( 1 + kFL ) ^ T
* Growing from C = 10,000 to 400,000 = ln 40 / ln(1 +
1.052x0.2x5.5) = 6.1 years (assuming period T in years)

11. *
* Consistency of
* Culture
* Philosophy
* Direction
* Complexity Reduction
* Business Agility
* Compared to Inorganic or Adhoc … Knee Jerk Growth…
* Also assuming your New Cashflow is Positive and Relatively Stable then your Growth is
already accounted for within Free Capacity. And doesn’t require enormously extra
planning, budget, expense etc. etc. except for Capital Expenditure
* Also the model shows that at the scale of 10,000 employees to scale to 40X is possible
in 6.1 years (Theoretically from the model)
* Which Negates the Nonsense that Organic Growth Necessarily Impedes Growth
justifying Inorganic Growth As The Only Possibility in anyway.
* It also reinforces Iterative & Incremental Execution, Emergent Strategy, Integration of
Leadership and Management within the same organization, It delivers better
Organizational Quality/Performance/Experience (ref: Capacity Chart)

12. *
Aditya!!!