Most management writing focuses on startups or large companies, but if recent performance is any indicator, midcap companies are the place to be. U.S. organizations with $10 million–$1 billion in revenue make up the fourth largest global economy in the world, with $3.8 trillion in private sector GDP. Over 200,000 midcap businesses collectively employ 34% of the U.S. workforce. During the 2008 recession, midcap companies proved surprisingly tough: Fully 82% of them survived to see the recovery (only 57% of small businesses made it through), and midcap companies added an average of 20 jobs each while big businesses were shedding thousands of jobs.

The stall point for many midcaps is when they find themselves a $100 million organization trapped in the body of a $30 million company. Looking much like the teenage boy wearing his father’s suit, they haven’t quite grown into the size they’ve achieved. Why? They confuse growth for scaling. Growth means adding revenue at the same pace you are adding resources; scaling means adding revenue at a much greater rate than cost. With intensified pressure to keep up, leaders often react to mere symptoms of poorly managed growth, such as widespread conflict or a sense of organizational mayhem.

Leaders in this position need to shift from working in their company to working on their company. Here are three things executives can do to secure scalable growth for their midcap companies.

  • Replace counterfeit “strategies” with real market identity. It’s astounding how many companies produce a financial plan, customer segmentation document, or financial forecast when you ask to see their strategy. Mission, vision, and values statements are other common stand-ins. But although all of these things are important, they aren’t a strategy, and they’re insufficient for defining who a company is to its market, relative to its competitive set. Worst of all, these companies let their identity be formed by whichever customers buy the most product. Executives in midcaps sometimes think their companies are too small to do in-depth strategy work — but they think this at their peril. For example, Research in Motion, the maker of BlackBerry, lost its market leadership position because it didn’t move beyond its traditional corporate customers; it failed to understand the mobile app market. Companies of all sizes can identify their competitive positioning, analyze threats and opportunities, consider their unique capabilities and the investments required to protect them, and create a shortlist of prioritized work to advance their position. These things are functions of discipline, not size.
  • Build capacity to scale — don’t just replicate. Many smaller companies are fortunate to find a market niche for a service or product that grows rapidly. When this happens, “rinse and repeat” (or “ride the wave as long as we can”) becomes the plan to manage growth. This approach ignores the reality that one day the wave will crest. Being able to quickly multiply successes is not the same as building for sustainable growth. Taking the time to design an organization that can sustain growth is what distinguishes great executives from those that eventually get swept away by the wave. Scaling up to manage growth involves constantly questioning how your organization should look — in advance of intensified growth. A client of mine in the energy sector required regional executives to discuss scenarios once a year that explored rising energy costs, lowered commodity costs, and alternative energy sources gaining or losing ground. For each scenario, they built responses to competitive threats and their organizational implications. The process was powerful and proved beneficial when the opportunity arose to expand into natural gas from traditional fossil fuels. The company diversified its portfolio, mitigated longstanding risk, and captured new markets it would have otherwise ignored, all while building an organization that could scale without replicated costs.
  • Welcome standardization — you won’t lose the “entrepreneurial vibe.” Of all the words that make entrepreneurial leaders shudder, few do it more than “process.” They associate the word with corporate bureaucracy. They fear that standardizing approaches to work will neuter entrepreneurial freedom and stunt creativity. But this is rarely the case. Standardized processes liberate creativity because they free up distracted energy that’s consumed by reinventing approaches every time something is done. Over time, organizations without standardized processes become a mass of confusion, redundancies, and cost overruns. Smart executives prepare the organization with processes that promote creative freedom while defining repeatable approaches to work — that way, maturity increases as size does. When advertising firms Draft and FCB merged, the new company, DraftFCB, wanted a new model to give it a competitive advantage in a crowded market. The model brought all the disciplines within the company together like the spokes in a wheel, with the client as the hub. Within a year, DraftFCB, now simply FCB, was making headlines for its approach, and clients were so impressed at the power of separate but fully integrated disciplines that they were asking for demos so they could take the model into their own organizations.

Midcaps that grow through effective scaling are seeing greater results: 65% of growth-minded companies are enjoying new markets, and 61% are finding new opportunities in international markets. As a leader, if you mature with the discipline to build an organization that can grow and scale, you too can gain the advantages of leading a growth company that can go the distance.