Light applause and satisfactory murmurs fill the room as your co-worker ends his presentation and takes a seat. There is a momentary pause as your boss scans the table, waiting for someone to open the discussion. Before the silence has a chance to turn awkward, a questioning voice speaks up. "Your proposal is comprehensive and ambitious, Gary, but can it scale?"
Scalable — or scalability — is a term most often encountered in the business/finance world, typically applied to a process, product, model, service, system, data size, or activity. It's a question of growth that evaluates important criteria in order to determine feasibility and value for any given product or service.Scalability is a question of growth, asking how something it can be expanded/shrunk to meet greater/lesser demand.Lori Andrews / Getty Images
When someone asks, "Can it scale?" they want to know how well the manufacturing or service process can be expanded or shrunk to meet different requirements, such as:Greater demandReduced demandSudden power outages or other types of output problemsTime to marketReturn on investment
Key Issues Concerning Scalable Products or Services
The primary factors (e.g. performance metrics) considered most often are:Cost: Can it scale fast enough within a particular budget?Quality: Can it be produced with performance, reliability, efficacy, etc.?Time: Can it be produced quickly enough to meet demand?
An Example of Scalability in Real Life
Let's say you flip the perfect pancakes for your family every weekend. Having four hungry teenagers keeps you busy in the kitchen, but it's uncomplicated and manageable. So when the growth spurts happen — you guessed it — they want to eat twice as many pancakes. Can you effectively and immediately scale your breakfast cooking process to meet famished demands? Sure! It's because you've got:Plenty of ingredients (no change in cost per package).Large mixing bowls to accommodate double batches (maintains batter quality/consistency).Culinary skills to operate multiple pans on the stove (double the pancakes, the same amount of time).
But what if you had to cook a double batch of breakfast pancakes for four hundred people instead? What about four thousand? The question of scalability now becomes much more complex. How would you go about meeting those goals (i.e. maintaining food quality and managing time) without going broke (or crazy)?
For starters, charging people for pancakes will help offset the cost of ingredients and cookware. You'll need a sizable dining area to accommodate those guests, but also a bigger kitchen to sustain speedy food service, along with hired staff trained in your ways of pancake-cooking perfection. Handling funds/transactions, leasing a restaurant space and managing employees each present additional expenditures that must be evaluated — ultimately affecting the price of pancake orders.
But at the end of the day, would scaling this pancake operation be worth it? If the projected profit is low or nonexistent, then probably not. But if the numbers look good for generating future profits, then congratulations on having completed a solid portion of a successful business plan!
What It Means to Scale Down
Often, scaling tends to go up because the assumption is that more people will want the product or service. Let's say someone creates a single product prototype to show potential investors. Those investors will undoubtedly consider market demand and the steps and costs involved for mass-production. But the reverse – scaling down — is also possible.
Let's say the product prototype is capable of cooking and serving ten thousand pancakes per second, but the equipment is also the size of a four-bedroom house. While certainly impressive, many people might ask to know how the idea can scale down. A machine that makes fewer pancakes per second, but can be mounted and operated from the inside of a food truck, would be far more pragmatic and useful.
Or, perhaps more realistically, what would your local pancake house do if a flood hit part of town and customers dwindled for weeks? It would need to scale down on pancake production but be ready to scale back up when customers could start heading out to breakfast again.
You will see this term often in terms of technology because so many processes today are powered by computerized machines.