Daniel is the CTO of Picnic—an online supermarket and logistics disruptor founded in 2015 in Amsterdam. Daniel moved to Amsterdam for a Computer Science doctoral program and also obtained a master’s degree in Business Administration in the city.
Before joining Picnic, he worked in the business-to-business space for a bit, building a retail recommendation platform. This experience made him realize that the food ecommerce industry was immature compared to the non-food ecommerce industry despite being the same size, which he identified as a business opportunity.
It was then that Daniel and the Picnic team decided to build a technology that would compete against people’s instinct to go to supermarkets and buy food ingredients by offering better price points and attractive offerings, as well as simplifying the food shopping and delivery process.
Picnic differentiates itself from the market by using artificial intelligence, machine learning, and deep learning for accurate order taking and tech-oriented logistics planning. They have leveraged those operations to deliver great services to their ever-increasing customer base.
Unlike most companies, Picnic has managed to grow in all directions at once; expansion, automation, and new business lines are all happening in parallel at their company.
The following text covers our conversation with Daniel in great detail. But if you prefer to watch the live session instead, head over here for the full recording:
Many companies struggle to scale in all directions because they focus on the product rather than the structure they need to implement to minimize the cost of change or scaling. In Daniel’s words, “Companies fail to look into the cost of change, but focus on the cost of building their technology instead.”
That’s why it’s common to see teams focused on adopting software development processes like Agile and Scrum to build a technology that is most efficient and easily launched.
However, your company’s technology choice or software development method has less impact on your growth than the architecture used to build the technology. Your company’s product or processes may need to be changed ten, a hundred, or a thousand times—and if they can’t be changed at a low cost, it may not be easy for you to scale.
Hence, if you’re looking to scale painlessly, you should ensure that these changes will be as effortless as possible.
Milestones such as a larger customer base, better technology, and better processes could necessitate making changes to your product ten, a hundred, or a thousand times. These changes could take a toll on your product and team if not properly managed. Here are some ways you can make these changes less costly:
In the software development context, the architecture of a system is the structure needed to understand the system. Evolutionary architecture is the system architecture that is adopted with change in mind.
As a result, such architecture optimizes the cost of change in the technology. Adopting an evolutionary architecture when building your technology will make future change requests less costly, since your team can easily implement such changes.
In addition to adopting an evolutionary technology, it’s important to document the product architecture when building your product. Product architecture helps your team understand the relationship between the elements of a product and its functions.
Creating a well-defined product architecture ensures that your team can implement change requests efficiently, as it helps your team identify the next steps to be taken in order to fulfill a change request.
Daniel recommends ensuring that everyone on the product team understands the product architecture. In his words, “It doesn’t matter if they’re the Product Owner or engineers; they need to understand the architecture.”
They don’t need to understand all of the product features or use cases, but they do need to understand the architecture, because that will drive future expansion opportunities.
Before implementing any change request, it’s important to consider the business value of such requests. As Daniel put it, “It’s important to think about new feature requests conceptually and ensure that these changes fit into the overall product vision.” This will also make communicating the necessary changes to the engineering team easier.
If your organization desires to scale within a short period of time, it’s essential to know the different ways they can grow. This will help with the growth targets and setting visions and missions for the company.
Depending on your company’s business goals and industry, your company will likely be looking to scale in the following directions:
The first growth level your company will likely experience is geographic expansion. Your company may extend its operations to a new city, new area, or new country. Geographic expansion is the classic business growth dimension.
This type of expansion may require little work from the tech team and more effort from the strategy or operations team. However, as a tech leader, understanding your company’s geographic expansion goals will guide your product development strategy.
The second growth dimension involves massively automating processes to improve efficiency. However, identifying the processes to be automated and scaled may be a bit challenging. Daniel recommends prioritizing functions that your company won’t be able to perform at the same speed if it becomes ten, a hundred, or a thousand times bigger.
Importantly enough, that doesn’t necessarily mean the most expensive or labor-intensive functions. In his words, “It’s purely a scale question. If your company becomes a hundred times bigger, can you still perform that function a hundred times more with no automation?”
This growth dimension requires technical expertise. As a tech leader, you may need to suggest using machine learning, artificial intelligence, or deep learning to automate the processes.
The third growth dimension involves expanding the business operating model with the same infrastructure to offer more services. Daniel recommends identifying new business lines by assessing the most important thing your business needs to do at the moment.
The bugs you need to fix and the features you need to add to your product are typically good sources of new business lines and services.
Picnic has grown remarkably since its inception in 2015, most recently recording 2–5% weekly growth. If you’re looking to achieve Picnic’s level of growth, there’s no magic formula, but the following tips from Daniel should help set you on the right path:
It’s easy to fall into the trap of benchmarking your product or services against existing market solutions. However, you may not be able to grow beyond the current market size if you do so. In Daniel’s words, “Copying competitors lets you get better at their game, but you can reinvent the game or play a completely different game instead.”
So, instead of comparing your product with the competition’s, Daniel recommends adopting a white-paper approach by brainstorming the best possible solutions and delivering the most automated solution for the future. This way, your organization can operate and scale in multiple dimensions simultaneously with less effort.
Most businesses find it difficult to move slower in the beginning, as it requires commitment from the team, investors, and other stakeholders. However, according to Daniel, it’s best to move slowly in the beginning, to ensure that you figure out everything from scratch.
Once you have discovered an innovative product and the fastest way to scale it, you will be able to move much faster down the line.
Evolutionary architecture may appear to be just systems and processes to many engineers, but software architecture defines the future limitations or opportunities for your technology.
For example, if you’re thinking about implementing a new feature, extending the current implementation, or making it more scalable, these changes would be driven by the core architecture.
Modeling such changes in your architecture ensures that the implementation is much easier. Architecture also makes a huge difference to your tech stack, since its growth is dependent on how quickly you can move faster. This is especially true if you’re working for a non-startup, where you have to change existing code more and write new code less.
Therefore, making architecture a top priority between tech, product, and business is important to promote a scalable business environment.
Tech leaders often focus on the technology and development processes. However, getting more involved in the business and finding an architecture linking tech and business matters. As Daniel puts it, “You need to think more about outcomes and KPIs, and not just features for your product.”
Daniel recommends defining the relevant KPIs for your tech stack and assessing how these metrics will improve with every new feature implementation. This will help you create metrics or form KPI-based judgments at scale.
Examples of such KPIs could be the conversion rate the new feature would drive or the customer retention rate. Beyond setting KPIs for your product or technology, you can also set KPIs for operations like the hiring process.
Scaling in multiple directions is desirable but also challenging. You may discover that your team’s strategies, techniques, and tactics are no longer suitable once your company becomes ten, a hundred, or a thousand times bigger.
Thankfully, you can always manage the situation by using the following methods suggested by Daniel:
According to Daniel, you should review your team’s short-term strategy weekly, and the long-term strategy quarterly. For instance, you can review the product and business roadmaps every quarter, then plan your strategy for the next three months.
Conducting these periodic reviews will ensure that you’re on track with what your company hopes to achieve in the next few years.
You may discover new opportunities that require your strategic direction to be updated. Also, new technology may become available that may not immediately apply to your organization, but could become more relevant to you after a while.
Hence, it’s best to be flexible with your strategy and adjust as needed. You can always organize hackathons or build prototypes to test your updated strategy or the new technology before adopting them.
Look out for processes that you can automate to make scaling less challenging. For instance, Picnic launched a fulfillment center where all operations are robotized. This has reduced their Product Picker’s waiting time in the warehouse by 95%, as the customers’ orders come to the Product Picker.
Multidirectional growth is definitely achievable. However, it requires a lot of careful planning to sustain such rapid growth. If you approach your business without understanding the nuances of scaling in multiple directions, you may end up stuck on a linear growth level or struggle to even remain in business after you achieve such growth.
Luckily, Daniel’s tips for growing in all directions should help you scale consistently and sustainably.
Thank you for reading this article. Take a look at the following resources if you’re looking to scale or manage a large team or product, or make any other significant impact in your organization:
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