James Bergin shares how you can bridge the innovative world of a startup with the global power of an enterprise, so that as you scale you get stronger, not just bigger.
Tertius Bezuidenhout
Senior Regional Sales Director
Workday ANZ
Every small to midsize business (SMB) faces a moment that I call the 'scale trap', where the scrappy startup approach that fueled their growth begins to stifle their agility and innovation.
The culture that made their five-person team feel invincible gets lost somewhere past employee number 250, and suddenly they're facing rigid bureaucracy and complexity in their ways of working.
To many SMB leaders, it can feel like an entirely new business than the one they joined when it operated out of a tiny office space. They want to embrace new technology like AI agents to scale their systems and manage thousands of employees, but fear losing the entrepreneurial spirit and agility that defined their startup days.
To unpack this challenge, I recently spoke to James Bergin, who is a technology futurist at Xero — a valued Workday customer that offers accounting software for small businesses and sole traders.
He understands more than anyone the pressure that SMB leaders feel to adopt every shiny new technology that comes their way. And his advice is clear: for SMBs to avoid the scale trap, they need to remember what it's like to operate with true scarcity.
Guide
When your SMB was a startup, every dollar was precious and it was all hands on deck, rather than siloed teams and precise job titles. This forged a culture of innovative, resourceful thinking.
"Necessity is the mother of all invention," Bergin observes. "And small businesses, when they start, have necessity more than anything. They don't have the luxury of big teams and expansive budgets. They need to make decisions that either help them survive, or thrive."
Your current challenge probably isn't that you lack access to the ‘right’ technology. It's that you're less clear about the necessity that it serves.
- James Bergin, Xero
According to Bergin, consciously checking in about the 'necessity' of an initiative as you scale can help you reign in capital-intensive projects that don't deliver the value that you need right now, and avoid the sprawl of apps that will hold you back in the future.
This is a common issue for SMBs. According to the Salesforce Small & Medium Business Trends Report, the average small business uses seven different apps to run daily operations, and more than half say they feel overwhelmed by it.
Another 50% report data inconsistencies between tools, which makes decision-making harder than it should be.
"Your current challenge probably isn't that you lack access to the ‘right’ technology," Bergin says. "It's that you're less clear about the necessity that it serves. Is it a nice to have, or is it truly necessary to scale and grow? That's the difference."
The national conversation on productivity tends to focus heavily on innovation. But as an SMB, what does being innovative really mean?
Bergin challenges the perception that it's just about creating something new. "That's the definition of invention," he says. "Innovation, on the other hand, is about creating something new to change something established."
"Understanding your established ways of working and what must be changed is a really great way of clarifying your vision," Bergin says. "Instead of asking, what new tools do we need? Ask where your pain points are and what capabilities you might be missing. Are you too slow? Too fragile? Too rigid?"
Leaders in midsize enterprises might ask themselves questions like:
For the first time, we have technology that doesn't think in ones and zeros, but probabilities. Instead of constraining us, it's almost like it’s embracing our nuances.
- James Bergin, Xero
"If you know those process pain points, and understand your status quo, you can start to discover where AI and other technologies can add real value. By thinking about the capabilities on offer and how they can change what is established about how your business operates, you’ll become more intentional in the investments you make," Bergin says.
This is an important point that's covered in Xero's recent white paper on AI in small business, which discusses how a lack of readiness is holding businesses back, stopping them from unlocking their full competitive edge.
The information revolution — and the decades of innovation that followed — required us to reduce organic, fluid, human interactions into binary constructs. It was either 1 or 0, this button or that one, this form or that one. To scale with a predictable output, processes had to be rigid and fixed.
But Bergin argues that generative AI is breaking this historical constraint, allowing humans to communicate and work with technology in their natural language — not just through mice, keyboards and other mechanisms of digital input.
"Humans are messy and complex," he says. "And for the first time, we have technology that doesn't think in ones and zeros, but probabilities. Instead of constraining us, it's almost like it’s embracing our nuances."
"For example," Bergin says. "An employee chatting with an AI agent for HR might say, "I need next Thursday afternoon off, but I'm willing to work through lunch to make up an hour, and I'd like to use the flexible hours I banked last week."
It's a great example where a legacy system will fail instantly. The request isn't easily pre-programmed — there's too much grey. But an AI agent for HR that understands natural language can check the banked hours, verify team coverage, anticipate compliance and present the request to their manager for approval. The process is still scalable and compliant, but the experience is organic.
Recognising employees for their full range of skills opens up greater access to job opportunities, and speeds up the ability to deploy talent across the business as it's needed.
The lesson? As your business scales, try not to squeeze all the complexity into rigid boxes that will ultimately slow you down and reduce your ability to innovate (in the true sense of the word). "Instead of focusing on the process, focus on the desired outcome," Bergin says. "Let the technology handle more of the complexity and messiness at scale."
One of the key differences between a small or midsize business and a large enterprise is the change that happens when businesses move from hiring a small team with diverse skills, to a larger team with defined titles and promotional pathways.
According to Bergin, it's another lesson that SMBs should remember as they scale. "Everyone in a small business is necessary," he says. "The CEO is also head of sales, and maybe chief coffee maker. They develop skills outside the defined list featured on their resume."
But as SMBs begin to scale, they often fall into the trap of rigid, title-based hierarchies. "On the surface, this can stifle cross-functional collaboration," Bergin says. "But the real issue is that you're not always giving the right task to the person with the right skills, regardless of title. Maybe the CEO should make the coffee, because they're the best at it?"
This shift in mindset is what we call a skills-based approach to talent, and it can unlock a range of benefits, not least of which is agility. Recognising employees for their full range of skills opens up greater access to job opportunities, and speeds up the ability to deploy talent across the business as it's needed — much like a startup.
When over half of business leaders (51%) are concerned about a future talent shortage, and only 32% strongly believe the skills in their organisation today are the same that they will need for future success, it's clear this approach is something that SMBs need to carry with them as they scale.
The journey from a startup to a large enterprise is not a linear path. It's a series of strategic choices in a world of imperfect options. "One of my favourite quotes is from Thomas Sowell," Bergin says. "He was an economist who said 'there are no solutions, only trade-offs'."
Your greatest competitive advantage as a scale-up isn't your technology budget, it's your inherent memory of why the business was built in the first place.
- James Bergin, Xero
For SMB leaders looking to scale, this might mean embracing these trade-offs:
"These trade-offs are not an investment in technology, but agility," Bergin says. "After all, your greatest competitive advantage as a scale-up isn't your technology budget, it's your inherent memory of why the business was built in the first place."
"Your team knows your customers, you know the value of agility, and you know what it means to operate with necessity. Use that to bridge the innovative world of a startup with the global power of an enterprise. That way, you can ensure that as you scale — you get stronger, not just bigger."
It's a valuable reminder that sometimes the greatest lessons are behind us. "Small businesses may dream of being big, but big businesses need to remember what it was like to be small," Bergin concludes. The successful SMB is the one that proves it can do both.
Guide
The rapid advancement of AI has raised huge questions about its impact on jobs. Despite that, 83% of workers agree that AI will enhance human creativity rather than limit it. Learn more about the AI skills revolution in this new global Workday study.