Nail It
I was at a small gathering of people about a month ago. Presenting to us was a gentleman covering the life cycle of your average start-up. He broke the life of any organization into four segments:
1. Innovate - come up with a brand new idea and develop it.
2. Nail It - test the idea with potential customers and refine as needed.
3. Scale It - grow the company; produce lots of widgets and lower your costs through volume.
4. Milk It - the original idea is passe; accountants and bureaucrats take over and the company (or the section of it for this one idea) putters along until it starts incurring losses, at which point it's taken out back and unceremoniously shot.
These four steps are fairly well-established in tech start-ups. They also resonate with my own personal experience. But when the Q&A came at the end, I did what I usually do when I get bored at lectures: I started throwing curve ball questions at the presenter.
Specifically, I asked him if there were any businesses where the jump from step #2 to step #3 doesn't actually make sense. (He didn't give me an entirely straight answer.)
Later that evening, I thought of one: a restaurant. McDonald's is one thing, because scaling is the one reason that any of us have ever heard of them. But imagine a restaurant where the menu was created by a single chef, and he has the kind of touch where, in order for the kitchen to run, he has to be there. It would be difficult to franchise the restaurant, where the essence of the business is contingent on one person.
I once had a management professor tell me that a healthy business is one that's growing, both in operations and financially. I think I'd be perfectly happy with comfortable stability.
1. Innovate - come up with a brand new idea and develop it.
2. Nail It - test the idea with potential customers and refine as needed.
3. Scale It - grow the company; produce lots of widgets and lower your costs through volume.
4. Milk It - the original idea is passe; accountants and bureaucrats take over and the company (or the section of it for this one idea) putters along until it starts incurring losses, at which point it's taken out back and unceremoniously shot.
These four steps are fairly well-established in tech start-ups. They also resonate with my own personal experience. But when the Q&A came at the end, I did what I usually do when I get bored at lectures: I started throwing curve ball questions at the presenter.
Specifically, I asked him if there were any businesses where the jump from step #2 to step #3 doesn't actually make sense. (He didn't give me an entirely straight answer.)
Later that evening, I thought of one: a restaurant. McDonald's is one thing, because scaling is the one reason that any of us have ever heard of them. But imagine a restaurant where the menu was created by a single chef, and he has the kind of touch where, in order for the kitchen to run, he has to be there. It would be difficult to franchise the restaurant, where the essence of the business is contingent on one person.
I once had a management professor tell me that a healthy business is one that's growing, both in operations and financially. I think I'd be perfectly happy with comfortable stability.