After years of advising emerging companies, I’ve observed a clear pattern of developmental challenges that track amazingly well with revenue levels. Although we’ve all seen these transition points in a company’s growth, there’s precious little prescriptive advice available for management teams facing the issues that occur as these “tripping points” are reached.
Most companies find themselves challenged at several levels of revenue growth in a number of ways. The most general “tripping points” are at:
• $1 Million
• $5 Million
• $10 Million
• $25 million
• $50 Million
• $100 Million
Each of these “tripping points” represents critical levels of revenue and growth that require review and potential revision in key areas of the company’s operations. Important and often difficult decisions are required in seven key areas:
• Strategy – Is our strategy right for the next phase of growth?
• Style – Are we operating with the right core value discipline for our business going forward, e.g. operational excellence, customer intimacy, product leadership or mastery of discontinuous change?
• Structure – Do we have the right organizational structure and operating units in place for new growth?
• Systems – Do we have the needed systems and infrastructure in place to support current and planned strategy and growth?
• Skills – What skills are needed to execute the next stage of strategy and tactics?
• Staffing – Are staffing levels appropriate and what should be the staffing strategy for new growth?
• Shared Values – Perhaps most importantly, do all of the above decisions and leadership come together to create a strong, coherent set of shared values that can lead the company forward?
For each tripping point, certain areas can generally be expected to be leading issues:
• $5 Million – Refining beginning Strategy, Structure, and Skills
• $10 Million – Evolving strategy, structure, skills and
• $25 million – Beginning infrastructure, style and staffing plans
• $50 Million – Key areas of infrastructure, staffing, skills and systems scalability, Style
• $100 Million – Scalability in all areas, Shared Values, Style
At each “tripping point” alliance strategy comes into play as well, as a part of both strategy and structure. Tripping point priorities influence key BD decisions such as:
• How to acquire skills (acquire or grow within)
• Structure for whole product (build or ally)
• Develop strategy for competitive advantage (technology, alliances, customers or offers)
In future posts, we’ll examine specific tripping points in more detail and discuss prescriptions to avoid TFO – Tripping and Falling Over – a major cause of critical start-up injuries. We’re also assembling a series of case studies for an article and potentially a book on “tripping points” and welcome suggestions for company case studies.
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