By Donna Mackenzie
To pick up on the last post – “What is an inflection point (and why should you care)?”
I love the classic Woody Allen film, “Annie Hall” and think Alvy Singer may have nailed not just the secret to love relationships, but also the vulnerability of company growth when he said, “like a shark, they must move forward or die.”
Plotting historical company growth (or decline!) can be done on a cocktail napkin. Projecting rational, acheivable future growth – given a good market view, reliable pipeline data, and historical performance data – is a few days with a spreadsheet.
Then again, there are sometimes acute inflection points in a company’s progress. Rollercoaster. Whether a severe sales slump or a rocket ship to hyper-growth and profits – either direction can cause the same feeling as the weightlessness at the top of a roller coaster just before the g-force of the downhill plunge slams you backward.
Your gut may tell you something important is about to happen, but is this the thrill ride of your life (positive inflection) or one that is going to have you hurling chunks at the bottom?
How do you recognize these “moments of truth” before they arrive? How to you avoid a stall or manage scale through staggering growth?
Techniques and frameworks exist (e.g.”Strategic Inflection Points” by David Mayes) to help assess your position on the growth curve. But of course, it doesn’t take a busload of MBA quant jocks to tell you things aren’t looking good if you’ve had year-over-year sales declines, if the not-so-recent negative economic climate has impacted price, or customers are defecting because of new technology eclipsing your offering.

Author, executive coach, investor, and serial entrepreneur, Christine Comaford, believes that there are common revenue inflection points at say, $10M, $25M, $50M, etc., but that regardless of revenues, the real challenge with inflection points is that “at each one, a company must reinvent itself in order to continue growing.”

What matters? People, Money & Model

Comaford makes the case that intentionally mapping a plan to get to, and through, each inflection point isn’t enough. Companies will also need shifts in three areas: people, money and model.

And she’s not alone in pointing out that as a company grows the CEO is further and further removed from the execution. On the people front that means delegating responsibility and authority to a competent executive team. When a company is on fire, the speed and trajectory of growth is complicated by the need for a deeper bench at the same time profits are being diverted to ramp production, inventory, development, and the like.

That gets us to the second point: money or capital. It’s clear that if a company is going to grow successfully through one inflection point and on to the next, expansion capital, financial controls, budgeting, and reporting may all need to scale — and scale well — along with revenue growth.

Comaford’s “model” covers a lot of territory, from business model and market dynamics to strategies for growth (organic, acquisition, partnering). Some or all of these may need to be addressed in different ways at each inflection point.

But wait! There’s more! …Perspective

People, money and model all make sense in helping avoid landmines along the way. But I’d add a fourth item to the list: perspective.

The word perspective comes from the Latin perspectus, to see through, to see clearly. So if you’re a founder facing an inflection point, seek out clarifying vantage points from those who’ve been there before you.

They’ll help you navigate new sets of sacrifices, compromises, and recalculations along the way that will have you seeing things in a different way allowing you to exercise better judgment in your unique situation. Perspective, sought out and asked for of the right people, can be a game changer.

Wherever you plot yourself on the growth curve, whatever inflection point might be looming, it’s wise to look at people, money and model with an eye to what your hurdles may look like and how you’ll get over them, under them, or around them from every possible vantage point. Evaluate where you are early and often so the ride is exhilarating rather than scary.

And back to Alvy’s survival advice…. Never stop. Otherwise you’re dead.shark.jpg

 

 

 

 

 

 

Caribbean reef shark CC BY-SA 3.0 Albert kok – Own work

Rollercoaster image – The Mirror

by Lilian Myers at 9:15 AM in Opinions

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