Juggling act

AIRPORT BOOKSHOPS teem with guides that promise to teach executives the secrets of success. Read this tome, follow this philosophy, change your habits and you, too, can be a management titan. As a moment’s reflection on business history demonstrates, there is no sure-fire route to glory. Instead, running a company is a permanent exercise in juggling trade-offs. What is the right course of action may vary at different times, and in different industries.

Take, for example, the pace of expansion. The fashion is for “upscaling”—creating a business model that can dominate its niche within a few years. This model’s turbocharged version, “blitzscaling”, is beloved of venture capitalists who dream of recreating the “network effects” that fuelled the rise of Google and Facebook. That is, in part, because most venture investments fail and a few big successes are needed to make up for all the duds.

From the point of view of the entrepreneur, however, upscaling may well be a mistake. For a start, not all businesses are subject to network effects. Second, by expanding too fast, companies risk losing control of product quality and messing up their management structure. Building a business is like running a marathon, and few people win a long-distance race by setting off like Usain Bolt. The first Walmart store was opened in 1962...



via Business Feeds

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