Idea in Brief
The Challenge
Many start-ups and new corporate ventures that grow very fast never sustain profitability and hence scalability.
The Insight
In an often-overlooked stage of growth—extrapolation—successful start-ups ensure that each new customer brings in additional revenue and incurs only marginal cost—the key to lasting, profitable growth. During this phase firms turn product-market fit into profit-market fit.
The Takeaway
To keep scaling up, a start-up or a new enterprise initiative must have a host of resources in place—such as a proven monetization approach, a strategy to exploit network effects, and robust capital resources. It must also be managed as an “ambidextrous” organization—capable of exploring new businesses while exploiting its existing core business—and systematically remove internal business-model constraints on growth.