The Best Strategies For New Startups And Small Businesses?
You would think this would be obvious as both situations require different approaches to reaching their stated objectives. But sadly this seems not to be the case, and the culprit of this confusion may lie in the literature on the subject.
Steve Blank, a founder or early employee in eight start-ups, stated on his website that “In the past, most business literature has treated the life cycle of corporations as if the practices that make sense for a large corporation were equally appropriate for a startup. They only differed in timing or scale”.
He argues “that as a scalable startup grows from a garage into a Google, it progresses through three distinct stages”. In the linked article he describes the first two stages as The Scalable Startup, and Metamorphosis – The Transition.
The first step comes from the recognition that what works for a startup will not work for a large and established company. This again would seem to be an obvious conclusion, from employee management to operating capital; their needs are as different as night and day!
Making the case that “Startups need different management principles, people and strategies than large established companies” he goes on to say that “Any advice that’s targeted to large established companies is irrelevant, distracting and potentially damaging in growing and managing a startup”.
Furthermore, he contends “If you would ask a startup CEO to create a diagram showing how their startup will become a large company, you’d probably get a simple line extending from “here’s where we are” to “here’s where we’re going” and “In this simplistic model, on the day a startup achieves product/market fit, they would stop doing all the startup activities and magically become a “large company”.
Since this magical transition will not miraculously occur on its own, just where does this leave the misguided startups, who have found themselves marooned on an island of inaccurate information?
Harvard Business Review’s article The Five Stages of Small Business Growth by Neil C. Churchill and Virginia L. Lewis, says “categorizing the problems and growth patterns of small businesses in a systematic way that is useful to entrepreneurs seems at first glance a hopeless task. Small businesses vary widely in size and capacity for growth” and it goes on to say that “The owner is the business, performs all the important tasks, and is the major supplier of energy, direction, and, with relatives and friends, capital”.
Yet there is still hope, all is not yet lost … and the way off that island of misfit information may be just around the corner. But that will have to wait until the next blog post!
By J. E. Elmore
Elmore Networks Tech Blog: