My Research in Evolutionary Entrepreneurship
For the past 5 years, together with Prof. Charles Fine we have been developing a new framework to understand the complex journey that successful companies went on from a start-up to scale-up to a sail-up with a focus on understanding specifically the nature of scaling and the role that entrepreneurial operations play in this stage. While hundreds of papers and books exist on entrepreneurial marketing and finance, entrepreneurial operations get far less attention. Furthermore, much of the literature in operations strategy and management addresses challenges of companies in stable (sailing) environments, leaving entrepreneurs with little theoretical or practical guidance on early stage operations strategy.
We mapped a framework phrased: Nailing, Scaling, Sailingas a shorthand for different stages of the entrepreneurial life cycle and provided nice scaling tools required in the second phase: processification, professionalization, platformization, automation, collaboration, segmentation, capitalization, multiplication and culturalization. This research suggests that in order to succeed in its trajectory, one must understand the overall entrepreneurial evolutionary process from nailing to scaling to sailing and all the attributes and the nature of each stage in order to better prepare for the entire journey.
The metaphor "Jungle, Mountain, Ocean" stands for the evolution of entrepreneurship as an overall journey, where the entrepreneurs face different obstacles, depending of where this journey takes them.
Nail it - "Carry as little as possible, but choose that little with care!" E.Shaffer
The earliest stage is all about figuring out and successfully prototyping a value proposition that works simultaneously for all the members in your "value chain" (customers, employees, suppliers, distributors, investors, etc.). At this stage, early entrepreneurial intentions, initial resource endowments, fast iterations and experimentations, and marketing efforts play especially important roles. The right mix of people that can work for and with you, along with the perfect array of distributors, suppliers, and investors, all contributing to a viable value chain.
Metaphorically, nailing stands for hacking through a very dense jungle with next to nothing but a machete, a very approximate map designating a very fuzzy destination, but no trail, and a small, determined team of like-minded adventurers, rule breakers and mission-driven problem solvers adventurous with entrepreneurial mindsets led by a mission driven, flexible, empowering and passionate leader…
scale it - "It's time to climb that goddamn mountain!” Jack Kerouac
The “scaling”stage comes once a company has proven some key aspects (e.g., technology, customers, pricing) of its value proposition and now must grow in parallel to its market alongside its production and delivery capabilities. In colloquial term, if Nailing was the ‘What’ then Scaling is the ‘How’. This is the heart of our hoped-for contribution, fleshing out seven attributes in the context of an entrepreneurial firm that has already “nailed it,” and now needs/wants to scale up.
Compared to trekking the jungle, scaling feels like hikingup a long, steep mountain with a rapidly growing team of people. Scaling is a journey of endurance, discipline and resilience. Unlike the jungle, here, the path becomes clearer, the horizon more visible, and the peak more tangible. The mountain is a territory riddled with paths that will give you a better sense of direction and more certainty. The tools that one can take on this trek are slightly more sophisticated and allow for a longer subsistence, but keeping lean is still critical,so you must optimize your resources and be smart with the tools you choose to carry.
sail it - "Anyone can hold the helm when the sea is calm." Syrus Publilius
The third stage, “sailing”typically comes much later, after a company has realized a significant fraction of the growth opportunity of its value proposition. Although the firm may still be required to navigate the stormy seas of competitive, technological, and environmental challenges, the average growth rate is much slower and the firm and its processes have reached a certain stage of maturity. At this point, the focus may be more on sustainability of the business and continuous improvement to navigate the market and avoiding organizational rigidities that make a firm susceptible to disruptive threats.
We think of sailing as the ability to continuously improve and innovate in product offering, production capabilities and market growth, and maintain your competitive advantage. Big companies have huge advantages in procurement, distribution, and manufacturing, as well as sales and marketing advantages. But they have a challenge of reacting fast to large threats in the market. Large companies are similar to tanker ships that are able to hold their course even in heavy weather if they are properly equipped and manned up.