How many times do we find ourselves sliding into the “or” mentality? While there’s something to be said for focus, the discipline around solving for two strategic constraints that might be in opposition to each other is actually very powerful and a great discipline to get in to.
The adage of a company solving for growth or profitability is a classic example of “the genius of the ‘and’ versus the tyranny of the ‘or.’”
While there are valid reasons in some cases to solve for only one of these objectives, meeting both requires thoughtful planning and execution — something most successful businesses need to live by. It reinforces a discipline that we are accountable for our actions, and removes the idea that we’ll grow for the sake of growth and figure the rest out later. Jim Collins gave great examples of this in his book “Good to Great.”
Create room for ‘and’
Many startup companies solve for early adoption: “Don’t worry about revenue, just get people to love the product.” While it’s imperative that users love the product for it to survive and thrive, ignoring the business model that allows it to scale profitably has bitten many.
Thousands of companies have raised millions of dollars and have been written up in trade magazines for this accomplishment (which it is); many of them then burn through these millions while they “learn” what it’ll take to get users to love their product.
Not only is it a waste, but the key issue is most times it institutionalizes the wrong processes and thinking, which are hard to correct once profitability becomes a priority.
Different rules for first-of-its-kind products
There are few companies with a first-of-its-kind type of product that also have investors willing to wait while the entrepreneurs figure out how to monetize the platform profitably, after they’ve figured out how to get worldwide adoption.
First-of-its-kind products (i.e., Uber, Facebook, Twitter) that have no prior relative playbook to follow have big problems to solve and require big bets — and most of us aren’t in that situation.
The “and” mentality creates room for both “constraints” versus solving for only one. This is more challenging in the short run, but worth the discipline it takes to be able to solve for both. It makes the mid to long run really interesting.
This was how we built Manta Media, growing aggressively and staying profitable. Our return on investment was 12 months, so if we made an investment or accelerated a portion of the business, we needed to break even within a year.
This discipline helped us weather ups and downs, such as the Great Recession, and also kept our strategies self-sufficient — all while nearly doubling the business from a top and bottom line perspective. The investors, customers and associates were extremely happy with the outcome.
Not all growth is the same
Make sure you’re building your business on a solid foundation with a business model that scales. You need to know this early on to eliminate as many false positives as possible.
Like F. Scott Fitzgerald said: “The test of a first-rate intelligence is the ability to hold two opposed ideas in the mind at the same time, and still retain the ability to function.”
