Are you a person who work hard on strategizing your own entrepreneurial growth?
Last week, I was a keynote speaker at an international Entrepreneurship and Innovation summit, the i7summit, that took place in the magnificent royal city of Chantilly in France. Presentations made by seasoned VCs like Tim Draper were, of course, very inspiring. Still, the sessions I attended where entrepreneurs pitch their new venture to VCs were even more instructive to me –with my academic lens on corporate growth.
I was amazed to see how most entrepreneurs exclusively focus on the product – or concept itself. But, they are not addressing the key challenge they will face: entrepreneurial growth.
How will they grow their company? Will organic growth be enough to scale up their business -build? Should they consider licensing agreements or alliances to get resources and legitimacy -borrow? Could they even consider making early on educational acquisitions? Implicitly, organic growth seems to be the default option.
I think this is a major flaw. In my research on “Build, Borrow, Buy” strategies I did with Prof. W. Mitchell, I found that firms that manage the broadest alternatives for growth are more likely to survive than firms that rely on a single growth mode.
Entrepreneurs have therefore to go beyond their product obsession and think very carefully about how they will grow their companies.
Three Recommendations to Accelerate Your Entrepreneurial Growth
Don’t think that organic growth is the only option available to start-ups.
In a fast-moving environment, internal development and greenfield geographic expansion often yield a fraction of the potential you can achieve. This is true if it is not complemented with partnerships and acquisitions (buying a business).
Don’t be paranoid about the partnership approach.
In the early stage of your company’s development, making alliances with partners to access news resources quickly or signaling prestigious affiliations is key to earn legitimacy in the market –both vis-à-vis your customers and your investors.
Consider making educational acquisitions or partial acquisitions.
Don’t make the false assumption that M&A is reserved for big companies. If you cannot afford full acquisition, budget relatively small “educational investments” at early stages. In such a way you can learn from a target firm without a full commitment.
About the author: Laurence Capron, The Paul Desmarais Chaired Professor of Strategy and Director of “M&As and Corporate Strategy” Executive Education Program at INSEAD. She is the co-author of Build, Borrow or Buy: Solving the Growth Dilemma (Harvard Business Review Press, 2012).
