I love this article which describes in detail what I call the “third horizon” or Cashflow stage of the Momentum Scaling growth model. In each preceding horizon, H1-Credibility and H2-Capability, the success metric is reaching a positive cash flow threshold which is not necessarily optimal or sustainable but gets you to the next level. In H3-Cashflow, the goal is to find your Profit Proposition (what the authors call “Profit-Market Fit”), putting you in the zone of continuous and scalable profitability.
The main message in common between this article and the Momentum Scaling model is Clayton Christensen’s quote: “Be patient for growth and impatient for profits.”
Link to HBR Article: https://hbr.org/2023/01/the-overlooked-key-to-a-successful-scale-up
Many start-ups experience enormous popularity and runaway growth, but only a few go on to become stable giants. What separates them from the pack? They all go through a developmental stage called extrapolation, say three business school professors. This stage isn’t part of traditional organizational theory, which holds that businesses begin in exploration mode (testing out hypotheses about how they’ll solve problems and learning whether people will pay for their solutions) and then move into exploitation mode (as growth slows and they fine-tune their business models to sharpen their advantage). But between those two well-known stages is the crucial extrapolation stage. During it, a company both explores and exploits. And most significantly, it works to ensure that each new customer…