1. Have you worked out what you are betting on? What is the focus? A blank or vague answer is bad news. The best answers are usually linked to big societal or technological changes that call for new services or products. Avoid the mistake of committing resources before you have nailed down the business plan.
2. Consider the operating procedures that could be standardised to maximise efficiency and keep costs down.
3. Work out how you will manage binding constraints (bottlenecks that bring growth to a halt). Binding constraints can come from inexperienced managers unsure how to expand or insufficient funds. If you are looking for such constraints it is easier to spot them and stand a chance of dealing with them before it is too late.
4. Deal with unanticipated obstacles. The best way to do so is to have a strong balance sheet to keep the cash flowing; keep fixed costs low from the start; create some diversification to avoid over-reliance on one market but ensure it is related diversification ie. related to the main products being created. (Brazil's Embraer, for instance, builds commercial and military aircraft which share certain design features and production processes); make sure you have some strong partners to help you spot binding constraints and overcome them.
5. Have a strong stomach. When things are going well a new venture looks like a winner and attracts a virtual circle of money, partners and new employees. But when things go bad - or even stall - a vicious cycle can ensue with decreasing confidence in the new venture. If there is a crisis of confidence managers can "enter a defensive crouch" and overlook new opportunities, leading to a downward spiral. It may be necessary to focus resources on one specific opportunity to maximise the chances of success. They might need to move good managers from established divisions to a new division before success is assured.
Growing fast - and smart
By Donald N. Sull
15 June 2007
MIT Sloan Management Review
Review by Morice Mendoza