Categories
Strategic

Dividing lines are essential

This is a fairly tortured analogy, but I hope it helps explain why I think it’s essential to be clear about your scope.

Let’s suppose you breed dogs. You’ve got a thriving small business, and one day someone comes to you and says

“You’re great with dogs. Have you thought about training them?”

And you think, you know what? I am good with dogs. I probably can train them.

So you get together some funds and you build out a little training area and you put out some advertising and, before long, folks are coming to get their dogs trained. It goes well. You hire an assistant and think about expanding the repertoire of things you train.

Then one day one of the Ringling Brothers, or Barnum, or Bailey come to you and say,

“I’ve heard you’re a great breeder and trainer of dogs. I’ll give you a million dollars to breed and train elephants for me.”

You protest that you haven’t any experience in it.

“Listen,” they say. “Animals is animals, and these animals is mammalian. Dogs is mammals, elephants is mammals. They’re pretty similar. I’m not asking you to train whales here!”

You say you haven’t anywhere to train them.

“Alright,” they say. “How about two million dollars?”

Two million would pay for enough space for playful pachyderms – and at the end of the day, how hard can it be?

The answer is very, of course: because although breeding elephants is mechanically similar the processes, timelines, and specialist knowledge are quite different indeed. Training, too, has similar theoretical principles but their application is quite different. Your elephant training staff can’t train dogs, and vice-versa. Your headcount has exploded but the money’s not coming in. It’s mostly going out. There’s not many folks looking for trained elephants…

Offers from potential investors that come with demands for new capability should be viewed with deep suspicion, if not outright hostility. When you’re in start-up mode, there’s a temptation to grab whatever’s thrown at you to boost your bottom line in the short term. It’s not worth the effort. A good strategy is there to give you a framework to make decisions against. In a choice between immediate cash injection and sticking to your strategy, stick with the strategy. I promise it’ll work out better.