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Economies of Scaling

Since we’re nothing if not relentlessly curious, we were looking over a list of rare things recently. We found the usual suspects: Hen’s teeth. Blue roses. Black swans. Winter Olympics in Hell. An honest politician. You get the idea. But we didn’t find the one thing we were looking for: A company that includes scaled growth in its business strategy. Such things, it seems, are as rare as flying pigs. We don’t know why.

Among many other things, Richard Branson is famous for saying, “If someone offers you an amazing opportunity and you’re not sure you can do it, say yes — then learn how to do it later.” That’s wonderfully idealistic advice. And we love the optimistic nobility of the sentiment. But the history of business is littered with the wreckage of companies that jumped at opportunities just like that, succeeded magnificently, then crashed and burned when they couldn’t keep up with the demand they’d created.

Like trying to put wheels on the proverbial moving car, you can’t scale for increased capacity when you’re scrambling to snatch opportunity from the jaws of a closing window.

Were it not for the fact that patience and foresight are as rare as plain language, this is not a particularly problematic pickle to prevent; although, it does require a rather deft balancing of marketing, sales, and resources: You have to market enough to create need. You have to sell enough to convert need to demand. And you need resources enough to create supply to meet the demand.

“But why didn’t Richard Branson mention any of those things?” we hear you ask. Well, that’s because he neglected to mention one more thing: Luck. To folks who think they can turn anything into gold, luck is a four-letter word:

Luck is not something you can mention in the presence of self-made men. (E.B. White)

Richard Branson’s kind of luck is as rare as the Midas Touch. He might disagree. After all, he can afford to. But lucky or not, he knew the economies of scaling and was prepared to use them as his successful businesses grew.

Tell yourself what you want. But there’s plenty of luck involved in success. Be prepared anyway.

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