Wump Commentary


The snowball principle of business strategy
January 22, 2007, 7:03 am
Filed under: business strategy, innovation

The snowball principle. Sound impressive? I hope so, I made it up myself.

To me you can judge the sanity of a company based on their understanding of the snowball principle. To make this clearer, my idea of a good business plan is one where what you are effectively doing is making a snowball, and starting to roll it down a hill.

That might sound like simple common sense.. and “like duh” it is.. so why are there so many companies that don’t get it? When I look at Corporate America, and venture capital startups, this is what I see:

  • 1: Typical: The belief that the way to run a business is to get a bunch of people to push a really big snowball up a hill. I kid thee not. I’ve seen this over and over again. Soooo many of the traditional beliefs surrounding US industry support this business model.. like “Work Hard’ for example. That’s great, but somewhat bogus. Sadly, there are lots of people capable of genius who don’t have time to allow it to float to the surface.. too busy.
  • 2: Typical startup: We need $6million dollars to build a really big snowball to roll down a hill. I think this annoys me even more. These are businesses started by people who leave Corporate America knowing in their gut that there can be a better way, who come up with good ideas, but still have that “big snowball” thing stuck in their head from the Corporate mindset. Part of it is ego. These are the guys who can make it big – but they don’t think it’s OK to have two employees and do under $250k in the first year.

Well here’s the thing. Group 1 are always going to struggle. If they manage to keep that snowball rolling then their struggle looks like success, if not it looks like failure, but it’s still struggle!

Group 2 could have just started with a smaller snowball and waited it to build momentum for 6 months to a year. If they’d done that, then a venture capital firm wouldn’t own more than half their company and breathing down their necks.

Thankfully I’m not the only person who thinks this way, and better still, other guys put it in words better. Go read the free ebook at 37signals.com. These guys rock.

Wake up people. If you are sick of working for someone else, then be very careful, because doing your own thing is more than “doing your own thing”. It’s all about leaving behind some of the corporate BS.. They don’t have it right most of the time.

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