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  • January–February 2023
  • Article
  • Harvard Business Review

The Overlooked Key to a Successful Scale-Up

By: Jeffrey F. Rayport, Davide Sola and Martin Kupp
  • Format:Print
  • | Pages:10
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Abstract

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 brings in additional revenue while incurring only marginal cost—the secret to lasting, profitable growth.

A new enterprise needs multiple strengths to navigate this phase—such as a proven monetization approach, a strong go-to-market strategy, network and density effects, and capital. It also must systematically identify and remove internal business-model constraints on growth that could prevent it from achieving scale.

Keywords

Entrepreneurship And Strategy; Scalability; Business Startups; Growth and Development Strategy; Entrepreneurship

Citation

Rayport, Jeffrey F., Davide Sola, and Martin Kupp. "The Overlooked Key to a Successful Scale-Up." Harvard Business Review (January–February 2023): 56–65.
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About The Author

Jeffrey F. Rayport

Entrepreneurial Management
→More Publications

More from the Authors

    • 17 Feb 2023
    • Faculty Research

    Startups Have a Unique ‘Extrapolation’ Phase — With the Right Leadership Methods, Growth Can Become Exponential Here, Says Jeffrey Rayport

    By: Jeffrey F. Rayport and Srijana Mitra Das
    • January 2023 (Revised March 2023)
    • Faculty Research

    OhmConnect: Energizing the Future

    By: Jeffrey F. Rayport, Jennifer Fonstad and Nicole Tempest Keller
    • 13 Dec 2022
    • Faculty Research

    Why Some Start-Ups Fail to Scale

    By: Jeffrey Rayport and Curt Nickisch
More from the Authors
  • Startups Have a Unique ‘Extrapolation’ Phase — With the Right Leadership Methods, Growth Can Become Exponential Here, Says Jeffrey Rayport By: Jeffrey F. Rayport and Srijana Mitra Das
  • OhmConnect: Energizing the Future By: Jeffrey F. Rayport, Jennifer Fonstad and Nicole Tempest Keller
  • Why Some Start-Ups Fail to Scale By: Jeffrey Rayport and Curt Nickisch
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