Companies that do not have redundant talent reserves should not pursue the second curve.

The second growth curve of many companies all starts with a casual line from the boss: "Should we build a second growth curve?"

Next, they set up an innovation department, allocate a budget, and recruit a few seemingly highly competent employees. Three months later, the boss asks why no results have been delivered yet. Six months later, the core business team starts complaining that the new business is siphoning off their personnel and funds. A year later, the project is shut down, and the person in charge of it leaves. In the final retrospective, everyone easily draws a conclusion: the second growth curve is far too difficult, and these people are not qualified for the job.

The more growing companies and executive teams I get in touch with, the more I realize that innovation is inherently difficult, and innovation for the second growth curve is even harder. When on earth is the right time to launch the second growth curve? What kind of people are suitable for leading the second growth curve? Who makes the final call when founders, executives and the old team have disagreements? What are the milestones at each stage? How long should the trial run last? What kind of results count as a validated viable model? Under what circumstances should we stop the project?

If these questions are not answered, the boss's line "let's build a second growth curve" will easily be reduced to only four words for the team: "Hurry up and get it done".

Later I thought about it further, before all these questions, there is actually a more critical precondition for launching: does your company have talent redundancy? If you do not have talent redundancy, do not start the second growth curve.

This has no absolute connection with whether the company has hit 1 billion yuan in revenue. For a company with revenue over 1 billion yuan, if there is only one person in every key position, the old business cannot operate smoothly without the boss, and no one from the existing team can truly step up to take charge of the new business, it still does not qualify to launch the second growth curve. For a company with revenue under 1 billion yuan, if its first growth curve is already relatively stable, it has reserved talents who can take full charge of a business independently, and there are people who can be released from the old business to explore new opportunities, it can start the second curve even earlier.

Funding is of course important. The second growth curve requires budget, and the company must have the capacity to bear a period of zero revenue. But funding only keeps the trial and error process going, and only talents can make the trial and error generate valid answers.

The talent redundancy I mentioned does not mean the company keeps a few extra people who have nothing to do temporarily. It means at least three things: The old business can still operate stably without the founder or a certain key person; someone in the team has grown to the next level and can independently take full charge of a business; when the new business is in the trial-and-error stage, the organization can assign truly competent people, instead of temporarily putting several overloaded senior employees together to form a so-called "innovation team". If you cannot meet these three conditions, once you launch the second growth curve, you will most likely not grow a new curve, but drag down both curves at the same time.

With all these questions in mind, I reached out to G.Li. He has led growth for companies at several different stages, and has truly taken full charge of new businesses. He is not someone who only gives advice on the second growth curve from an outsider's perspective, but someone who has spent actual funds, encountered real pitfalls, and must take full responsibility for the final results. This time I invited him to 90li, and what we want to discuss is: after the boss puts forward a casual idea, how can the second-in-command turn it into a verifiable problem?

01

The second growth curve is first and foremost a talent problem

Many companies judge whether to launch the second growth curve by first checking if the market is large enough and how much money they have in the account. These two factors of course need to be evaluated.

But after you actually start, you will find that the first bottleneck you hit is often talent. The truly competent people in the old business are not willing to be released by the boss. People who are willing to join the new business may not have the ability to find solutions from scratch. External hires who join the company do not understand the old business, and cannot mobilize the existing resources.

The most common practice in the end is to set up an innovation department, select one person from each different department, who continues to finish their original job during the day, and discuss the second growth curve in meetings at night. This is not talent redundancy, it means everyone is working part-time on the new project.

The second growth curve will definitely compete with the first growth curve for resources. Competing for budget is only the superficial phenomenon, what they are really competing for is the boss's attention, the most competent people in the organization, and the space to continue operating even after making mistakes. If the first growth curve can only be sustained by the founder himself and several core senior employees, the second growth curve will never have a real person in charge, nor a stable rear support.

Therefore, when I judge whether a company can launch the second growth curve, I will not only ask how much money it has. I will also check: are there successors who can take over the old business? Are there people who can fight independently for the new business? Is the company willing to assign its truly outstanding talents to a position where there is no definite answer for the time being? Funding determines how long you can run the trial, and talent redundancy determines whether you are qualified to start the trial in the first place.

02

The boss's insight is important, but it can also be wrong

Many bosses start new businesses initially based on their intuition and experience. This is very normal. In the early stage, there is not that much data available, nor a complete team to do research for you. Many opportunities are first seized by founders relying on their experience, taste and perception of the market. But having made the right judgment many times in the past does not mean this time the judgment is definitely correct.

When G.Li was leading a certain new business, he attached great importance to the boss's initial insight, but he would not immediately turn that insight into a full-fledged product. He first tested several different concepts. He sorted out which concept the users responded best to; then he made samples, let users experience them for a period of time, and listened to how they described the product. Sometimes the most effective sales language is not thought up by the marketing team sitting in the meeting room, but spoken by the users themselves.

In one test, the boss was initially more optimistic about a concept that sounded grand and highly imaginative. But after the team actually went to talk to users, they found that users repeatedly mentioned another more specific, more daily problem.

The latter does not sound that grand, but it truly affects how users live every day. Here comes the problem: when the boss firmly believes in Plan A, does the team have the courage to come back to him with user feedback and say "Boss, it seems that Plan A is not the right direction"? What is even harder is whether the boss is willing to listen to it.

I have always believed that the founder's intuition is extremely important. Many companies would not even have a starting point without that initial intuition. But intuition is more suitable for putting forward hypotheses, it cannot directly replace the final answer. The boss can decide which direction to look at first. But whether users are willing to pay for the product, you have to go back to the users for the answer.

03

In the early stage of the second growth curve, the money you spend is paying for answers

Someone at the scene asked G.Li: "How did you find out that the original direction was not appropriate? And how did you dare to switch directions so quickly?"

He did not talk about any fancy model that can predict the future. He talked about how to conduct tests in different regions, how to run the model with non-core products first, what kind of results count as successful validation, and then decide when to bring in the core business resources.

They did not pour all their resources into the project from the very beginning. They ran one round of test first, and switched direction once they found the original path was wrong. After switching, they checked whether the new hypothesis can be established. This sounds very plain and simple, but it is extremely difficult to execute in reality.

Because the money spent in the early stage of the second growth curve is not the same as the money spent on mature businesses. For mature businesses, spending money is mostly for driving growth. For the early stage of the second growth curve, a large part of the money you spend is paying for answers. Does anyone want this product at all? Is this price acceptable? Where do the users come from? Can the brand and channels accumulated by the old business still work for the new user group?

Before you get answers to these questions, when the boss asks "when can we scale up the business", the person in charge really finds it hard to give a clear answer. But "not knowing the answer" cannot be the excuse to run the trial endlessly.

On the contrary, precisely because you do not have the answer yet, the person in charge must make it clear: what exactly are we testing in this round? What signals indicate that we can continue? What signals indicate that we should stop this path? How much money are we prepared to spend, and how long are we prepared to take to get this answer?

If a person in charge can only say "give me a little more time" every time, but cannot explain clearly what the next round of test is going to validate, I will start to doubt whether he is truly doing exploration, or just refusing to admit that the last round of test did not deliver any results. The second growth curve of course allows trial and error. But trial and error must have clear test subjects, clear budget, and clear stop conditions.

04

The boss gives the direction, and the second-in-command needs to translate the hypothesis

One line from G.Li at the scene left a very deep impression on me: "If you just execute according to the boss's superficial understanding, you are definitely doomed to fail. Because he does not need to take responsibility for the final result, I am the one who has to be accountable for the result."

This line may sound a bit harsh, but it truly reflects the reality that many second-in-command face every day. The boss says our final destination is A. The second-in-command cannot just split A into ten tasks, and lead the team to rush to complete them blindly.

He must first ask: in this line from the boss, what is the real direction he wants to reach? What is just a hypothesis he made about the path? Direction and hypothesis cannot be mixed together. If we cannot reach A directly right now, can we first go to the surrounding areas of A? If we find it still not feasible after reaching the surrounding areas, can we first go to B, and then go to A from B? The specific path in between can be discussed, validated, and we may even take a detour. But the second-in-command must not forget where the top leader initially wanted to go, and why he wanted to go there.

This is what I have always been saying, The COO is first and foremost a translator. Mechanically executing the order is not translation. Coming back to the boss with data and saying "I am the professional, you have to listen to me" is not translation either.

Real translation is turning a vague judgment from the boss into verifiable user problems, business hypotheses, resource arrangements and phased results. You can argue before making the decision. Facts, data, costs and risks can all be put on the table for discussion. In the end, the top leader still makes the final call on which direction to go. Because the fundamental direction of the company is ultimately borne by the founder.

The choice the second-in-command needs to make is: if you are still willing to follow the path, then work together to make the path work; if you no longer believe in this path, you also need to be honest about whether the two sides are still suitable to move forward together.

05

What questions will I ask the founder before launching the second growth curve

If a founder says to me right now: "Meiji, I am ready to launch the second growth curve." I probably will not first ask him who he plans to recruit for the project.

I will first ask: Why now? Is your first growth curve really almost reaching its peak, or is your recent growth a little slower and you start to feel anxious? The second growth curve you mentioned, does it mean just launching a new product, or targeting a new group of users, solving a new type of demand, or even building a set of new capabilities that the company never had before? If you get zero revenue for the first six months, how much money are you prepared to spend to get the answers? How long are you prepared to run the trial? What results do you need to see in the first phase, so that you can continue to invest in the second phase?

There is also a more tricky question: how much power will the person in charge you recruit actually have? If he finds that your initial judgment may be wrong, does he have the courage to come back and tell you the truth? After he tells you, are you willing to listen?

I have seen many second growth curves end up failing. During the retrospective, everyone is discussing whether the person in charge is competent enough. This of course needs to be evaluated. But now I will also look at the founder: what exactly did you give him? A verifiable problem, or an order that can only be executed?

These two types of tasks require completely different types of people. If the direction, target users and business model do not have clear answers yet, what you need is someone who can explore, and dare to make judgments with incomplete information.

If the answer is already very clear, but the organization just cannot execute it properly, what you need may be someone who can build systems and replicate the proven model stably.

Never assign an exploration task to someone who only knows how to execute, and then blame him for not finding the answer. Also never assign an execution task to someone who always wants to redefine the problem, so that the company ends up in endless discussions every day and never delivers any results.

06

The second growth curve is not just launching one more product

Why did I invite people like G.Li who have actual hands-on experience to 90li? Because many problems are very easy to talk about on stage with theoretical methods, but the reality inside a company is completely different. What if the old business refuses to allocate resources? What if the direction the boss insists on does not align with user feedback? You have already invested a lot of money, when is the right time to admit you made a mistake? Can senior employees from the old business do well in the new business? You clearly know that one path is faster, but the boss wants to go to another direction, what should the second-in-command do? These are the things that actually happen every day when you are building the second growth curve.

The second growth curve is not just launching one more product, nor is it just setting up an innovation department. For a mature company, it very likely means that beyond your past successes, you need to re-learn to understand a new group of users, re-allocate resources, and re-define who makes judgments and who takes responsibility for the final results.

The first growth curve solves the problem: what do we rely on to keep making profits today?

The second growth curve needs to answer the question: after the old set of success methods gradually loses its effect, what else can the company rely on to survive?

If you are also preparing to build the second growth curve, I suggest the founder and the new business leader sit down first, and write these things on a piece of paper: Is there someone in the old business who can truly take over the operation? Is there someone in the new business who can independently take full charge of the final results? Why do we launch it right now? What are we validating in this round? How much money are we prepared to spend, and how long are we prepared to test? What kind of results mean we can continue, and what kind of results mean we should stop? What decisions are reserved for the founder, and what decisions can the person in charge make independently? You may not get all the answers to these questions at once. But you must never have never thought about them seriously.

This article is from the WeChat Official Account "Zhang Meiji", written by Zhang Meiji, and published with authorization from 36Kr.