Jim Johnson explains Death Valley, the dangerous stage when a company's growth doesn't match its infrastructure. Being under-scaled leaves you unprofitable; being over-scaled creates unsustainable overhead and burnout. Leaders must understand their current size, the cost to reach their target, and deliberately plan the infrastructure and controls needed to scale sustainably.
There's another name for this phase, and it's a scary name: Death Valley. We don't like that name. Now, the reason why is because when your company starts to get into this particular section, there are some very critical things that can happen that can kill your business. If you build a company that's designed to do $15 million and you do $10 million, you're in real bad shape, and you probably didn't make any money. However, if you build a company to do $15 million and you do $20 million, that can also be an extremely dangerous safest place to be. And if you're not focused on infrastructure, which many aren't, they're just grinding and trying to grow, then when we hit a real large growth phase of our business, we start scrambling. We might start throwing money at the issues that we're dealing with, which increases our overhead and decreases our profitability. If we don't throw money at the problem in order to bring in some relief for our team, we might end up burning people out. Now we have big levels of turnover. People simply couldn't maintain that level of performance for very long. Understanding exactly how big your business is now, what it will cost to build it in order to handle a specific target, and then aiming for that target specifically is a very strategic thing you need to have understood. And understanding your finances, understanding culture maintenance, and understanding the reward for doing that and what it takes is so critical so that we're not in Death Valley, but we're in growth and scaling.
