One of the main mistakes of small companies is falling for the “milky cow”. In marketing, a BCG Matrix is a 2x2 matrix. It helps a business consider growth opportunities by reviewing its portfolio of products, services. Most companies start with a “star”. A product, service or business model that makes the company a leader in certain field. The problem with the “star” is that it requires big initial investment in form of time, money or effort. A lot of companies fail at early stages because they don’t start with a “star” or they put insufficient effort. That’s the five years barrier that lots of companies fail to exceed.
Those lucky who succeed will turn the “star” into a “cashy milky cow”. Business starts to make big profits, company size gets bigger. Mastering the “cow” business model becomes more a habit than a challenge. Here a new barrier builds up, I will call it the “invisible barrier”. Money and profit are very good, so lets make more of these. All the focus will turn into making more profit from the same product, from the same “cow”. The company will become comfy, at least for some while.
A company without a clear a goal or a culture pushing it towards that goal, will always fail for the invisible barrier. It will keep doing the same thing over and over again. If you ask an employee what is the mission? what is the company trying to accomplish? I doubt he has an answer. If he did, he will reply “making money”. Making money is not a bad thing, but a trap that lots of people fall for. Milking the “cow” is not a bad thing, but a company should always look for a new “star”. Companies should always look for “stars” that align with their culture. “stars” make companies thrive.