What is a trigger point on a new venture’s scaling path?
A trigger point is a key decision on a venture’s scaling path where a significant, planned action or decision is put into play to advance the innovation. The Corporate Explorer is looking for trigger points when it is time to add capacity or access to a customer group to the evolving business. At a trigger point, the strategic stakes are high because of the scale of commitment involved, the number of customers to be served, the amount of capital to be deployed, or the liabilities involved. Trigger points are moments of no return. Amazon calls these decisions “one-way doors” because they entail commitments that are difficult, if not impossible, to reverse.
What is the opposite of a trigger point?
Non-trigger-points are decisions or actions from which an organization can withdraw at little or no cost. Amazon called these “two-way doors.” They are lower-risk and often offer new ventures the opportunity to learn about a potential step on the scaling path and adapt their strategies accordingly. Amazon called these “two-way doors.”
Why is a trigger point important to a new venture’s scaling path?
Trigger points are important to a scaling strategy because they signal a significant commitment to the chosen scaling path. They provide consequential, faster access to the capabilities, customers, or capacity that a venture needs to grow.
What are examples of a trigger point?
There are three good examples of trigger points taken by LexisNexis, Best Buy, and Indian retailer, Reliance:
1. As LexisNexis began to scale its global analytics business, leaders knew that the acquisition of ChoicePoint, an insurance industry data company, would be a trigger point for scaling the business. This was not only because of the price it paid — at $1 billion, it was the largest deal the company had yet made — but also its strategic value. They knew it would be a launch point into the insurance industry and give the company the ability to offer breakthrough products, such as one that would automate the collection of customers’ data when they applied for new automotive coverage.
2. Best Buy’s $400M acquisition of Current Health was a trigger point in that it provided the remote care management platform that connected the health devices in customers’ homes to care providers. The acquisition showed providers that Best Buy could leverage its consumer reach to drive the adoption of in-home health technologies. This trigger point also provided access to a significantly larger set of customers including Mount Sinai, Geisinger Health, and the UK’s National Health System.
3. The Indian firm Reliance created a new 4G cellular phone company that created a market for mobile data access. They aimed to give app developers access to the enormous market of Indian urban professionals. Their scaling path included acquiring assets to scale, also known as capability – they bought a company to get access to radio spectrum for broadband – and leveraging current assets to develop capacity. They built an entirely new phone network from scratch using construction technology (for 4G towers and fiber tunneling), leveraging skills from their petroleum refining and chemical businesses. When they launched, they took the unconventional approach of making unlimited data and voice free for three months, the logic being that this way they built an audience for app developers, thereby making the market commercially viable. This created a trigger point for further investment; when they had enough users, enough app developers, then the value of subscribing to the new service would increase.
What is an example of a non-trigger point?
An example of a non-trigger point is Best Buy’s approach to over-the-counter hearing aids. Best Buy tested this scaling path via a strategically smaller investment, first piloting hearing devices internally with a small subset of employees. Once the idea was validated, and following an October 2022 ruling by the U.S. Food and Drug Administration, the company launched a selection of nearly 20 hearing devices online as well as in Best Buy stores. They also launched an online hearing assessment to help consumers identify their level of hearing loss and help determine which device is best for them. The company made a wise scaling choice- pursuing a “two-way door” which included a low-risk partnership, a captive audience to generate feedback, and limited exposure in a small number of stores. Once they validated demand, they were able to rapidly scale the business.