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A startup can use the Power Curve theory to guide its growth strategy by focusing on three key areas: Starting Revenue, Debt Level, and Past Investment in R&D. Firstly, the startup should aim to increase its revenue as much as possible, as larger organizations have better chances to move up the Power Curve. Secondly, the startup should aim to keep its debt level low, as lesser debt increases the chances of moving up the Power Curve. Lastly, the startup should invest significantly in R&D, as a higher ratio of R&D to Sales can lead to a significant improvement in the Power Curve.
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Starting Revenue: The larger the organization, the better the chances to move up the Power Curve. To become a significant advantage, the organization must be in the top quintile in total revenue. Debt Level: The lesser the debt, the greater the chances of moving up the Power Curve. To have an advantage, the debt-to-equity ratio must be in the top 40% of that industry. Past Investment in R&D: To gain a significant improvement in the Power Curve, the ratio of R&D to Sales must be in the top 50% of that industry.
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McKinsey & Co. partners wrote this book. How do you effectively turn the promises of strategy meetings into reality? How can you manage social dynamic...
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