Their relationship is usually linear. The capacity rarely increases without higher costs. How we respond to this conundrum should be determined by our intentions.
- Build it and they will come. Create as much capacity as you possibly can. The more you have, the more likely you are to be successful. This works when customers appreciate capacity. When size gives us a sense of comfort and credibility since you clearly believe in what you do and we expect you did the research. (If you took shortcuts, word spreads quickly. The exponential nature soon turns the other way.)
- Get them to come and then we will build it. This is the smart, resource thrift, lean method of getting where you’re going. The risk is less, and you allow the customer to guide your spending as you go. The lower sunk costs do make a blasè approach more likely. This can result in a lower commitment to understanding our customers. If we get it wrong we can just fix it on the fly. (If you get it right early on, you could run out of capacity and then take shortcuts to fix the problem.)
Both approaches have merit and a place under the sun. Whichever one you settle on, make sure you understand, it’s not just one choice, it’s many.
