Framework
Resource Allocation Triangle
TL;DR
When making strategic resource allocation decisions in early-stage companies.
In early growth, you have three allocation choices but can only optimize two: Growth (acquire customers, expand markets, ship features), Efficiency (profitable unit economics, sustainable burn rate), and Quality (product excellence, customer satisfaction, infrastructure depth).
When to Use Resource Allocation Triangle
When making strategic resource allocation decisions in early-stage companies. Use to diagnose which dimension to sacrifice based on market context.
How to Apply
1
Identify Your Market Context
Determine the competitive dynamics of your market
Questions to Ask
- Is this a winner-take-all market?
- Is capital constrained or abundant?
- Are competitors commoditizing the space?
- Are you in a land-grab phase?
2
Choose Two to Optimize
Select the two dimensions that matter most for survival
Questions to Ask
- Growth + Efficiency = sacrifice Quality (land-grab)
- Growth + Quality = sacrifice Efficiency (winner-take-all)
- Efficiency + Quality = sacrifice Growth (capital-constrained)
3
Accept the Trade-off
Explicitly accept weakness in the third dimension until resources allow strengthening it