Want to replicate the exponential growth rates of firms like Uber and Buzzfeed? You can.
Writing for the World Economic Forum (WEF), Kaj Työppönen and Thomas Philbeck analyse the results of a WEF study of 200 “hypergrowth” companies. Their conclusion: get your priorities right and massive growth is within reach.
It took Uber just three years from its establishment in 2009 to achieve a valuation of $18.2bn. Within a decade Buzzfeed grew its monthly usership to 200 million with six billion content views. Firms like these, with compound annual growth of 40% or more, can disrupt entire industries and sweep incumbents before them.
Here’s how they do it.
CHECKLIST FOR HYPERGROWTH
1) Stay agile. Gear up for a rapid response to market changes. Cultivate a state of readiness to restructure your business, transform its culture and embrace new science and technologies.
As Austin Okere, the founder and CEO of Nigerian company Computer Warehouse Group, says: “The maxim used to be that ‘big fish will eat small fish’; today the paradigm has shifted to ‘fast fish will eat slow fish’.”
2) Simplify and replicate. Complicated operations and supply-chain arrangements hamper your firm’s agility. Keep your business model simple and it’s easy to replicate.
Founded in 1994, Home Instead Senior Care (HISC) was generating revenues of $1.3bn by 2015. How? It took its set menu of home care services and franchised it nationally. Then it identified partners overseas who would act as master franchisees, replicating the business model again in their countries.
The simplicity of its business model was key to HISC’s global expansion.
3) Recruit the best people. Hiring in talent is the biggest contributor to achieving hypergrowth. Seek out individuals whose values match your company’s culture and purpose. Look for those who have great problem-solving skills and are comfortable operating in a rapidly changing global environment.
The CEO of one luxury and lifestyle manufacturer in Asia told WEF: “Our solution has been to look for talent outside of the industry to get fresh ideas. Recruiting from, for example, the automotive industry, has transformed our production with lean principles.”
Don’t worry too much about acquiring people with specific technical skills but rather look for those who have the intelligence, flexibility and adaptability to solve complex problems and to adjust to changing internal and external factors.
4) Shape the regulatory framework. Regulatory frameworks don’t just happen to hypergrowth companies; they help to shape it.
The CEO of a Silicon Valley unicorn company says: “As we had only a headcount of 100, the company established an office in DC and had full-time employees discussing with regulators globally in the key markets. This approach has paid off… it has been one of our key solutions to enable hypergrowth.”
5) Embrace technology. Not all hypergrowth companies are tech startups, but what differentiates hypergrowth companies from their slower growing rivals is the way they use technology.
“Market entry is often experimental, followed by scaling and diversification if the business takes off as planned,” say the authors. “Data is a key driver for segmentation and targeting in new markets and scaling decisions are made based in conjunction with the data.”
Data collection and analysis enables the rapid product testing and trialling that is prerequisite for beating your rivals to the punch.
6) Consider joint ventures and partnerships. Some hypergrowth companies are young risk-taking enterprises, but many more are corporate partnerships or the result of joint ventures between established businesses and small startups.
The CEO of one Silicon Valley power and utilities company says: “Working with innovative clients has taught our company so much about new business opportunities and helped us transform the business… We have changed our approach to investing in clients. The selection is no longer based on short-term returns but rather how we can both benefit from the relationship.”
As global markets become increasingly accessible, hypergrowth could become the new normal. Nurture the habits of hypergrowth to make sure your firm hits the big time.