Growth strategy

How to make a company grow in speed of Formula 1?

Formula One racing is lightning-fast, but it takes talent and experience to stay on track. It is the same thing when you are managing a gazelle.

Most business leaders dream of rapid growth and fast success. Often it is said there is only one limiting factor, one bottleneck, but in fact there are several. Rapid growth does not always mean rapid profits and ultimate success.

Start-ups are a good example of fast growth. Why do we distinguish a start-up  from other companies that are new on the landscape? A start-up is built for rapid growth and a short learning curve, and generally has a broader target market than the country of location or familiar neighbouring countries just across the border. A conventional company knows what product it will bring to market and generally knows their customers. A start-up may not have that knowledge, but it is prepared to experiment very quickly and learn and change in the course of those experiments.

Big risks may mean big success

So, the main factor in rapid growth is the fit between product and market. The goods and services start-ups roll out are usually completely new, and the market is often unlimited or competition very low. Only consumer awareness and receptiveness determine the market’s (opening) potential. That is why start-ups find some kind of market niche with an unmet need, or they create the need themselves.

A conventional company enters an existing market where the buyers’ perceptions, preferences and price level are fairly well known. In such a situation, it can be very complicated to change consumers’ behaviour. But in a market segment that has just emerged, everything is still waiting to be defined, there are fewer restrictions, less competition and the consumer is ready to gain new experiences. All it takes is to discover an unsatisfied need or desire and offer a matching product. Start-ups are very quick to learn from market feedback. If interest in product is lukewarm, changes are made immediately – product management and development take place on a rolling basis. This is the second factor behind rapid growth – the ability to learn quickly and constantly keep track of how the product corresponds to the market.

Ordinarily, people are the bottleneck

If the market is ready for a product, then you have to be ready to deliver it. Rapid success usually means a bottleneck will form in a place where no one expected to find one. The most typical bottleneck is human resources, usually some key personnel member, but it could also be in a supply chain.

How often do executives ask themselves and their team whether they are capable of growing rapidly tenfold? What would that take? But twentyfold? Only rarely do they know what that requires. But for a professional buyer, it is the main question – can my partner keep us supplied on that scale? What about their organisation’s strength, internal processes and so on?

The main criterion for assessing start-ups and their business ideas is their potential growth speed, their scalability. Investors are interested in a business model designed for rapid growth right from the beginning, because growth can be truly unexpected. That is the third variable in the rapid growth formula.

Fourth, there is the human factor – the ability of the executives and team to work together and their stamina during the rapid growth phase. The rapid growth often means long and exhausting workdays, chaos, changes and variables and as mentioned above, quick changes of direction. Only the few thrive in such a work environment and those people are the ones who have to ensure that the whole team does not burn out and stays together.

 

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