Maintaining Core Competencies for Rapid Growth
Scalability in the hypergrowth context means that the business, as a complete system, is able to enlarge its activities in multiple markets simultaneously. Global, rapid and continuous scaling is nigh impossible without relevant market understanding of the existing opportunities and a vision of the potential markets that can be created or developed. Approaches to scaling differ significantly between business-to-consumer (B2C), business-to-business (B2B) and hybrid (B2C and B2B) companies.
Successful firms focus on innovation processes and product life-cycle management to drive and ensure scalability. Innovation is approached with great care and focus, and KPIs directly linked to operational data are harnessed to support scalable decision-making. Technology plays an important role in the scalability of many hypergrowth companies, as platforms and the digital transformation of products and services work in concert to help companies reach larger markets. For successful scalability in terms of operations, companies identify their core businesses and intellectual property rights (IPRs) and often outsource the noncore needs that might inhibit scaling, should they be pursued with internal resources. There is no magic formula for scalability – some hypergrowth companies want to keep everything closely controlled.
Some firms do not continuously grow from their initial product or service. They may use mergers and acquisitions (M&A) as well as financing to jumpstart new rounds of growth. M&A is mainly used for acquisition of talent and technology or weeding out early competition. Also working capital and financing requirements can quickly escalate as hypergrowth models often create high upfront burn rates and escalating cash flows with end-heavy returns.
Scalability, solution examples
Title | Key Growth challenge | Solution | Solution example |
5.1 Driving innovation scalability | Know-how for scaling multiple markets simultaneously | Use data as the key innovation driver and positioning innovation as an outcome | Unicorn, Silicon Valley, Co-Founder “Our primary markets have been the USA, Europe, South Korea and Japan for rapid scaling. What we have noticed is that these markets are similar in terms of scalability. In order to execute in all of these markets, we need to ensure that our solution is to keep scaling in these markets. We developed a simple model to make sure that our innovation process is truly driven by data. In the first step we make our product to function with the basic features – to make it work. Secondly, we start improving the product through the data we collect. Only in the third place do we start innovating around the solution. We re-engineer the solutions with data. As we want to focus on scalability, we do not want to introduce new features as long as the older version keeps scaling. Without having a solution in the market, we could not innovate.” |
5.2 When the obvious solution becomes a challenge | Scaling a platform connecting talent and technology | Scaling supply of talent on a platform which enables a large talent pool to be connected to a demand market | Services Industry, APAC, CEO “Our business is built around connecting two markets through our platform. In our marketplace, talent is the most difficult item to scale. We came up with a very unique model to connect a very scarce niche talent, which is in great demand. And we scaled the talent pool incredibly fast. Growth vectors are different on the supply and demand side of the talent market. The key is to balance these factors. Many say that technology is the key for scaling fast. In our case, it has been the slowest part, and talent, which many have issues with, scaled fast.” |
5.3 Partnering for speed | Scaling multiple-market sectors simultaneously | Optimize partnership models in order to access large global consumer markets | Multi-Industry, Africa, Chairman “Large, established consumer markets have given us the opportunity to grow. We do not have all the tools to access the key consumer markets globally by ourselves. To access and scale them, we really invested to find the right partnering models and worked to develop our offerings. In some sectors we have partnered with global brands and used their platform to scale our products. In other sectors we have scaled with joint ventures. We try to identify a narrow offering where we can be the market leader or a complete offering to serve leading global brands with the most suitable model.” |
5.4 M&A for scaling technology and talent | Managing talent and technology gaps while scaling and expanding the business | Serve primary markets by using M&A to fill talent and technology | Technology, Asia, CEO “M&A was not important to us initially. But as we started to get traction and a lot of customers, we wanted to expand our offerings and fill our talent gaps faster. We did not need market share, rather build on what we had already accomplished. We started to integrate M&A as a tool with our technology and talent processes and once using it as a tool we accomplished things a lot faster. We always look for a win-win-win; there must be direct value to our clients, the acquired company and to us.” |