Growth is in many ways the most critical success factor when it comes to diverse aspects of business today:
It is perhaps the most straight forward way to create value in a business.
It is a key condition for successfully raising new capital.
It represents a prerequisite for favorable valuation of a business in case of sale or merger.
It is possibly the most reliable yardstick to guide investors when it comes to navigating where and how to invest.
Blitzscaling addresses how corporations might achieve ultra-rapid growth, through so-called blitzscaling. Fast growth is it, and this important book discusses how to do this by getting in early and doing it quickly. This can make a big difference! Blitzscaling is the latest concept when it comes to strategy, and this is what the book addresses, i.e., to offer a set of techniques that allows both start-ups and established companies to build dominant, world-leading businesses in record time. It is a matter of speed and ultra-fast growth!
The authors, Reid Hoffman and Chris Yeh, are credible experts when it comes to this new approach: Reid Hoffman is a successful and very famous Silicon Valley-based internet entrepreneur, investor, venture capitalist and author He has been among the founders of PayPal, LinkedIn and SocialNet, has invested in AirBnB, Facebook and Zynga, and is on the board (or has been) of AirBnB, Microsoft, Mozilla and Zynga.
Chris Yeh is a writer, investor and entrepreneur, and has developed a highly successful consulting practice focusing on the topic which has benefitted companies from his knowledge and insights to accelerate their businesses. Both authors and educators, they also offered a highly successful course at Stanford on blitzscaling in 2015.
The book clearly lays out the “how to do it” as well as the “key potential pitfalls” when it comes to this approach. And there are many useful examples which shed light on it all. Clearly the authors’ intimate knowledge of Silicon Valley and corporate America play a great role here.
The book is comprised of six parts, plus introduction and conclusion. In the introduction, the authors provide a clear outline of what is to come:
“Blitzscaling is an aggressive, all out program of (rapid) growth” (p.5).
To achieve this, a company must have a “killer product” (p.9), a well-defined market and a clear distribution channel.
Management must be ready to “take the additional risk and discomfort of blitzscaling your company” (p.12).
Then, in section one, the authors elaborate on what blitzscaling actually is. They point out that speed is key to it all (i.e., to ultra-rapid growth) rather than efficiency as such. And they argue convincingly that such rapid growth is perhaps the best predictor for business success and greater return. There are three distinct types of innovation that seem to drive it all:
The business model
The strategy itself
Management processes, i.e., to instill a “do it” culture in the firm that embraces blitzscaling.
There is also a short section on the choice of the term “blitzscaling”, pointing out the link to the blitzscaling concept that the Germans practiced during WW2, perhaps exemplified above all by General Heinz Guderian’s attack on France with his “panzer” tanks brigade in 1940. While the authors’ choice of name “blitz” might perhaps be somewhat unfortunate for this reason, the reviewer reading admits that the notion of blitzscaling nevertheless adds to the clarity of the concept of driving for ultra-rapid growth.
Now to business model innovation. In addition to the three conditions that need to be present for successful blitzscaling, the authors also point out the importance of the potential for so-called network effects, i.e., that growth might lead to acceleration of one’s group of customers (through word of mouth, market dominance, …). The authors infer that we typically tend to talk about businesses that might be characterized as “bits”, i.e., software, rather than as “atoms”, i.e., hardware. And the authors distinguish between offerings that are free (grow fast, increase the network) versus “freeism” (clear value to customers in the marketplace).
The authors also point out several “conditions” that may make blitzscaling more achievable. The first is whether the so-called Moore’s law might be in effect. Clearly companies that are pursuing blitzscaling might benefit when this “law” applies (named after one of Intel’s founders). The speed of technological change leads to an ever-accelerating array of new technological opportunities – new models, more advanced components, smaller and more powerful parts, etc. Clearly blitzscaling might be easier when such conditions apply.
The second “condition” lays out the degree to which a business might lend itself to automation. Blitzscaling assumes that automation might be done.
A third condition is to always attempt to follow a different path than the majority. This would normally take a lot of discipline: it can be hard to do the opposite of everyone else, to break our natural flock mentality.
The rest of this chapter discusses in more detail the various key conditions for blitzscaling. These have already been discussed before (market size, etc.), and this section seems slightly repetitive. There is an interesting analysis of the business models of four well-known and highly successful firms at the end of the chapter, however: LinkedIn, Amazon, Google and Facebook.
The next section discusses strategy innovation. A review of the biggest potential opportunities by starting blitzscaling opens the discussion in this chapter, emphasizing that an early start usually might represent a big new opportunity to go faster. There are typically learning curve effects that can be had by being the first to blitzscale, relative to competition. The early advantage of high speed might be formidable.
Should one ever stop blitzscaling? Many of the managerial principles of this approach shall of course remain valid under most conditions. Stopping might simply make little sense! However, when slowing growth, increased overheads and worsening economic performance might set in from the point when the intensity of one’s growth-scaling efforts are eased.
The authors point out that a blitzscaling strategy process typically is iterative, and that one’s strategy thus changes at various stages. This might also be the case when it comes to the role of the founder, changing from personally leading the super-growth efforts, through managing super-growth prone people, through working out an organizational design to enhance blitzscaling, to finally managing a portfolio of business lines, where the blitzscaling intensity might be higher in some parts than in others.
Moving onto the fourth part of the book, which discusses managerial innovations associated with blitzscaling, the authors continue their discussion of how the focus typically might evolve. The authors identify a total of eight key managerial transitions (pp. 144 – 198). Several of these have to do with how managerial focus might have to change as high growth evolution takes place, from so-called “start-up-people” (p. 147).
A second set of transitional factors deals with how more informal data sources are enacted on to formal data application, and how a single business focus thus becomes a portfolio focus. The authors give us an interesting analogue here, namely, to evolve from being pirates to being a navy, and then going from being captain to becoming admiral. A detailed analysis of how Uber’s top management might have missed out here follows (pp. 178 - 198).
There seem to be several counter-intuitive rules for good management practice when blitzscaling. One would be to embrace chaos, and to hire the best people to be found now, i.e., no procrastination! Various aspects of one’s business might not be perfect but, move on! Ignore occasional fires! Further, do not be distracted or slowed down by occasional outlying customer complaints. Rather, keep in mind that paid-for consumer products tend to have the least room for error (p. 209).
The authors point out that when new capital shall have to be raised, one should always attempt to go for a higher amount that what might be needed in the short term. Blitzscaling costs money, and a liquid resource of at least 18 months might be prudent.
To evolve one’s culture is of course the major challenge when blitzscaling. It might not be all that easy to maintain a highly action-orientated culture as one’s firm grows. Blitzscaling requires a clear understanding of one’s cultural context. The leader shall typically have a particular challenge to transmit the essence of this. He/she must take the time to do this. And, since one’s culture more-or-less continuously will change, the leader must be comfortable with the so-called “ship of Theseus” principle, which states that over time every original plank of one’s ship shall have to be replaced. And so it may be also with an evolving organizational culture. To increasingly open up for diversity might be particularly important. And so-called “cultural hypocrisy” should be avoided (p. 237).
In the fifth section of the book the authors discuss how the blitzscaling concept might have broader implications. To this reviewer there are three such extensions of the blitzscaling concept that seem to be particularly pertinent. One is how independent investors might benefit from a better understanding of blitzscaling. The book is a great guide when it comes to this. This group of stakeholders cum investors are always striving to manage their investment portfolios and are thus having to cope with where and how to invest, and also considering potential exits. Growth represents perhaps the safest predictor for finding attractive investments. Investors might thus indeed benefit from this book. The many factors associated with successful blitzscaling might indeed be used as checklists for investors, to help them identify growth.
A second key implication might be how the blitazscaling approach ideally should impact societal policymaking. Ultra-rapid corporate growth is key. What might be done when it comes to national policies to enhance such growth? What is the relevance of blitzscaling for policy makers in the public sector? To provide favorable conditions for firms to grow represents a critical challenge for policymakers. To keep taxes and public fees at reasonable levels is one factor, to make it more worthwhile for blitzscalers to take the risks that the approach implies. To avoid restrictive regulations to provide the blitzscalers sufficient freedom to evolve the business, as well as to minimalize bureaucratic slowdowns, and to provide safe patent protections for blitzscaling firms’ core technologies do indeed represent policy-making dimensions. Politicians and policymakers can thus benefit from reading this book as well!
Finally, the authors discuss the geographic spread of blitzscaling. The approach was developed in Silicon Valley. But it is clearly relevant on a much larger geographic scale. Are there some geographic areas that stand out when it comes to incubating blitzscaling? Clearly Silicon Valley comes out on top of the list. Above all, there seem to be a confluence of people with the requisite attitudes (creativity, open-mindedness, willingness to take risk, tolerance of “chaos”), risk capital, and innovative technological approaches. But, as the authors point out, there is nothing sacred about Silicon Valley’s position as the blitzscaling location for excellence. Other locations are coming up in the rest of the US (Seattle, Boston, NYC, Denver, …) in Europe (Berlin, London, Stockholm, …) as well as Asia (Chechen, Shanghai, Seoul, Taipei, Hong Kong, Singapore, …). The key conditions relating to people, capital and technology are footloose!
The final section of the book discusses a potential dilemma with blitzscaling. We have indeed seen an eclectic example of how a strive for high growth might imply ethical dilemmas when it comes to social networks’ concern for limiting some individuals’ access to use of their network – curtailing free speech because of potential risk of gross misuse (Facebook). Clearly, such ethical dilemmas seem to have no clear solutions.
Occasionally, new refreshing approaches emerge in our field of strategy, such as the focus on market share (Henderson/BCC), the 5 competitive forces (Parker) and/or the integral role of innovations (Christensen). The blitzscaling concept of this book adds to this. Without a doubt, this represents another landmark when it comes to the evolution of our understanding of corporate strategy. This reviewer recommends this book wholeheartedly. A key to growth!
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