Blitzscaling: What it means for businesses and why it matters
Blitzscaling: What it means for businesses and why it matters
The success of Reliance JIO is a standout example of how a new entrant became large and successful in a very short time. India seems to be churning out a pantheon of modern 'scale leaders', in fact, many less than a decade old.
Among them, a sizeable number have acquired a unicorn status or scale that makes them market leaders. It is motivating to see that fast-growing companies such as Nykaa and Zomato have met with a huge oversubscription and terrific investor response.
It is almost like a fairy tale; how this class of companies scale rapidly, turn into market leaders, become highly valuable, and live happily ever after.
These companies adopt 'blitzscaling' to drive lightning growth by prioritising speed over efficiency, and invariably, they seem to knock the competition out of the water.
At the outset, their approach may seem radical, unwieldy, risky, inefficient with a do-or-die attitude.
The reality is that the window for action can be tiny, and it can close quickly. Even a few months of hesitation can mean the difference between leading and chasing.
It is accepted wisdom that getting in early and doing it fast can make the difference in any business where scale matters. Like climbing Mount Everest, scaling is not just a science but also a mindset - a journey that requires an equal measure of faith and a willingness to fail.
Bill Gates, the legendary founder of Microsoft, deployed this strategy in the growth phase, riding on an extreme culture of working hard and getting things done fast.
This breed of fast scalers has hugely benefited from an entirely new ecosystem that has evolved. Venture capitalists and private equity are the primary drivers with abundant capital and willing backers of ideas. Additionally, there is a rich network of service providers and outsourcing companies to support rapid growth.
Notably, scrutiny of the business models of the blitzscalers reveals several aspects that they manage differently. The first is their contrarian approach. When Reliance JIO decided to enter the market, more than a dozen players were at each other's throats.
With fierce competition, the margins had all but evaporated, and most of the players were on track to pursue consolidation. The market seemed to have reached a saturation point.
Yet, despite these adversities, Reliance JIO invested heavily in creating a telecom infrastructure of the future, expanded the market with free connectivity and affordable handsets, and eventually emerged as a market leader, wiping off nearly all but a couple of competitors.
Another example is Google. In the early stages, a 'search' was seen as a terrible way of making money in advertising when the ad inventory that had value was measured by page views and the time spent on a site. But then Google stuck with this new model and eventually rewrote the rules of online advertising. But, of course, this is true of all big ideas that have acquired cult success.
Each of these companies raises money early enough, which actually alters the course of their business. To blitzscale, a war chest is necessary and is needed fast to outpace the competition.
Promoters tend to prefer bootstrapping their way forward, but, arguably, even a successful start-up can grow more quickly with more money at its disposal.
The truth is that opportunities have a knack of appearing on the horizon when least expected, and therefore, sufficient fund availability ahead of time is the key.
How does risk measure up in this strategy? For one, when the market is up for grabs, the risk isn't inefficiency but playing it too safe. But, on the other hand, blitzscaling also requires a strong focus on risk management. So, while risk-taking is at the core of this strategy, it doesn't require unnecessary risk-taking.
Another vital facet is the value of trust. By its definition, confidence builds over time, and to expect that one needs to build trust fast, therefore, an oxymoron. However, having a credible board or a buy-in by eminent investors who are themselves trusted is one effective way to fast-tracking the trust build up.
While the list of attributes that make a case for blitzscaling is long, one aspect that gets consistently overlooked is the importance of culture.
The common mistake is to ignore company culture or delay thinking about it. In the growth stage, strategy execution, chasing revenue, and working on the product/technology seem more compelling and take precedence over culture.
But culture underlines everything a company will achieve, and it is critical to start thinking about this intentionally when the team is small and the culture is still malleable. Remember, management guru Peter Drucker's famous quote 'culture eats strategy for breakfast'.
With the roster full of well-known names such as Bill Gates, Mukesh Ambani, Reed Hastings of Netflix, and Brian Chesky of Airbnb, their success stories are truly inspirational. In the modern business world where speed is the essence, the maxim - slow and steady wins the race seems to have no takers.