The blitzscaling theory or explosive and rapid business growth.

  • “EXPLOSIVE” BUSINESS GROWTH
  • BUSINESS GROWTH AND BLITZSCALING OR “EXPLOSIVE GROWTH”
  • WHY DO WE FOCUS ON THE CONCEPT OF “EXPLOSIVE BUSINESS GROWTH”?
  • WHICH ARE THE STAGES OF BUSINESS GROWTH?
  • WHICH KIND OF ORGANISATIONAL PROBLEMS ARE RELATED TO BLITZSCALING?
“EXPLOSIVE” BUSINESS GROWTH

Hereby we seize the opportunity to comment on an article by Tim Sullivan about BLITZSCALING that was published on the Harvard Business Review and that is always highly topical.

BUSINESS GROWTH AND BLITZSCALING OR “EXPLOSIVE GROWTH”

Blitzscaling or explosive growth is defined as a strategy that is necessary to adopt in order to promote a rapid, very rapid business growth. It deals with the science and art of building a business or a start-up in a rapid way and in a global market, whose main purpose is to be the first mover in terms of dimension and economies of scale.

This kind of businesses can rapidly create many job places and, if we look into the future, the amount of these businesses is expected to increase. Amazon embodies an excellent example of a rapid and explosive business growth, both in terms of business volumes and of served countries. It has basically reinvented the concept of e-commerce. As a result, it has become a clear market leader.

WHY DO WE FOCUS ON THE CONCEPT OF “EXPLOSIVE BUSINESS GROWTH”?

Everybody lives and works in an interconnected age. When we talk about interconnection, we don’t just mean Internet. We also mean transport, payment and information networks. In this context, it is necessary to have a very dynamic business, as your competitors come from all parts of the world and can get in before you by reaching dimensions and economies of scale that are inaccessible to those businesses that come after.

The blitzscaling theory is based on a military strategy, according to which, if you want to win, you have to act in a rapid way and surprise your “enemies”. This business strategy may obviously entail some risks. If you consider this theory under an entrepreneurial point of view, when a start-up decides to promote its business growth and to become the reference market leader, it will run more risks if compared to a business that works and increases its business volumes in a normal way (i. e. slowly) through a natural development process (the so called “organic growth”).

WHICH ARE THE STAGES OF BUSINESS GROWTH?

There are three different stages of business growth. Generally, we tend to focus on just two of them, i.e. the increase in sales and in the number of customers. Of course, these represent two key elements, but they are not sufficient, if you do not consider business growth itself, where the business must grow as fast as sales and the number of customers, whereas it often represents an obstacle to achieve this goal. For this reason, it is useful to consider some questions in order to understand if we really have the basics to grow:

  • Which position do talented people occupy in your business? And how you let them grow under a professional point of view?
  • How do you communicate in your business?
  • How is business culture and philosophy preserved?

WHICH KIND OF ORGANISATIONAL PROBLEMS ARE RELATED TO BLITZSCALING?

Under a managerial point of view, blitzscaling is always inefficient, as it can burn money in a very rapid way and, at the same time, you can also make many mistakes. However, sometimes it is necessary to run these risks, if you want to increase your business in a rapid way and survive. One of the possible risks you run is not to pay much attention to a proper in-depth analysis concerning regulations, fiscal rules and compliance. Another possible risk is the acquisition of competing and complementary businesses in such a rapid way that you have no time to integrate them in a proper way or eventual inefficiencies to the detriment of customers.

Even in this case, the best competitor is not the business that provides the best service or product, but the business that provides it to the highest number of customers in the shortest period of time and that reaches economies of scale in order to eliminate all competitors that have already entered the same market or to avoid that other competitors enter it.

An example: Google is a free service. However, thanks to this free service, it has a multimillionaire turnover resulting from complementary services. Google is now such a big company with such a big economic power that who dares to launch a new search engine to compete with it?