Blitzscaling: Counterintuitive techniques to growing a startup or established business super-fast05/12/23
One of the key features that sets global giants apart from those companies that flame out or implode before they can reach market dominance is their ability to grow and grow quickly.
Contrary to the popular Silicon Valley narrative, it's not superhuman founders or savvy venture capitalists that lead to extraordinary success. Rather, it's that these companies have learned the strategies and practices necessary to grow at a phenomenal speed.
Entrepreneurs and investors who need to grow really quickly to reach a massive scale must study and implement the science and art of rapidly building out their business.
That science and art is called blitzscaling.
What is Blitzscaling?
Blitzscaling is a specific set of practices for igniting and managing dizzying growth; an accelerated path to the stage in a business's life cycle where the most value is created. As counterintuitive as it may seem, blitzscaling prioritizes speed over efficiency in an environment of uncertainty and allows a company to grow at a furious pace that captures the market.
Books had 151 employees and generated revenues of $5.1 million. By 1999, Amazon.com had gone public, grown to 7,600 employees, and generated revenues of $1.64 billion. Today, Amazon dominates the eCommerce market.
During the mad scramble, companies focus on growing quickly without being left behind – or even coming in second. We often call this the Ricky Bobby principle. As he says in the 2006 movie Talladega Nights, “If ya ain’t first, you’re last.”
Blitzscaling is about growth that propels a company into first place. Blitzscaling is the playbook for achieving market dominance.
Secret to Blitzscaling
The secret to blitzscaling is found in a set of techniques for scaling up at a dizzying pace that secures the leader’s position and blows the competition out of the water.
“Blitz” is German for lightning. And colloquially in English, to blitz means to rally quickly and move at speed to achieve a common goal. In U.S. football during a blitz, a higher than usual number of defensive players will rush the opposing quarterback in an attempt either to tackle them or force them to rush his pass attempt. To blitz is to overwhelm the
Blitzscaling often plays out in the tech sector because tech advancements throw the market up in the air, forcing competitors into a mad scramble to become market leader. One prime example is Amazon's incredible growth in the late 1990s. In 1996, Amazon opposition.
Scaling, of course, is growth or sustained expansion – something every company aims for. When you have a valuable winner-take-most market, the most important thing you can do is to beat your competition to scale. Blitzscaling maximizes speed and surprises and overwhelms competitors.
The trick to understanding and navigating your own company’s blitzscale strategy is to follow a set of practices for igniting and managing what becomes a culture of speed over efficiency. This furious, winner-takes-all pace can be overwhelming without guidance. It combines gut-wrenching uncertainty with the potential for a much bigger, more embarrassing, more consequential failure.
Risks of Blitzscaling
Blitzscaling may mean disregarding many of the normal rules of business, but it isn’t without guidelines. It is hard and very expensive to implement. Unless you’re like Microsoft or Google and can finance growth from an exponentially growing revenue stream, you’ll need to convince investors to back you. To make matters worse, you must keep enough capital in reserve to recover from the many mistakes you’ll likely make along the way.
Despite the fear factor and occasional pitfalls, blitzscaling remains a powerful tool.
Building massive global companies
Blitzscaling, beating your competition to scale, is the modern way to build massive companies. Many companies that were merely ideas 10 years ago are now global transformational companies, such as Airbnb or Uber.
If the goal is to grow faster than your competitors, scalability is the key and distribution will allow you to beat them to the finish line. The goal is rapid growth on a massive scale. A Facebook with a handful of users is worthless. A Facebook with a billion users is a trillion-dollar company.
Blitzscaling stages and techniques
Sometimes the biggest risk is not taking enough risk. One of the concepts of blitzscaling is embracing chaos. You’ll be making massive changes over a 6-to-12-month period, including how you run the company. And navigating these changes requires an understanding of the science and art of blitzscaling.
The most obvious, visible, and impactful change in a company as it scales up is the number of people in the organization. Blitzscaling bases the stages of growth on the number of employees in the company, or its organizational scale, and can be defined by the following stages:
- Stage 1: Family (1-9 employees)
- Stage 2: Tribe (10-99 employees)
- Stage 3: Village (100-999 employees)
- Stage 4: City (1,000-9,999 employees)
- Stage 5: Nation (10,000+ employees)
The three key techniques of blitzscaling are:
- Business Model Innovation
- Strategy Innovation
- Management Innovation
First, design a business model that can and should be blitzscaled. Then execute a blitzscaling strategy in which you prioritize speed over efficiency in the face of uncertainty. Finally, apply innovative techniques to manage the strains and challenges of rapid growth and massive scale.
One of the key features that sets global giants apart from companies that flame out or implode before they can reach market dominance is an ability to evolve and optimize their management practices at each stage of growth.
Contrarian yet responsible
Like most things of value in this world, blitzscaling is contrarian and specific. To succeed, you’ll have to violate many of the management rules designed for efficiency and risk minimization. In fact, to achieve aggressive growth goals in the face of uncertainty and change, many of the conventions of blitzscaling fly in the face of what is taught in business schools and are counterintuitive to accepted best practices of either early-stage startups or classic corporate management.
Even though blitzscaling is driven by speed and risk and encourages leaders to disregard normal rules of business, blitzscalers who win their markets have a moral obligation to those markets and their associated stakeholders.
For all the good that blitzscaling produces, organizations moving at hyper-speed can face some inherent challenges even when trying to behave responsibly. Blitzscaling can result in problematic corporate cultures, adversarial relationships with regulators, and questionable decision making.
It’s important to marry velocity with responsibility to successfully capture the first-scaler advantage while still developing and adhering to a strong moral compass.
So, if you are considering heading down the blitzscaling road, take a deep breath and be prepared to embrace chaos and uncertainty. Learn to love speed more than the organizational coherence and stability that used to give you comfort. And keep your eyes on the goal that is market dominance.
To Blitzscale or not to Blitzscale
If you are wondering whether the time is right for your company to blitzscale, consider the following:
- Does growth provide you with a big enough opportunity?
- Is there a lasting competitive first-scaler advantage?
- Will riding the learning curve give you an unassailable competitive advantage?
Reasons to stop blitzscaling are simple. No company can grow at a neck breaking pace forever. Although hypergrowth is a powerful strategy to propel a company into the No. 1 position, it cannot be a permanent strategy.
Should you attempt blitzscaling at all? Blitzscaling requires capital — whether from investors or from cash flow — to fund relatively inefficient growth. If you have a low-margin business model that investors are reluctant to fund, blitzscaling will probably not work for you.
Blitzscaling can be the right tactic for both start-ups and established companies. Wherever you begin, blitzscaling is definitely a proven strategy for someone looking to build an iconic, multi-billion, or even trillion-dollar company.
In our three-day course presented by Thunderbird School of Global Management, we will walk through the stages, techniques, and strategies that make blitzscaling work for both traditional or established companies and start-ups.
Register today to take part in this transformational course taking place Oct. 9-11, 2023 at Thunderbird Global Headquarters in downtown Phoenix, Arizona.