Techniques of Blitzscaling
Blitzscaling is a strategy and set of techniques used for driving & managing extremely rapid growth that prioritize speed over efficiency in an environment of uncertainty. Put another way, it’s an accelerant that allows your company to grow at a furious pace that knocks the competition out of the water.
Business Model Innovation:
n today’s digital world, technology is no longer a strong differentiator as many are easily available as services. Moreover, they are built on demand. Rather business model innovation is something that can act as a differentiator between competitors. Many Startups are committing the blunder of focusing more on technology, software, product and design but neglecting ‘The Business’. Business in simple terms means how an organization makes money by acquiring and serving its customers. Business model innovation lets you compete with a giant competitor. Uber & Airbnb outsmarted competitors with innovative business models along with technological innovation. Once you have done business model innovation then technological innovation will help you sustain and scale. Referral bonuses given by Paypal is an example of business model innovation which helped it scale at lower costs than the standard cost of acquiring new customers via advertising.
Once you have developed an innovative business model the next obvious step of Blitzscaling is aggressive growth. As opposed to the traditional business model, Blitzscaling often requires spending significant capital on outlay. People with a traditional mindset might think of it as a waste of money. Although ideally, a Blitzscaler would stand by a financial strategy that supports aggressive spending thus leading to the desired output. For instance, every time Uber is launched in a new city it offers huge discounts. By offering big discounts the company can scale faster and achieve a position of dominance in the market. This requires massive funding & an ability to demonstrate future cash flow to the investors.
Hyper growth from blitzscaling might lead to excessive strain on the organization and its employees. In a business model, growth strategy should be accompanied by efficient management of human resources. Every year employees might be tripled in numbers to achieve the desired hyper growth. Counter intuitive things like wrongful hiring, launching flawed and imperfect products resulting in angry customers could happen. Managing the employees and customers is the key.
This blog is inspired from the book: Blitzscaling – by Reid Hoffman