With speed sports like Formula One racing, downhill skiing, and surfing, athletes are taught to ride along the momentum as opposed to resisting the acceleration. This concept is easily transferable to the business world especially as start-ups begin to experience the momentum of a rapidly changing and growing environment. We call this hypergrowth.
What does hypergrowth look like? According to the Harvard Business Review, hypergrowth occurs when an organization’s compound annual growth rate (CAGR) exceeds 40%. To put into perspective, normal growth businesses experience less than 20% CAGR.
Fundamentally, the core component to support hypergrowth is building sustainable systems, teams, and processes that scale. To achieve this, our investment strategy operates on the principle of the Trifecta for Hypergrowth.
Creating a sustainable business relies on having a balance between finance, marketing, and operations. At the intersections of finance and marketing, you have healthy lead generation. By understanding your break-even targets, you can better understand the target number of leads and clients, thus better understanding your target marketing spend for optimal return.
At the intersections of marketing and operations, you have better business development (and sales). Leadership and people development is a core component as you need to have the right team members in place to drive conversions.
At the intersections of operations and finance, you have better unit level economics. From an investment perspective, expansion is a great idea but the best idea is to ensure you have healthy units to support the growth.
At the intersections of all three, you see the perfect balance of operations, finance, and marketing - thus creating a strong foundation for hypergrowth.
While hypergrowth may be experienced unexpectedly, below are a few tips on how to better prepare your business for scale:
Don’t lose sight of your core while innovating. Of course, innovation is the name of the game, especially as it relates to maintaining competitive advantage. The key is to maintain balance - a balance between seeing around corners and fortifying your business strengths.
Focus and prioritization are critical. Hypergrowth requires hyperfocus. As the organization faces fast growth, there is a chance of steering into multiple paths. While it may seem time consuming, taking a few minutes to pause, prioritize, and game plan will lead to much higher success rates in the long-term.
Foster a culture of innovation and opportunity. The most successful organizations who faced hypergrowth are very action-oriented companies. As you look to build and consistently develop your team, make sure you are creating a culture of possibilities. Cross-functional projects can be a more active approach to fostering enhanced communications between departments, thus enabling increased efficiencies.
Keep an eye on the items outside of top-line revenue. As your business grows, there is a risk of not having the proper infrastructure or systems to support the growth. Review your IT systems and operational processes at each checkpoint to ensure a balanced weight to support growth.
Use the data to drive business decisions. A datum is a record of an action or event which reflects a decision made by a person. So in essence, data is people. By understanding data, you can then understand the patterns and behaviors that drives people to take action.
Most importantly, focus on the people. Your workforce is the key element that will drive the success of your business. This applies to the entire process of attracting the right talent to properly onboarding new team members to consistently providing developmental opportunities and creating a culture of learning. When it comes to the team, always be in the recruitment mentality - actively seeking opportunities for your team to keep them engaged and inspired.
Many strategies and tactics come into play when supporting hypergrowth and remembering the fundamentals of the trifecta provides a benchmark for sustainability. Looking for more information on how to ensure a proper balance? 👋 Drop us a line at firstname.lastname@example.org.