Six of the world’s ten largest companies fall into the ‘serial business builder’ category. What does that mean, and what do these companies have in common?
In a recent webinar hosted by McKinsey, Reid Hoffman, co-founder of LinkedIn and partner at venture capital firm Greylock, and Chris Yeh, co-founder of the Global Scaling Academy, offered insights. They explained that ‘serial business builders’ are organizations that relentlessly come with new ideas and spin them into scalable businesses—businesses that can disrupt entire markets by creating value in radically new ways. Being the first to scale is extremely important. And in times of uncertainty like COVID-19 the ability for organizations to move fast matters even more.
Ari Libarikian, a senior partner and global leader of Leap, McKinsey’s business-building capability, and Rock Khanna, a senior partner and co-leader of our Marketing & Sales Practice in North America, led the discussion with Hoffman and Yeh on blitzscaling, a phrase the two use to describe the set of practices that enable companies to rapidly grow and beat competitors.
The importance of speed and innovation is something we've also seen in our own work with clients. “The companies that have stayed at the top for decades are always regenerating,” says Ari. “They’re finding new sources of value, new sources of revenue, and creating new businesses. This is really a requirement to being successful today.”
Rock adds that, even amid the disruption to global business caused by the pandemic, "we have seen some companies outpace their competitors by acting quickly and launching new products and services in a matter of weeks that have typically taken years."
So how can executives blitzscale their organizations? Below are four tips from Hoffman and Yeh.
1. Act fast
Speed matters. Now is the chance for businesses to make fast moves, and being first counts. This means prioritizing speed and deciding which actions must be taken now versus what can wait for later. Speed, after all, is relative to what the competition is doing.
Today, technology is enabling every company to move with even greater speed. Elsewhere, markets are more global and hyperconnected, creating greater opportunities to blitzscale. Leaders should know blitzscaling only lasts a finite period: Only when competitors can no longer catch up should they stop.
2. Embrace smart risk
Every good strategy involves risk, but it’s important to manage that risk as you go. Leaders must be willing to make and survive mistakes, learn from them quickly, change their minds, and embark on an ongoing learning journey.
Decide which risks matter and should be taken, and use data from previous experiments to shape strategy. Uncertainty is a core part of innovation. Before doing anything, leaders need to establish a marketplace, market fit, and accept uncertainties.
3. Hire for adaptability
People typically focus on financial capital at the expense of human capital. Yet it’s largely human capital advantage—people with experience growing companies from the ground up—that makes companies successful.
Getting the right entrepreneurial people in at the right phase of a business is key. This means hiring in those employees who understand change is afoot and may not necessarily stay with the company forever.
Hire who’s right for the role right now, not right for later. Make it clear what their specific mission is and what constitutes success.
4. Focus on winning
First, determine where you stand next to others in the market and how that fits into your business model. As people navigate the ongoing pandemic, there’s an even greater need for flexibility and adaptability to move from survival to growth mode in order to leapfrog the competition.
While the ability to scale quickly is often triggered and enabled by technology, it’s not always the case. Competitiveness of another player, for example, can also be an impetus to scale fast. No matter how analog or old-school a company, whenever there’s a chance for a winner to take most of the market, there is reason to rapidly business-build.