Over the past 20 or so years academics and practitioners have looked at a number of different ways of seeking out growth companies. We have labels like “scaleups”; Gazelles; Fasttrack100; Fast50; Champions and of course Unicorns!
In the end, these are the high octane companies that grow at over 20% per year for at least three years or more. And some of the more tightly defined supergrowth companies are those with profits.
But, defining them is not going to create more of them! We need to understand why and how they grow faster than their competition, how they sustain the entrepreneurial spirit as they grow and what their longer term sustainability looks like. In reality we do not have enough of a rich insight into these companies as they are mostly outliers and case based research is expensive and difficult. However, we do need deeper insights.
Here are some key lessons that might inspire entrepreneurs and create an agenda for teaching and research in the field of rapid growth sustainable businesses.
The lessons are drawn from two keynote speeches and a deep dive on a panel discussion during VentureDay 2016 https://www.cranfield.ac.uk/som/events/venture-day
The inspirational keynotes were:
Jozsef Varadi, CEO and founder of Wizzair a low cost airline that has been growing since it started in 2004 to a stage where it is now flying some 21million passengers per year and becoming a dominant player.
Jon Thornes of Coolmilk a UK businesses that transformed itself from a flat lined dairy business into a rapid growth venture providing a platform whereby regional diaries can charge for and manage the logistics of school milk to over 1 million children per day.
A fabulous panel included
In addition there was a panel chaired by Guy Rigby of Smith and Williamson that comprised Robert Wright, a serial aviation entrepreneur and founder non-exec of Wizzair; Karim Sekkat a corporate finance expert now running Oxford Engineering; Tim Jones Chair and shareholder of Treatt PLC a food ingredients company and Debra Charles of Novocroft which provides the backend to numerous rail companies to manage smartcards..
Hitting a wall
Curiously the resolve to go for supergrowth came from one of two places, an early vision to become a global player or after hitting a wall and having the entrepreneur reconsider their future direction. With Novocroft, Debra Charles said her vision was to define the end point and make that the beginning. There were many echoes of approval for this point of view from other members of the panel.
In the case of Wizzair for example the wall came in three layers in 2010; the Ash cloud over Europe; a Polish airline crashing in Russia and floods in Central Europe, all of which affected the ability to fly and the desire of passengers to fly. This triggered a realisation that there was over reliance on the Polish market and the Central European segments. So, Wizzair ensured a much wider route base, hired over 40 nationalities into its operational team and has 6 nationalities at the CXO level from a top team of 7. The ability of the staff and the top team means that it is in a much better place to continue sustained growth
In the case of Karim Sekkat at Oxford Engineering, his early realisation that they only really had one customer. He has since taken action to broaden the customer base, with some vigour. The same applies to Treatt PLC, where they saw flat lined sales and decided that the breakout would come by addressing underserved markets with more clearly defined customer needs in several geographies.
All the speakers and panel members agree on the following points. That to achieve supergrowth you need a really talented team at the top with aligned vision and values.
The step before that is about how to prepare for supergrowth and here the tips from the panel were to focus on three major elements; to really look at the environment and understand how and where the business will fit into it. Entrepreneurs need to try and foresee the future of their environment as best they can. Secondly to ensure they have a scalable venture with the internal capabilities to grow and harness the opportunities. The third key aspect is about being able to secure the right resources at the right time and place, especially as the firm grows across sectors and geographic boundaries.
How can established and flat lined businesses get into supergrowth
· Look at under-served markets and focus energy on entering those markets
· Clearly identify what your customers are looking for
· Then get the right team in place to enter those markets and meet the needs of customers
· Need to make the growth potential exciting to engage your team, have the confidence in your ability to make a difference
· Start with your “end point” and work backwards
Ignore the pundits
In 2004, Jozsef was invited to a CNN interview to talk about the launch of Wizzair and the interviewer at the end of the conversation said he would be unlikely to come back as he expected in this tough economic climate that the airline would be bankrupt in less than 12 months! This is a difference between a pundit and an entrepreneur with self-belief and talent.