How High-Growth Companies Succeed
The greatest source of competitive advantage in companies that grow from small to big is the unique combination of what it does and how it does it.
No Obvious Competitive Advantage
Much of what we believe about what makes growth companies successful is just plain wrong. It’s not about having a visionary, charismatic leader. It’s not about having the best talent. It’s not about being the most innovative in the industry. It’s not about being in a hot, sexy market. It’s not about having the coolest, hippest product. It’s not about sophisticated strategies. Fast growth companies come from all different worlds. And it’s not even about money. The vast majority of all high-growth companies never get a dime of venture funding.
Most breakthrough companies simply don’t have an obvious competitive advantage.
What, then, is so special about the companies that grow from small to big from those that don’t? The answer can be found where imitation by competitors is less likely, within the organization’s inner workings. What a business does is visible and easy to understand, but how it does it cannot be seen or easily understood from the outside. The resources, people, systems, processes, and culture that form the infrastructure or underlying framework of the business are much harder to copy and, therefore, provide the foundation for long-term sustainable competitive advantage.
Growth is More Than Strategy
A clear and focused strategy is the starting point for high-growth companies. To consistently grow you need much more. The “much more” is what separates market leaders from the also-rans.
Most peo¬ple mistakenly believe that the ultimate sources of competitive advantage are products and strategies. They are foundational, but they are not enough. Offering a great product in a growth market, backed by a fantastic strategy, is the minimum required to compete. It’s certainly not enough to guarantee success.
The internal development of an organization is the single greatest advantage any company can achieve. Yet most leaders ignore it. To most leaders, developing products, markets, and strategies seems far more important compared with the more mundane tasks involved in the nuts and bolts of building a company. Unfortunately, although things like leadership, management, and organizational processes may not be exciting, they are vitally important as the company scales.
Few business leaders spend enough time thinking about the business as a whole. Leaders of growing companies must be prepared to manage an organization and devote substantial time towards time-consuming things like management systems and other business processes.
Your survival depends on it.
Over time, the most important product of a company is the company itself. In growth companies, things like people and organization outshine products.