Thomas A. McGonagle
Thomas A. McGonagle

Thomas A. McGonagle

The five stages of Blitzscaling

The five stages of Blitzscaling

Thomas A. McGonagle's photo
Thomas A. McGonagle
·Jul 20, 2022·

4 min read

The 5 Stages of Blitzscaling If you’ve ever worked for a fast-growing startup, you know what the pace and operating structure can be like. New people appear in the office and disappear just as quickly. Phones ring off the hook because no one is available to answer them. Niceties, such as performance reviews and strategic planning sessions, go by the boards. Everyone is traveling 100 miles an hour, even if they aren’t entirely sure what the destination is. Such companies are “blitzscaling,” or operating at a pace at which the need to grow outstrips nearly every other consideration. Blitzscaling is a specific set of practices for igniting and managing accelerated growth. The term was coined by LinkedIn co-founder Reid Hoffman and Chris Yeh in their book of the same name to describe the way successful entrepreneurial firms put growth above all other considerations with the expectation that problems can be fixed later. Successful blitzscalers prioritize speed over efficiency in an environment of uncertainty and allows them to scale at a furious pace that captures the market. Companies can grow incredibly fast, become very large and transform markets, like Amazon, PayPal, and Google have done. But, the tactics that get them to each stage of growth change as a function of their scope, customer base and business environment. The skillsets they need also change as the business becomes more stable and diversified. The trick is to preserve the best characteristics of a high-growth company without dragging along the baggage of chaos and inefficiency that accompanies it. Hoffman and Yeh define the five stages of growth for high-speed businesses: family, tribe, village, city and nation. Each works very differently. Family These are businesses at the early-stage of startup that may have only a few employees. Their ideas about what product to build and market to serve are typically vague and changeable. Companies at the family stage are often most concerned with securing the funding needed to get to a proof-of-concept for their business. They can move quickly because the consequences of failure are low, but so are the chances of success. Blitzscaling is usually not a growth option at this stage. Tribal These are companies that have a more fully formed business plan and may have prototypes or working products in the market. They’re still figuring out the right customer mix and whether the business can scale. Such businesses may blitzscale at the risk of flaming out or they might choose to bide their time and seek further funding for more managed growth. Village The village stage is when blitzscaling is most likely to occur. This is when businesses know they have a viable and potentially hit product and are racing to grow as quickly as possible. Sales and customer service are usually top priorities and organizational discipline is not. Companies at the village scale may have more than 100 employees and attract enough investment to let them get away with inefficiencies for a while. They’re also attracting the attention of competitors, both large and small. Speed is their greatest asset, but they must balance the mandate to grow quickly with the need to put structures in place to prevent the organization from spinning out of control. City Once a business reaches the city stage, its priorities usually change radically. It has paying customers that rely on it to deliver and support reliable products. Its revenue stream is becoming more predictable and it may be eyeing new product lines, markets of acquisitions. Structure and process are needed, along with new skills to manage such functions as human resources, accounting and operations. Blitzscaling is usually not an option for the entire company at this point, but blitzscaling principles may be applied to new product launches through small teams that operate autonomously. Nation At the nation stage, scale stability trumps all other objectives. The company probably has one or two cash cow products that make up most of its revenues. And, its priorities are to protect its current revenue stream and find new avenues of growth. Blitzscaling is out of the question for companies this size, but they are often in the hunt to acquire fleet-footed startups and may fund internal projects that use blitzscaling tactics. It’s been said that CEOs who get their companies to $1 billion usually aren’t the same as those who get them to $10 billion. When you consider how priorities and operating principles change as businesses grow, that isn’t surprising. The most successful companies manage to retain traces of the blitzscaling tribal culture even when their business is global. Want to learn more about the benefits of blitzscaling? Read “Benefits of Blitzscaling: The Winner-Takes-All Growth Strategy”

 
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