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Management article
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Reference no. R0804J
Published by: Harvard Business Publishing
Published in: "Harvard Business Review", 2008

Abstract

When a market or an industry goes into hypergrowth - that steep part of the S-curve where market share is usually determined - established companies may be at a disadvantage. Often they labor under organizational legacies that hamper their ability to respond to lightning-quick opportunities to increase their share. Izosimov, the CEO of VimpelCom, rode the hypergrowth wave in Russia's cell phone market and came out ahead. He offers five rules to help other companies survive a similar ride. Sell first and ask questions later. This is the time to capture as many new customers as possible - while making sure that you can actually deliver the promised products and services. Your business model doesn't have to be perfect at the outset, though; you can refine it as you go along. Don't try too hard to innovate. Of course you must understand the technological trends in your business, but your focus should be on the systems and solutions critical to your growing customer base, not on the strategic implications of future killer apps. Organize like McDonald's. Standardized organizational structures, technologies, and business processes allow your people to hit the ground running in new markets. In VimpelCom's case it would have been cheaper to start by piggybacking on local systems - but customer satisfaction would have suffered. Push decisions out to the front line. You simply can't afford decision paralysis during hypergrowth. Ceding operational decisions to those who have to deliver the performance saves time, triggers entrepreneurial behavior, and may even raise the quality of job candidates. Foster a can-do culture. Action-oriented companies - where people move on quickly from solutions that aren't working, communicate freely, and don't fear failure - will do best during hypergrowth. To foster such a culture, reward people for their successes and for implementing new ideas.
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Abstract

When a market or an industry goes into hypergrowth - that steep part of the S-curve where market share is usually determined - established companies may be at a disadvantage. Often they labor under organizational legacies that hamper their ability to respond to lightning-quick opportunities to increase their share. Izosimov, the CEO of VimpelCom, rode the hypergrowth wave in Russia's cell phone market and came out ahead. He offers five rules to help other companies survive a similar ride. Sell first and ask questions later. This is the time to capture as many new customers as possible - while making sure that you can actually deliver the promised products and services. Your business model doesn't have to be perfect at the outset, though; you can refine it as you go along. Don't try too hard to innovate. Of course you must understand the technological trends in your business, but your focus should be on the systems and solutions critical to your growing customer base, not on the strategic implications of future killer apps. Organize like McDonald's. Standardized organizational structures, technologies, and business processes allow your people to hit the ground running in new markets. In VimpelCom's case it would have been cheaper to start by piggybacking on local systems - but customer satisfaction would have suffered. Push decisions out to the front line. You simply can't afford decision paralysis during hypergrowth. Ceding operational decisions to those who have to deliver the performance saves time, triggers entrepreneurial behavior, and may even raise the quality of job candidates. Foster a can-do culture. Action-oriented companies - where people move on quickly from solutions that aren't working, communicate freely, and don't fear failure - will do best during hypergrowth. To foster such a culture, reward people for their successes and for implementing new ideas.

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