E-commerce hypergrowth while the rest struggle

Managing growth in a highly expansive market is certainly a trick. Managing to grow at a time when the market is down, though, is a more exacting test of business acumen.

Online consulting is a $15 billion industry- Patrick Jason O’Brien

What’s happening in tech is an economic anomaly. “Hypergrowth” – the term being used to describe what e-commerce is currently experiencing, sees companies of all sorts and sizes – large and small, established or start-ups – hopping on to the e-commerce bandwagon to give the much-needed boost to their businesses and become the next Amazon in the internet world. And why not?

The open nature of the internet gives the flexibility to a small firm to conduct business in direct competition to a brick and mortar giant. It is a question of who grabs the opportunity first. While most of Europe grapples with a jobs crisis, tech companies are dipping into their ample funding and cash reserves to build out existing facilities, move into larger spaces, and produce programmes and services to accommodate the infusion of new workers. The world of business and marketing is starting to take notice of the hyper growth in the search engine optimisation industry and recruiting of talented individuals is at all time high.

The online consulting space is estimated to be a $15 billion industry and some experts predict that it will grow to $40 billion by the year 2015. What is driving this demand and growth? There are many business operators that have failed to realise that the marketing paradigm has shifted from traditional marketing to web-based marketing. When times were good, many business owners invested in print, radio, TV, direct mail, tradeshows, telemarketing and travelling for face to face meetings. When the economy turned in 2007, their immediate impulse was to cut back or find more efficient ways of advertising. Now business owners are in a speed race to take their positions for the web and social media real estate!

Technology businesses, large and small, are trying to manage what LinkedIn CEO Jeff Weiner and others call “hypergrowth”, or on-boarding. For example, the launch and hypergrowth of Google’s ambitious Google+ social site earlier this year has helped fuel a meteoric rise in the company’s stock. The search king unveiled its Google+ to grab attention and advertising funds away from Facebook. Google+ is the search company’s foray into social networking that numbers more than 10 million members since launch. The social-networking giant holds an $84.7 billion valuation on the private stock-trading network Sharespost.com.

Google finally gets its with the idea of “circles” and “sparks” as a way of understanding social network segmentation that is superior to Facebook, specifically the ability to segment different friendship groups into separate conversations. This is not just a grouping of relationship data but a fundamental wake-up call that it reflects how virtual communities actually work. It’s often been surprising how this social graph reconstruction has gone missing from the mission statement of Facebook in their every population expanding one size fits all approach. One of hypergrowth’s secrets is giving the customer what he or she wants.

The web enables a small business to go global instantly, reaching millions of customers and hundreds of millions in a year or two where it used to take a decade or more. It is often an entrepreneur’s dream!

So is there a secret to hypergrowth? Though some companies grow more quickly than others, few meet the criteria for such growth. Of all the beasts in the corporate jungle, the most fascinating is the one that emerges from nowhere, grows at a phenomenal rate and, before too long is challenging some of the bigger animals. Such companies are known in America as “fast-growth tigers” or “threshold companies”, and sometimes in Europe as “baby sharks”. Like champion athletes, they fascinate precisely because their performance is so extraordinary. Mere mortals can be forgiven a touch of Schadenfreude if they see one of these apparently superior beings fall flat on their faces. But they are no less relevant for that and they raise interesting questions.

What are the lessons that firms with more prosaic performance records can learn from the management strategy and techniques of the hypergrowth companies? And is it the case that there is a “tortoise and the hare” element to the experience of hypergrowth companies vis-a-vis the rest? In other words, do such companies, after a period of rapid expansion, burn themselves out, bump up against financial or market ceilings, or come to the attention of larger firms as takeover targets?

In reality, when companies stay in tune with their markets many survive though many suggests that recent news from the US, which saw Apple stock slump, was a sign to some hypergrowth is over for the giant. Where they fail no doubt their competitors will be baying from the sidelines.

www.castilleresources.com

Mr O’Brien is a guest copywriter with Castille Resources Ltd, a local ICT and finance recruitment specialist.