Tuesday, June 24, 2008

Managing during Hypergrowth Phase of an Industry

Managing Hypergrowth.
By: Izosimov, Alexander V.,
Harvard Business Review,
April 2008, Vol. 86, Issue 4

Hypergrowth is the steep part of the S-curve in a growing market or industry, where the leaders emerge from the pack.

Market share is determined during hypergrowth, so companies must make sales their top priority. Later they can focus on efficiency and the business model and pay more attention to costs. Innovation, too, should be put on hold until the systems and solutions critical to a hypergrowing customer base have been put in place.

Five Rules for Hypergrowth Management

Focus first on sales
Innovate with caution
Standardize structures and processes
Delegate decisions to field managers
Reward action and Initiative

An example of hypergrowth

THE PROSPECTUS FOR VIMPELCOM'S IPO on the New York Stock Exchange in 1996 forecast that more than one in 10 Russians would own a mobile phone in 2006 – in marketingspeak, a penetration rate of 14%.

But by about 2003, the Russian market penetration rate reached 20%. After that, it took just 10 quarters to get to 80%. Imagine: In two and a half years the country went from just one in five Russians owning a mobile phone to four in five owning one. That is hypergrowth.

Alexander V. Izosimov is the CEO of VimpelCom, a leading provider of mobile telephony in the Russian Federation and other former Soviet republics and the first Russian company to be listed on the New York Stock Exchange. The company's headquarters is in Moscow.

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