Pentagrowth was founded in 2013, when we began to see Wikipedia as the standard of knowledge and the rise of Airbnb or Github, organisations that suggested very strange things to us. Instead of staying in a hotel, go and sleep at someone’s house, instead of writing code and asking permission, create a fork and develop your own part. I realised that these initiatives were growing at high speed. We are at a social and technological time in which you can do more with less and most of the time better. So, I decided to study this phenomenon more in depth for myself. We compiled data from 50 organisations that had had an increase of over 50% in users and income for 5 consecutive years.
All these organisations used 5 core growth strategies:
How do you use the networks of the future? As in every generation, we have seen an increase in the pace of growth: Organisations that were born on the web grow very rapidly. Those born on social media, twice as quickly. Those that were created for mobile, 4 times as fast, and now, the speed of IoT is even quicker.
How do you get your stock? If you go down the traditional “buy and sell” or “produce and sell” route to grow, you have to fork out and finance it yourself. There is also the option of doing it like BlaBlaCar: “I just see empty car seats” or like Airbnb “I just see empty rooms”. You use what is available and unused and that reduces inventory costs. If you go even further and you look at the amount of open data, open software, open videos on YouTube or texts on Wikipedia that you can study and integrate that information, your inventory cost is 0. The less you spend on creating your inventory, the faster you can grow.
How do you take advantage of the public’s abilities? Traditional companies are only interested in the volume of consumption when they look at the market, and we are just passive: customers, patients or taxpayers. The people of today, armed with a smartphone, are gunslingers from the Wild West. Who can’t shoot a video? Who can’t review a restaurant? The more work you spread out among your users, the faster you grow. It’s just a case of recognising the productive capabilities of the general public.
How do you make use of your business associates? Nowadays, businesses are business systems. There could be between 2 to 7 in the world, but not 27. What Apple showed us with Apple Market was a revolution. Apple said: Guys, we are going to share the market. The logic was; If you want to sell your app from my business, I keep 30% and I give you the 70%. At the end of 1 year there were a million Apps in Apple Market. The next question we should be asking ourselves is: What’s worth more? The 100% of what you or I yield, or the 30% that someone else does? The bigger or the more diverse the corporate group that sets up their business on top of yours is, the quicker you grow yourself.
How do you share your knowledge? If you can put your knowledge in service of the people and a grand number of them realise that what you are offering makes the world better or that they can integrate it into their own lives, they can support you beyond market rules. For example: Wikipedia. My life and the lives of many others are better with Wikipedia. Therefore, I don’t pay to use it, but I pay so that it exists. If you can make it so that a community can get a hold of shared knowledge, you have a pillar of growth beyond the support of the pay to use market.
The question is in how do I put it into practice? We have developed a methodology that consists of 4 steps:
1. Everyone who has grown a business or is growing one knows that it’s like breaking rocks for 3 years. If you are going to take 3 years to reach your stride, you may as well ride the wave that comes later. How can you look back and mould yourself from the standpoint of a future that rocks? By that we are referring to something that might have a positive impact that might drive you. It is key to look back from the future. It isn’t the time to design for mobile. It’s time to design for mobile data and wait for the wave to come. When you look to tomorrow, you just see barriers and hurdles. When you elevate your vision, you jump the hurdle energetically, and the barrier from above seems like a simple obstacle to you. This is the first step: take a point of view that gives you the advantage and energy, that’s what this system aims towards.
2. Break it down and see what you already have today. We have to categorise things. Ways to organise ourselves include: what purpose does something serve? How much should we use it? If you are able to look at what you have from a different point of view, the value of things changes. For example, we have invited some carnivorous friends to dinner, and we have bought entrecôte. The night before the dinner party, those friends call and tell us that some vegetarian friends are going to come too. Suddenly you have to change the menu. This is what happens in real life since things don’t move gradually. Something comes along and puts a stop to us doing things the way we were used to. The first step is to go back and assess what you have now. You open the fridge and you realise that your entrecôte is now worthless because your guests are vegetarians. How much is that lettuce worth? That lettuce is worth gold. The trick is to re-read the data that you already have, the active data that you already have (and don’t use), the abilities of your people, the knowledge you can share from your future that rocks. After, going back to visit what you already have, seeing how they can fit into your future that rocks, is the second step.
3. What’s the next network can I connect to? What open data, content, or distributed assets are going to be available that aren’t now? Just as somebody who doesn’t have a spare flat, but they have a spare room for a little while. From there I could enter the co-working/co-living market or the nap market. Instead of hiring it out to stay the night, I hire it out for a nap. In this new scope, what are users going to bring to the table? Making videos or giving ratings. The general public has an impressive capability in generating data, about themselves or about the traffic quality. If you can offer something to win over the public, you’ll go far. What are the new standards that are being established? It’s a case of knowing your business ecosystem very well and what you can bring to the party. If you are invited to the party, there are two ways to walk in: the first is with your hands in your pockets, but you have to be interesting, good looking and a bit cool. The second way is with two bottles of wine. Think about it, contributing the two bottles of wine to your business ecosystem is a good way to start, given that it allows you to find a space. The final question is: what expertise do I have, am I worth more stuffed into a draw or shared with people or communities with whom I share a future that rocks?
4. When you have the point of view, you know what you want to produce, you know what internal ingredients are worth and which external ingredients you have found or exist (thanks to technology or the sharing power of the public). Now it’s time to start cooking. Keep sight of your goal to not fall into the tendency of thinking “egg = omelette”. It’s important to recognise that there apart from eggs there are potatoes, tomatoes and other amazing ingredients. So, this step consists of spreading the ingredients out around the table and starting to combine them to create a new dish. A good indicator for whether an idea has potential is that it smells like the future.
Being audacious is key. It’s not the time to do things 10% better. It’s time to amp up to 10 times better.
You have to try, survey, identify new elements, check the effort / impact ratio, and stick to 80% impact to 20% effort. It’s important to be audacious, straight forward, and focused. Everything that grows very quickly, at first is very small. Google started as just a search engine. It’s very difficult to do something well. It’s difficult to design a new interaction that adds value. It doesn’t bode well wanting to be everything for everyone in the beginning. Keep in mind that it’s better to find the route with minimal effort and with the maximum impact to reach your goal.
