These five powerful examples of companies that found serious growth show the power of momentum in action.
In the repertoire of factors, influences and KPIs that a company can count on, none can reel in such explosive or exceptional growth as business momentum.
Honestly, with the winds of momentum in a business’ sails, things can seem eerily predestined, almost as if the company cannot fail. The business simply keeps going from strength to strength, victory to victory, and before long, it leaves all of the opposition eating its dust.
This is why momentum is possibly the single most powerful influence that can make a company stand out like the sun in an industry’s sky.
Despite its powerful influence, though, the subject of momentum has always been elusive. That is, until now. I have devoted a series of articles to specially talk about the subject and unbundle it for entrepreneurs like myself. This includes explaining the unique meaning of the concept and how a business can identify if it has momentum.
Today, I’ll be focusing on a compelling topic: living examples of companies that have found (and sometimes, lost) momentum. How did they start? What did they do to get moving? How did it all come together for them? I will answer these questions and more.
But before we dig in, it’s necessary to rehash two things about momentum that will be central to our discussion: the unique characteristics of momentum and how it operates.
The unique characteristics of business momentum
Although you won’t find this in many places, momentum has several specific attributes that announce its presence and underlie its operation. These factors are central to the concept and explain why it is what it is. They are as follows:
- Momentum is organic: Momentum is internally-driven. It is a result of clear and specific goals which a business identifies as being central to its unique value proposition.
- It is generative: Momentum breeds momentum, just as success breeds success. Every win, innovation and success serves as a launchpad that brings even more success.
- It is sustained: Unless sustained, momentum is nothing but a temporary change in fortunes. It must be consistent, prolonged and lingering for it to be exceptional. But it doesn’t last forever.
- It is protective: Can you stop a car going at 90 mph? What about one going at 0.9 mph? That’s the power of momentum. Even when a business makes costly mistakes, the power of momentum can keep it going.
- It is profitable: Lastly, momentum results in sustained periods of exceptional growth. It leads a company to operate far above the bar, reaching the heights in industries that practically all others can only dream about.
How business momentum works
Business momentum is the exclusive preserve of far-sighted, serial achievers. It is only made available to businesses that are not content to rest on their laurels or stat-pad their companies. Here’s how it works.
Ordinarily, the focus for companies is to increase their bottom-line and achieve stability. Having broken into the market, the natural instinct is to consolidate first and then explore prospects for growth. So, the primary goal for these companies is to increase profitability, often at the expense of growth.
However, for momentum-fueled companies, growth is often as necessary, or even more important than profitability. These companies have usually identified specific goals that will set them apart. They consider these extremely important and as such, refuse to rest on their laurels.
While working on achieving one success, they are already laying the foundation for the next. And when they achieve that one, they’re already moving onto the next, and the next, and the next, until it seems they have an unbroken streak of almost never-ending success.
As we will see in the examples that follow, these companies identified extraordinary goals, found their groove and set about achieving them without letting up.
Compelling examples of companies that have found momentum
Industries all over the world are rife with examples of companies that found, sustained and even lost momentum. We will look at five examples of these companies, from the very big, to startups that found exceptional growth.
As BBC News puts it, Google “…doesn’t sell anything you could pick up and put in your pocket”. Yet, it is neck and neck with Apple as the most valuable company in the world. How did a latecomer search engine get to this point?
Google was born in 1995 in the Stanford University dorm room of Sergey Brin and Larry Page. They had a great idea at the time, to create a search engine that could index and present the chaotic mass of information available on the fledgeling internet.
But Google wasn’t the only search engine around then. Directories such as LookSmart, Excite, Yahoo Directory, Alta Vista, Business.com, Ask.com, and Galaxy were all equally popular then. What was different about Google? They had an extraordinary goal: “to organize the world’s information and make it universally accessible and useful”—no mean feat.
At the time, they developed PageRank, an algorithm that could rank websites based on relevance, thus delivering incredibly helpful information. Their bold and exciting algorithm, coupled with their unique goal to “find better answers” set them on a trajectory of exceptional growth.
You’ll notice something interesting at this point. There was nothing really groundbreaking about creating a search engine. Others existed, and before long after Google’s break out year in 1998, they could reasonably develop similar algorithms. But by then, Google already had the power of momentum working for it.
Although Google had the best search engine on the market at the time, its experience and the data it gained from a large user base allowed it to improve quickly. Essentially, its momentum created insights that when implemented, only led to even more momentum.
And it didn’t stop there either. The company has continued looking for ways to improve, many of which have been wildly successful. As of 2016, Google had acquired more than 180 companies, including Motorola, Nest Labs and YouTube. Apart from this, it kept adding new areas of business (Google News, Calendar, Gmail, etc.), and these have provided even more significant momentum.
Today, Alphabet, Google’s parent company has a share price of $1,483.46, an increase of almost 1,700% over its initial value. While it cannot be said that every single one of Google’s innovations has been successful, there’s no doubt that 20 years from now, the company will still be around in some form.
Walmart
When Sam Walton started Walmart in 1965, the norm concerning retail business was that large retail stores could not survive in small towns. The industry expected that there was less purchasing power in these locations and far fewer potential customers.
But the distinguishing factor in Sam’s Walmart was that he knew about customers and related deeply to them. He knew that customers in smaller towns, though less wealthy, would be more loyal if he met their needs thoroughly. He would be able to command a higher share of their income and potentially make much more. As a result, he was able to fashion a unique value proposition that would resonate with his customers: “Always low prices, Always”. And as the company was able to attract more customers and open new stores, it was able to deliver even more powerfully on this proposition.
The company gained momentum based on its extraordinary goal and highly specific top-level processes geared towards achieving that goal. By 1990, the company had become the largest retailer in the US, and by 1999, it was the largest private employer in the entire world with revenues more than $100 billion per annum.
However, as Professor J. C. Larreche of INSEAD says, “momentum doesn’t look after itself”. Walmart increasingly began to let its focus slip off the fundamental values that fueled its growth. It became out of touch with its communities and lost respect for its workers, and as a result, it began to lose momentum.
Today, Walmart is still huge, and the Waltons are amongst the richest in the world. But can you still regard it as the best and biggest in its industry?
Netflix
Netflix is perhaps the most powerful example of the momentum effect in a business. In only 20 years, Netflix went from an upstart DVD rental business to one of the largest entertainment companies in the world. How did they do it? By powerfully leveraging on the momentum effect.
When Netflix started in 1997, it appeared to be little more than a fledgeling DVD rental business struggling against the undisputed video rental industry leader, Blockbuster. However, what many didn’t know was that Netflix was there to play the long game.
Even at the time they started, founder Reed Hastings and Marc Randolph intended for Netflix to become the biggest entertainment company in the world. And to achieve this august aim, they resolved to find ways to create a fulfilling entertainment experience for customers.
In doing this, their first play was to introduce a mail order element to DVD rentals. So, customers could rent titles and have them sent over by mail then return the movies the same way once they were done.
Then, the company did something extraordinary. Between 1999 and 2000, they moved from a one-time rental fee model to a subscription model. This allowed them to understand better how customers used the service and also provided an essential metric against which to measure growth.
They kept refining their customer experience per individual and between 2003 to 2004; they introduced the Cinematch algorithm to personalize movie suggestions for subscribers. By the end of 2006, the company had more than 6.3 million subscribers, a 7-year CAGR of 79%.
Even though it had reached a 90% renewal rate by 2009, the company refused to rest on its achievements. From 2007, it put considerable resources into developing its internet video streaming capabilities at a time when everyone thought streaming was only a fad.
But this was an inspired decision, as the DVD market began to shrink from 2007. Even though the technology at the time wasn’t readily available, the company continued to pour resources into it, and before long, the company was rolling along at full speed again.
Even after its Qwikster incident, it just kept going strong, and by the time the company produced its first Netflix Original – House of Cards – in 2013, it was set to conquer the world. By 2017, the company had achieved the unprecedented: the number of subscribers on its platform exceeded the total number of cable TV subscribers in the US.
Today, Netflix is an undisputed worldwide leader in entertainment. With its unwavering focus on consistently refining the experience of its subscribers, the company triggered the momentum effect and has been riding it ever since.
Slack
Although it’s not as big as Google or Netflix, Slack also harnessed the power of momentum to access exceptional growth. From only 8,000 users in 2013, the company hit 1 million daily active users in 2015 thanks to the explosive effect of momentum.
It did this by the power of word of mouth referral, which was in turn fueled by its unwavering focus on user satisfaction. When it first started, the company made its product available to large, established companies like Flickr. This generated plenty of press coverage and brought in users.
But it didn’t rest there. When new users came in, they had many questions, and Slack painstakingly answered every single one, generating thousands of helps tickets and tweets a month. This attention to customer service secured the buy-in of numerous customers who in turn shared the product with their network, leading to a serious growth.
Today, Slack has considerably expanded to serve more than 10 million daily active users. But it is not resting there. It keeps putting effort into ensuring that its platform truly lives up to its promise as a seamless, stress-free way for teams to collaborate.
When WhatsApp first started, there was already Facebook, Twitter and Skype. It seemed the market was saturated, and there was no space for a lowly instant messaging platform. But founders Brian Acton and Jan Koum had a plan and it was straightforward: to create a product without the baggage of similar apps at the time.
They introduced a platform that was brilliantly simple and adapted to the straightforward task of sending and receiving instant messages. With the addition of a 1-year free trial, people got on board quickly and the market that seemed saturated instantly opened up.
In just four years, WhatsApp outstripped the growth trajectories of Facebook, Gmail, Twitter and Skype, hitting 419 million users which was 274 million more users than the nearest contender.
By opting for a model that was dramatically different from what obtained at the time, they created a unique proposition.
Conclusion
These examples showcase the powerful effect that momentum can have on a company’s growth. But they also show that there’s much more to momentum than the end product of crazy growth and revenue numbers.
For companies that want to get the wind of momentum in their sails and ride the wave to success, significant work must first go on behind the scenes. As professor J.C Larreche says, these companies live by the motto: “first build your wave, then ride it”.