Business momentum. Everyone seems to have heard of it, yet you won’t see it extensively catalogued all over, as most business concepts ordinarily are.
In fact, if you have ever tried a Google search on the subject of momentum, you’ll likely have noticed that the chances you’ll get something meaty on Google’s first page are 1 in 10. Beyond that, it’s mostly a lot of high-sounding words with no real substance.
Well, as from today, I’m starting a blog series that deals extensively with the concept of business momentum. What does Momentum mean? How do you recognize it? Is it really that important to your business, and how do you make it work for you? All of these are questions that I’ll take to the cleaners over the course of this series.
I decided to do a deep dive into the subject of business momentum because it has also been an elusive subject for me. Over my years of experience as a startup founder of a High-Tech company, I have been in many situations where the available information on a subject simply wasn’t practical or abundant enough. As a result, I spent much time looking deeply into, and thinking hard about the concept of momentum and that research has led to these articles.
But what will be different here compared to all the other posts and blogs on momentum? I aim to provide an entirely honest perspective of the concept, based on the information I’ve been able to find, and my own experience with momentum — both working for me and against me.
Here are my thoughts on to the concept of business momentum.
What is business momentum?
In the simplest terms, momentum describes the phenomenon observed when a business hits a run of success or “good luck”. It represents a level at which a company operates where its brand, products and market demand are flying high. Everything the business tries seems to come off, and even when it hits minor snags, it just can’t seem to be stopped.
The point of momentum is that period when everything seems to be going the way of a business, and it can access better opportunities at a faster clip than usual. Momentum always has a starting point. For instance, if a random “influencer” customer enjoys your product and tweets about it to his/her huge following. With every new customer that comes and leaves satisfied, you set off a chain reaction of motion that just keeps propelling new business. That single tweet can kickstart a string of momentum that can last for years. And that is what makes the concept of momentum so elusive and vague.
For me, those moments when I experienced spikes of momentum felt sacred. As a founder, I could almost see those spikes of momentum happen in front of us. It was like a mystical breeze in the air. Everything — and I mean everything — would just seem to be going our way. Customers just can’t seem to get enough of your product, they sign contracts faster than usual, and reporters are falling over themselves to interview you.
But these are my words, what are others saying about momentum?
When a business is high on momentum, it becomes a serial success. J.C. Larreche, professor at INSEAD, describes these companies as having found a way to deliver “continuous, exceptional growth, year after year”. He called this the “momentum effect”.
The interesting distinction he’s making is the fact that momentum correlates with longer periods of continues exceptional growth year after year.
Business momentum is the sporting equivalent of hitting home runs with every swing of the bat. So for those of you that don’t get it yet. Here are a few other examples from popular parlance:
- When they say, a sports team is on a roll, what people mean is that they have momentum. If you’re a soccer fan, you’ll appreciate that Liverpool FC, a team that was struggling for relevance a few short years ago (and now regarded as possibly the best in the world) are enjoying the momentum effect.
- Ever seen a landslide start? It could begin with a single snowball or one or two sheets of snow. But as it is pulled downwards by gravity, it gets bigger and starts to go faster. Before long, it’s moving at the speed of a locomotive. And speaking of locomotives…
- At rest, a train can be kept in place with almost insignificant effort — a little wooden block under one wheel works. But when it gets going, it can smash through a 5-feet concrete wall and keep going.
These examples show momentum in its purely conceptual state, and they point to one fact: when something begins moving the right way and continues like that, it builds up speed. If it stays in that direction, without letting anything interfere with its forward motion, it becomes unstoppable. That is momentum.
When it’s put like this, business momentum seems like a straightforward idea. But that can often be misleading. This is because the concept can be quite intangible in practice. For instance, how do you tell if you have business momentum? I spoke about the feeling of momentum before, but as a reader, you can hardly do anything with my opinion or feelings. So, how can you measure momentum? If you don’t have it, how do you go about getting it?
All these are essential questions that I’ll address over the course of this series. But first, let’s answer one question that I see people ask all too often. Is it vital for your startup to harness the power of business momentum to become propitious?
Does a business need momentum to be hugely successful?
Although this might not surprise you, the simple answer is not that simple. There’s a general tendency to assume business momentum is something every business should strive to obtain. Almost like it’s some mystical element that you need to grab. Something once you have it, you can’t let go of, or you’ll lose the wind in your sails. “Ride that momentum”, you hear your mentors say, or: “you should ask those advisors quickly since you have this momentum”.
But that doesn’t make any sense at all, for the primary reason that real momentum, most of the time, equals exceptional periods of growth. Nine out ten times, real momentum results in extreme, sustained growth. So, If your business is not growing at an excessive rate over an extended period of time, you don’t have real momentum. Momentum in itself like the locomotive is unstoppable once it’s going. If you only experience spikes of momentum, those are just spikes, and they are no real business momentum. What I’m trying to say here is that very few people have experienced real business momentum. As I’m writing this, I can only say that I have only experienced blips on the radar screen that is momentum. Like I said before, I’ve experienced spikes of momentum.
This means that it is rare, highly coveted and a trait more commonly associated with businesses that have become game-changers in their industry. It’s just like becoming a unicorn. All businesses can technically attain this status, but the vast majority won’t. Of tens of thousands of companies around the world, there have never been more than 500 unicorns worldwide.
However, unlike becoming a unicorn, the problem is not that businesses are generally unable to achieve momentum. Instead, most are unable to sustain momentum.
It is useful for us to appreciate the difference between momentum spikes and prolonged momentum. Continued momentum indicates sustained periods of exceptional growth, while momentum spikes are more like lucky breaks you enjoy due to a few right compounding decisions.
As a startup, if you have enjoyed any kind of prolonged success — a series of highly successful funding rounds, in a brief period, for instance — you’ve had a taste of business momentum. We’ve all had it. That point at which you feel everything is coming together when you’re on a hot streak when you suddenly think “Oh my God, it looks like we’ll pull this off”.
But most businesses eventually lose that feeling. Things become more measured, steady, safe. You’re posting pretty decent profits year-on-year, and your business remains a solid bet. But no one’s going crazy about what you’ve done.
To be sure, it’s perfectly fine if your business does not have momentum. You can still be successful without it. For instance, who would you say currently has momentum between Google, Yahoo and IBM? You’ll probably pick Google. But does it mean the others are failures? No. Well, maybe Yahoo could have done better… But the answer is no. IBM is still a hugely successful company while you could hardly say it has momentum at this moment in time.
So, while achieving business momentum is great, it’s not a determinant of overall business success. Instead, when we start talking about momentum, we’re talking about really pushing on and taking your business to the highest levels it can attain year after year like an unstoppable object.
How does business momentum work?
There are several types of momentum across disciplines. In the capital markets industry, there’s talk of the momentum effect — a phenomenon where asset prices follow a specific trend for a long period. There’s also linear, angular and quasi-hyperbolic momentum in physics.
But in business, we refer to prolonged momentum and momentum spikes. As mentioned earlier, what we’re really concerned with here is prolonged momentum. How does it work?
In most businesses, success is achieved by mastering the daily grind. They learn to work off the fine margins and can adapt their processes to achieve repeatable success. Eventually, for these companies, the goal is usually to increase profitability, often at the expense of growth.
For instance, when a startup catches its first big breaks, the aim is to normalize that level of achievement. The business wants to attract more investors, build a prominent profile and claim its place amongst the ranks of established companies. As a result, there’s a tendency to prioritize profitability at a certain point, which can have a trade-off that decreases top-line growth.
But for companies harnessing the power of momentum, growth is just as vital, or even more important than profitability. When these companies achieve one success — and while they are still enjoying it, they’re already looking to the next, and the future, and the next. They can’t be stopped, and they don’t want to be stopped.
All of you know Elon Musk right? Elon is an excellent example of an entrepreneur who understands the power of momentum. When he got his first big payoff, he ploughed everything into PayPal. While PayPal was still trying to make its mark one step at a time, he had already started putting his money into the next big thing, Space X. He does not slow down while he’s successful because he knows he’ll lose his forward motion that way. While still enjoying the success, he keeps on working and already has his eye set on the next big achievement. He is the embodiment of business momentum. He keeps the train going head-on without stopping.
Similar to this, the mentality of momentum fueled companies is to identify the biggest opportunities for their company and go after them with laser focus. They deliver perfectly on their value proposition, and this provides a solid platform for growth. Then they act upon their growth prospects immediately.
But they don’t act haphazardly. Their decisions are not knee jerk. Momentum-fueled companies identify opportunities and put in a ton of work under the radar to establish that it can be done; they work out the best way to do it and deliver exceptionally.
Once they do this, everything else seems to take care of itself.
Final thoughts
Although business momentum is not something that every single business needs, or must aim for, or achieve, it can be a powerful force to achieve serious growth, if that’s what you’re after. To sum it all up. Momentum is a state, not a thing and only a few will experience real momentum.
If you want compounded success on success, go out there and find some momentum for yourself and just keep on going without looking back or slowing down.