According to most sources, Alexander V. Izosimov coined the term “hypergrowth” in April of 2008 to describe the “steep part of the S-curve that most young markets and industries experience at some point, where the winners get sorted from the losers.” Essentially, hypergrowth refers to an accelerated or rapid growth pattern of a certain industry or sector of the market. This can occur when a new technology or innovative product quickly gains popularity.
What Is an S-Curve?
To understand hypergrowth, it’s necessary to understand the S-curve that is referenced by Izosimov. An S-curve is a graphical depiction of data and will display any cumulative data. It is the growth of a variable in terms of another variable, which is often expressed as units of time. This is why it’s a popular way to illustrate hypergrowth.
Examples of Hypergrowth in Business
One well-known example of hypergrowth occurred within the cell phone industry in Russia. In the year 2003, market penetration in that industry was 20%. In simple terms, this means that 20% of Russian consumers owned a cell phone. At the time, this number was 50% of U.S. citizens.
However, after the 20% point in 2003, the Russian market only took 10 quarters, or two and a half years, to reach 80% market saturation. This huge burst in growth is what Izosimov called “hypergrowth.” That two-and-a-half-year burst is the “steep” part of the S-curve. It’s over in less than a blink of an eye as far as the markets go, but it leaves huge changes in its wake.
As startup culture has boomed, there have been many more instances of hypergrowth. Facebook, Google and Snapchat are all examples of social media and internet hypergrowth. These instances of hypergrowth are rarely perceptible as they occur. Instead, they seem to happen over night, with everyone using X product one day, and the next day everyone seems to be using Y product.
How to Achieve Hypergrowth
The internet makes hypergrowth both easier to achieve and harder to “survive” in many ways. Anyone in the startup world can tell you that the moment after your highest rise is the moment that you are most likely to fail. Flush with cash and eager to maintain momentum, there is a likelihood that owners of hypergrowth startups will either under-fund their new items or spend too much money on perks or other items that won’t help fund the bottom line.
Assessment of Hypergrowth
The World Economic Forum studied hypergrowth for around 10 months during the 2015 to 2016 fiscal year. They focused on attempting to understand what hypergrowth tells us about the possible future of enterprise and the likelihood that this phenomenon will continue to impact the world economy. In collaboration with EY, the World Economic Forum assessed nearly 200 companies to understand the key challenges facing companies when they encounter rapid growth and how that rapid growth is different between regional economies and industries.
According to Olivier Schwab, the head of business engagement at the World Economic Forum, “Hypergrowth is an important signal of the systemic opportunities in a transforming global economy . . . we are looking at the preconditions for hypergrowth and what they mean in a larger context for the future of enterprise.”
Because there has not been a lot of time since the coinage of the term “hypergrowth” and its effects on industry, there are not a lot of answers to be had about what the future of enterprise looks like. However, we do know that this steep incline is more of an indication that the next move a hypergrowth company makes must be made wisely or they will risk falling from the tremendous vantage they have reached.