Around 1995, we found a substance that could bend time in the business community -- it was called Venture Capital. With enough of it, we could compress the evolution of a startup company from a few decades to a few years. Companies like Amazon, eBay and most recently Google showed us that billion dollar companies could be built in years, not decades.
What was more interesting is that these companies began growing faster even as the venture capital markets dried up completely. They found a better approach to growing at a dizzying rate – by compressing time.
Compression in Action
Compressing time in a business means reducing the time between two salient points of development. For example, reducing the amount of time it takes to acquire a customer. Or reducing the amount of time it takes to service that same customer. Or even better, reducing the amount of time it takes to get paid by that customer!
The bane of most business plans is that they quickly fall into the rut of doing what seems obvious, creating a sequential and time-intensive approach to growth. Amazon could have started out with one small store and then built that store out over time. Instead, they conceived (and built) the world’s largest book store from the get-go, and then spent the rest of their time keeping that store in business. They essentially built their company backwards.
The bane of most business plans is that they quickly fall into the rut of doing what seems obvious, creating a sequential and time-intensive approach to growth.
Google and eBay took a different approach. They realized that in order to grow fast they would have to acquire customers at an alarming rate. They also realized that they would need to acquire millions of free customers in order to get hundreds of paying customers. Their models essentially gave the services away for free in order to compress the timelines of customer acquisition. With a huge network of customers in hand, they can now spend their time servicing the paying customers that shook out along the way.
Squeezing out the Empty Space
When I talk about squeezing out the empty space, I’m not talking about getting rid of the BizDev Team. I’m talking getting rid of the bloated, sequential processes that keep companies from growing faster. Let’s start with a problem that just about every business faces – the time it takes to acquire and service a customer.
With an eye on compression, the first thing we should do is agree on the goal. The goal is to get the customer to pay for your service. Everything else is just a means to that end.
For our own purposes, we’ll say we are a consulting company that sells it’s time to clients for a fee. We may decide that we can condense our sales cycles by picking up work that other companies have sold and providing our people on those projects. Instead of spending time soliciting clients, we could spend our time billing them.
Or we may decide that our sales cycle is efficient, but it takes too long to hire and train people. In this case we might decide to outsource the work we bring in, saving ourselves the time and expense of recruiting a team of our own. Once again we are able to compress the time it takes to collect our fees (and reinvest them) which ultimately grows the business faster.