Blueprint to a Billion by David Thomson
In a meeting last year, a prospective business partner in a position to know something about building a billion dollar business strongly recommended David Thomson’s Blueprint to a Billion: 7 Essentials to Achieve Exponential Growth. Mr Thompson, a former McKinsey consultant, examines 7 common essentials possessed by a set of 387 “Blueprint companies” that went from an IPO since 1980 to reached $1 billion in revenue (book published in 2006). While certainly applicable to start ups and early stage companies with big aspirations, this book is widely applicable to any leader looking to foster let alone attain radical growth.
Boiled down, Mr. Thompson’s quantitative and fact based analysis shows that “it is exponential revenue growth that makes a great company.” Ok, not a surprising revelation. But what is interesting about Mr. Thompson’s book is how he measures exponential growth. As opposed to using a companies founding year to start his analysis, Mr. Thompson anchors his models at “the inflection point – the point where the business demonstrates its breakout to exponential growth.” From this inflection point, Mr. Thompson observes that revenue growth has two parts: the time to the inflection point and then three trajectories to $1 billion in revenue that centered on a four [Google, Cisco], six [Microsoft, Starbucks] or twelve year [Fifth Third Bancorp, Dreyer's Ice Cream] trajectory.” What is also interesting about Mr. Thompson’s analysis is that his findings show that exponential growth can and does occur in any sector, not just the highly publicized IT sector.
Mr Thompson’s seven essentials are:
- Create and Sustain a Breakthrough Value Proposition: “= Addressed market segment x Targeted customer x higher-order benefits”
- Exploit a High Growth Market Segment: “The most successful Blueprint Companies focused their efforts on recognizing an ownable market space [in any industry] by discovering a desirable target and distinctly addressing unmet needs.”
- Marquee Customers Shape the Revenue Powerhouse: “…it is about securing deep relationships with a limited number of valued customers who become the rising tide for exponential revenue growth.”
- Leverage Big Brother Alliances for Breaking into New Markets: ”… Big Brothers realize that they need Little Brothers. They fear being left out of emerging markets or not being able to fill critical gaps in their portfolio with the latest innovation.” (Included in this section is an excellent discussion around P&G’s approach to innovation with little brothers.)
- Become the Masters of Exponential Returns: ”Within each of the Blueprint CEOs whom we interviewed, we found an overwhelming conviction that you had to be making money almost from the get-go, that no consideration was more important than cash and ROIC.”
- The Management Team: Inside-Outside Leadership: ”It takes a dynamic duo!”
- The Board: Comprised of Essentials Experts: ”… heavily weighted with alliance partners, customers, and CEOs who had scaled a business.”
Mr. Thompson weaves into his essentials facts, data and quotes from leaders at Genentech, Broadcom, Starbucks, Tenneco, Google, Juniper, Jet Blue, Home Depot, Staples, Williams-Sonoma, Fifth-Third Bancorp, Cisco, eBay, Performance Food Group, Microsoft and Proctor and Gamble. Each essential has extensive depth backed by stories around Blueprint companies like these and more which I leave to the reader to explore.
Mr. Thompson’s essentials are really more a fractal applicable to any exponential undertaking, not just those looking for exponential revenue growth to reach the $1B . He suggests using his essentials to shape business strategy, evaluate and train leadership, lead teams, shape investments among other things. My take away, among others, is that the Blueprint to a Billion offers a great lens through which to evaluate career opportunities, business partnerships and acqusitions!