The Fibonacci Factor

Photo by Jitze Couperus

Photo by Jitze Couperus

Gone are the days when it would take generations of leaders to build billion dollar companies. Corporations like Amazon, Alphabet and Facebook have displayed tremendous growth, surpassing the long-lasting industrial behemoths within decades. The number of unicorn businesses has risen exponentially and the time required to develop into the unicorn stage has decreased in conjunction. 2018 was marked by 119 companies joining the club globally with 326 total companies in the unicorn category. Over 15 companies have achieved the status in less than two years with Jet, an e-commerce startup, becoming a unicorn in 4 months. The acceleration of startup culture and the paradigm shift in value can be attributed to multiple causes, most of which derive their roots from globalization.

The beginnings of globalization are still debated, with some placing it as long ago as the Bronze Age due to its inherent connection with human nature. The year 1989 marked the widespread adoption of globalization around the world, a direct consequence of a drastic increase in the size of the customer target sphere. Intensified competition has compelled the firms to differentiate their offerings. As a result, businesses have started discovering markets and are rigorously specializing in developing specific core competencies relevant to their markets. Thus, a chain reaction characterized by competition followed by its elimination through emerging markets has initiated and is playing a pivotal role in propelling innovation across every sector. Today, technology is becoming a very crucial element as companies are rapidly integrating software and automation capabilities. The second wave, i.e. globalization of information, has resulted in the cross-pollination of technologies leading to sustained improvement. In addition to the impetus and tools for scaling companies, the past decade has also witnessed an increase in the venture capital deployed globally with an annual number of deals expanding from 8,500 in 2010 to 14,800 in 2017. There has been an astounding 231% gain in the amount of capital invested in these seven years. Since the 2000s, globalization of venture deals has also resulted in the decentralization of the startup ecosystem worldwide.

The pre-globalization period constituted a small number of B2C businesses. However, the consumer has become the centre of operational and technological advancement today.

The consumer economy gave birth to the concept of e-commerce, one of the most significant innovations of the 21st Century. With sales totalling to 2.86 trillion USD in 2018, e-commerce is becoming the fundamental mechanism of almost every business for serving its customers globally.

Post the financial-crisis, the advances in automation have compelled people to up-skill. The dramatic rise in the number of startups during the same time has forged a symbiotic relationship between the two, thereby enhancing both of them simultaneously.

The unemployment rates in the United States, constituting about 48% of unicorn companies have dropped from 9.1% in 2011 to 3.6% as of April 2019. An increase in cultural diversity in the workplace has resulted as companies cross borders. With an increasingly diversified workforce, insights into different cultures are being gained – boosting sales and marketing. Diversity programs are having a positive impact on customer satisfaction with a noted improvement in the brand image for more than half of companies that have implemented them.

Of interest is the fact that globalization itself is evolving. The third phase, characterized by people will impact growth in unimaginable ways. With the rise in the service industry and the development of virtual reality and fully automated practices, we are gradually leading to an office-less world. With 53% of professionals telecommuting for at least half of the week, the trend is likely to increase substantially, thereby having a transformational impact on employee productivity. Globalization has been a subject of intense debate as it brings certain disadvantages with it as well. However, the evolutionary butterfly effect caused by the advantages associated is worth appreciating.