How can a company seemingly come from nowhere to become a formidable competitor—if not a leader—in national and international markets? Some companies seem to rise suddenly or unexpectedly from subordinate or recently established positions to dominate markets and industries.

Our research has shown that these companies have not wasted time in pursuit of cure-all solutions. Instead the leaders of these businesses have applied strategic principles and practices that dramatically increase the possibility of establishing and retaining a strong market position. These are the principles and practices that, collectively, we call breakout strategy.

Four Ways of Getting on the Fast Track

The magic of any breakout strategy lies not in the strategy itself but in its fine details and implementation. It is not possible to develop a universally applicable formula for growth because every business situation depends on a myriad of circumstances relating to markets, competitors, and organizational capabilities. We can, however, learn to read strategic situations and manage strategic processes. It is important to recognize, for instance, that companies endeavoring to get on the fast track to business growth are doing so from very different starting positions. Our research has led us to the conclusion, given expression in Figure 1, there are in fact two main types associated with each breakout strategy. These types depend, in turn, on the nature of the growth opportunities the company perceives. All major growth opportunities ultimately require a superior value proposition, but there is a clear division between a proposition targeted to an emergent market and one targeted to an established market.

Companies that follow a taking-by-storm strategy in an emergent-market context are true originals. These companies typically are first or near first to market with a product or service whose features strongly resonate with the latent demands of potential customers. They tap into a previously unmet or unperceived reservoir of demand, and when that reservoir is large, the effect is akin to an oil exploration company's "hitting a gusher." Rapid growth follows. If the company is able to keep pace with the market, it becomes established as a market leader and is able to reap exceptional first-mover advantages, including the ability to command premium prices and internally generate the financial resources needed for double-digit growth. Two examples of true originals that we will examine in this article are Bob Dylan, the musician, and Google, the Internet company.

Companies that pursue a taking-by-storm breakout in an established-market context are revolutionaries. These companies seek rapid growth by changing the competitive rules of their chosen markets in a fundamental way. They may be just as innovative as true originals, but their brilliance takes the form of radically improving an existing product or service rather than of creating an entirely new market. They aim to win market share very quickly by giving customers a much better deal than those that are offered from existing suppliers—by delivering a superior product, a lower price, or both. Prime examples of revolutionaries that we will examine in this article are Boston Beer and IKEA.

The breakout phenomenon is not confined to start-up companies. Established companies that are laggards may be turned into leaders through successful pursuit of a transformational, growth-oriented breakout strategy, and in these cases, too, the basic distinction between emergent and established markets applies. Companies that pursue a laggard-to-leader strategy in an emergent-market context are wave riders. These companies have not previously displayed much potential for growth or transformation, but are trying to move from a subordinate to a dominant competitive position. At some point, and for reasons not always easily discerned by outsiders, they recognize the potential of an emerging market trend and make the decision to enter the competitive fray. Michelin and Glaxo are two examples.

Companies that pursue a laggard-to-leader strategy in an established-market context are big improvers. These companies stand out by suddenly coming to market with a radically improved value proposition. Customers quickly become aware the company has changed dramatically for the better; as a consequence, its revenues, reputation, and profits all move upward in a spiral of growth. Examples include Best Buy and Burberry.

True Originals: Bob Dylan and Google

As a musical artist, Bob Dylan indisputably is a true original. In the early 1960s, he carved out, shaped, and developed an entirely new market space within the contemporary music firmament. When Dylan left Minneapolis for New York in 1960, at age 19, he was an aspiring folk musician who played other people's songs in his own distinctive style. Like so many others trying to make it big, he began his career by playing the folk music clubs and bars in and around Greenwich Village. There was little money to be earned, and Dylan lived cheaply, relying on the goodwill of friends and acquaintances for somewhere to sleep. He was acutely aware of the gulf between his aspirations and his present status.

How, then, did Dylan move from being an unknown to being an international superstar within just a few years? What led to his being signed by a major record label, Columbia Records, and the release of his debut album in 1962? How did he succeed in taking the market by storm over the next few years? The trite but frequently cited explanation for his spectacular breakout is the youth of America were quick to recognize Dylan's genius; his words and music tapped into, reflected, and expressed the changing spirit of the times.

There is undoubtedly some truth in this, but exceptional creativity and happenstance alone are not sufficient to explain why Dylan emerged from the pack to capture the imagination of a generation. What Dylan had, and the majority of his fellow musicians did not have, was an instinctive understanding of how the game was played in the music business. He was able to take stock of his position, to set himself goals for improvement, and to take the practical steps necessary for breakout.

Dylan's brilliance as a practical strategist who made the most of his creative talents and originality can be seen in the way he spent his time and the choices he made prior to his breakout. Most obviously, he was a prodigious and accomplished social networker. He took the time to get to know and learn from the top folk artists of the day and he used his connections to get on the bill at top folk music venues such as the Gaslight and Gerde's Folk City, giving him much wider exposure. It was following a performance at Gerde's in the autumn of 1961, which got a rave review in the New York Times, that Dylan was signed to Columbia by the legendary record producer John Hammond.

Less obviously, but equally crucial to his breakout, Dylan worked very hard and deliberately to find his distinctive voice. He cultivated a unique and arresting performance style, reworking old songs and playing them very fast. He read widely —acquiring images and allusions that he would use in his later work.

When Dylan signed with Columbia in 1961, the company had seen enough to believe that he was a star in the making, but he had not yet completely formulated his "new template." This came with the album "The Freewheelin' Bob Dylan," which contained nine original songs and marked his breakout as an original artist. By creating the new template, Dylan had created a new and compelling value proposition, carefully crafted to meet the needs of the market space he was seeking to occupy. The songs were original, melodic, and beautifully performed. They were perfectly in tune with the sentiments of the generation that filled the university and college campuses across North America and Europe.

The decision to sign with Columbia, a behemoth of the establishment, may seem strange for a musician who is popularly seen as "the voice of protest." But Dylan always was more than this. He was ambitious and hungry for commercial success. Columbia was best placed to exploit his talent. It had global capabilities in production, distribution, marketing, and publicity, and, as Dylan was well aware, it knew how to make him a star.

True originals such as Dylan are iconic cultural figures precisely because of the effect they have on the cultural landscape. However, we should not lose sight of the fact that their celebrity stems ultimately from their commercial success, which, in turn, was the product of practical strategy and deliberate action. Breakout is rarely, if ever, accidental.

True originals have an enduring and transformational impact on society. They introduce to the world products that satisfy a widely felt, if previously unarticulated, need, and in the process they shape the way in which large numbers of people think, feel, and live their lives.

The breakout of the Internet search and indexing company Google since 1998 is a cultural phenomenon of similar magnitude. Google was the brainchild of two Stanford University computer science graduates, Larry Page and Sergey Brin, who as graduate students in the mid-1990s developed algorithms and software systems for ultrarapid Internet search and indexing. Search engines already existed, but none of them had the technological sophistication of Google, which returns answers to queries with lightning speed and ranks them by their likely importance and relevance. Google has improved the lives of countless millions of people by making valuable information routinely accessible at no cost.

For the user, Google's service is fast, reliable, easy to use, and free because the company's business model calls for Google to generate revenues through contextually relevant advertising and by making its technology available to other service providers. This, indeed, is a compelling value proposition to both end users and advertisers, and it accounts for the remarkable expansion of the service across the world.

Google is a classic case of breakout strategy in action. The company has the straightforward but supremely ambitious goal of organizing the world's information and making it universally accessible. Its aim is to improve the user experience, to make the service available to as many people as possible, and to develop new search technologies and products. Investment resources are plowed into infrastructure development, search-technology research, and operational improvements. From all this has sprung wireless search technology, different language versions, the capacity to handle documents in numerous formats, and customized search tools and services. It is a story of exceptional growth and organizational transformation from a small company to a global corporation within a few dramatic years.

To achieve this, Google put together an experienced senior management team under the leadership of CEO Eric Schmidt, and it created robust financial and commercial systems to complement its technological capabilities. Management leveraged the company's knowledge assets though partnerships with market-leading companies while cultivating the contacts and relationships that were needed to access rapidly emerging markets.

True originals, we may conclude, have their finger on the pulse of their time, showing an ability to rise above the immediate and focus on satisfying important social needs, capturing the Zeitgeist of the moment, and tapping into the fact that, in Dylan's immortal words, "the times they are a-changin'." In doing so, they help to form and forge the future. They also have the discipline, perseverance, and capabilities needed to deliver what they promise.

Revolutionaries: Boston Beer and IKEA

Revolutionary companies invariably are intensely market-facing. They perceive that customers could and should get a much better deal than any presently offered. They may identify quality or performance problems with existing products, or they may see ways of delivering products of similar quality at much lower prices. In essence, they believe that incumbent suppliers have become inward-facing and self-serving, comfortably complacent rather than dedicated to improving the lot of the customer. Upon entering the market, they almost invariably position themselves as "champions of the people," as luminaries striving for a much better deal for customers.

Jim Koch of the Boston Beer Company, for example, championed the cause of flavorful, high-quality beers brewed in the United States using traditional methods, with no artificial additives and only the finest ingredients. His starting position was to characterize the U.S. beer market of the early 1980s as having settled down into dull uniformity, dominated by mass-market brewers such as Miller and Anheuser-Busch, with the only real alternative to blandness being provided by imported foreign beers.

The launch of Sam Adams in 1984 as a top-quality "independent" U.S.-brewed lager not only put Boston Beer on the corporate map, but also triggered the microbrewery revolution that transformed the image of beer drinking in the United States. The company's success demonstrated there was a ready market for premium domestic brands—offering top quality at high prices—and in the process it extended the social reach of beer drinking.

Revolutions occur regularly in consumer markets. The founders of most great enterprises have humble beginnings but big dreams. In his teens, Ingvar Kamprad launched a mail-order business from a tiny shed in his hometown of Älmhult in southern Sweden. Lacking the resources to deliver the packages to his customers, Kamprad came up with a dependable, low-cost option: he arranged for his goods, which included nylon stockings and cigarette lighters, to be delivered by local milk trucks. This was the first of many creative approaches that he adopted to reduce costs and deliver what his customer wanted. Today, Ingvar Kamprad's company remains based in the small town of Älmhult, but it has long since outgrown using milk trucks for distribution. It also has moved on from its original product range and now offers the widest range of home furnishings to the greatest number of people around the world. In the process, its founder became one of the richest men in the world. Kamprad, through his company IKEA, revolutionized home furnishings.

So what are the revolutionary foundations of IKEA's breakout? IKEA changed the ground rules for competition in a dull, traditional market. When IKEA entered the fray, the home furnishings industry was characterized by large stores selling cheap, usually poor quality goods and small stores selling high-end, expensive pieces. The two types of stores had two things in common: poor value for money and a lack of customer orientation.

IKEA changed all this. Its flat-pack, self-assembly products, warehouse layout, and mass production techniques deliver cost savings that benefit the customer through low prices. Also, Kamprad emphasized cost-conscious design, giving his designers the task of being creative—but on a budget.

As with all successful breakout revolutionaries, customers' expectations were increasingly shaped by their experience with IKEA, and competitors had to respond through imitation or differentiation.

As IKEA's business and brand grew and expanded geographically, it took on another dimension. IKEA was fast becoming more than just a store; it was being transformed into a lifestyle choice. Some people describe this as a state of mind that revolves around contemporary design, low prices, wacky promotions, and an unrivaled enthusiasm.

IKEA has come to reflect an individual's personality and has even become a guardian of people's lifestyles. At a time when consumers face so many choices, IKEA provides a one-stop sanctuary for coolness. It has become far more than a purveyor of furniture and soft furnishings. It sells a lifestyle that customers around the world embrace as a sign they have good taste and recognize value. "If it wasn't for IKEA," wrote the British design magazine Icon, "most people would have no access to affordable contemporary design."

The most important thing about revolutionaries is that these companies ultimately have a major impact on their business realm, altering the perception of value in the eyes of consumers and redefining norms in the minds of competitors.

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