Successful businesses are more alike than unalike. They share a common universal goal and employ a systematic approach to building a repeatable and scalable business model.

This manifesto show you how

By Ash Maurya, founder of Leanstack and writer of Running Lean and Scaling Lean.

1. All Businesses Share a Common Universal Goal

To make happy customers.

2. Making Happy Customers vs. Making Customers Happy

Making customers happy is easy. Just give them lots of stuff for free. But that doesn’t lead to a working business model.

Making happy customers, on the other hand, is not just about making customers feel good. It’s about making customers achieve results (desired outcomes).

Happy customers get you paid.

The work of making happy customers happens in a customer factory.

Every business has one.

3. Throughput (aka Traction) is The Goal

Traction is the only thing that matters.

4. The Customer Factory Blueprint

This process can be further broken down into 5 macro steps that can be found in all businesses: acquisition, activation, retention, referral, and revenue.

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The Customer Factory Blueprint

The customer factory represents everything inside your business: Your marketing, sales, customer service, and product.

5. The Activation Step is Where You Make Happy Customers

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Activation is where you make happy customers

This is where value is created for your customers. When you create value for your customers, they reciprocate — allowing you capture some of this value back in the form of monetizable value

Notice how the activation step has the most number of lines leading out of it. This is what makes activation a causal step.

Making customers happy at this step causes customers to
– buy from you,
– keep coming back, and
– refer others.

The inverse is also true.

6. The Customer Factory Isn’t Just A Cute Metaphor

We have been running real factories for a long time and have learned how to model and optimize them as systems.

Your business model is also a system.

7. Focus on Systems vs. Goals

Goals focus on outputs.
Systems focus on inputs.

Example: Goal: Losing 10 lbs.
System: Learning to eat right.

The problem with goals is that they don’t tell you how to achieve it or what to do when you achieve it. In the example above, a number of people can brute-force losing 10 lbs once through sheer willpower. But once that wears off, the weight comes back on.

Systems on the other hand, like learning to eat right, help you focus on key activities or routines that move you towards the goal. Once these key activities turn into habits, you not only achieve your goal, but shoot past it.

The best way then is to use goals for ballparking your desired outcome, and systems for formulating key steps to achieving the goal.

You still need to size up your goal because the effort that goes into losing 10 lbs is quite different from losing 100 lbs. But once a ballpark goal is set, like losing 10 lbs, does it really matter if you lose 9 lbs or 11 lbs ?

Focus your energy instead on building systems for helping you achieve the goal.

Systematizing the 5 macro steps in the customer factory blueprint is how you achieve your goals in a business model (aka growth).

8. Establishing Repeatability is a Prerequisite For Growth

Your customer factory is no different.

You can’t scale a business model that isn’t first repeatable.

Getting to your first 10 customers, while an achievement, isn’t repeatable if you don’t know where you next 10 customers will come from.

Random isn’t repeatable, which means it isn’t scalable.

When is the right time to start prioritizing for repeatability?
Right after your first sale.

If you don’t focus on establishing repeatable sales quick enough, you start getting pulled in many different directions, can easily lose focus, and hit a brick wall.

9. Grow Your Customer Factory Systematically in Stages

They often end up wasting needless time, money, and effort on the wrong things at the wrong time.

Going fast on everything is a recipe for getting lost faster.

The counter-intuitive mindset here isn’t speeding up to rush scalability, but rather slowing down to focus on building a repeatable customer factory in stages.

Every product goes through 3 stages:

  1. Problem/Solution fit,
  2. Product/Market fit, and
  3. Scale.

Each stage is essentially a customer factory.

The difference across the stages is the amount of throughput (i.e. number of happy customers) that you repeatably generate.

In other words, each stage is essentially a smaller-scale version of the next stage.

Optimizing your customer factory in stages helps you focus on the right actions at the right time.

10. Systematic Growth Comes From Focusing on Constraints

Startups constraints - help by using a business coach or Leanstack coach

Focus on your constraints.

At any given point in time, there is always a single weakest link or constraint. Growth comes from correctly identifying, prioritizing, and breaking this constraint.

80% of your entire team’s effort should be focused on your weakest link and nothing else.

Once a constraint is broken, search for the next constraint, and repeat the process.

How do you know when a constraint is broken? When your customer factory throughput goes up as a result of something you just did.

Yes, this is the Theory of Constraints applied to the Customer Factory.

11. The Customer Factory is non-linear

Sometimes 1 + 1 + 1 can equal 5. This is when every step in your customer factory is aligned for customer value creation (making happy customers) — creating a compounding effect.

Other times, 1 + 1 + 1 can equal -2. This is when you attempt to brute-force or game a step at the expense of making happy customers.

Examples:

  • Using sleazy or aggressive sales tactics to close,
  • driving low quality leads into your customer factory.

These short term tactics may work to locally optimize a step, but at the expense of your overall throughput (and operating costs).

12. Focus on the bigger context

Your customer’s desired outcomes live in the bigger context.

Your customers don’t care about your solution but about achieving their desired outcomes.

If you continuously focus your efforts on removing the obstacles standing in the way of your customer’s desired outcomes, you systematically build a repeatable and scalable customer factory.

You win.

To read my next article on “Don’t be fooled, these are 8 reasons why entrepreneurs fail and how you can beat them”, click here.