By Sean Ellis, CEO of Growthhackers.com
My mission for the last several years has been to figure out ways to help startups reach the revered unicorn status. I myself have enjoyed the journey several times as a growth leader, but have found it very difficult to help others achieve this level of success as an outsider. In trying to figure out ways to guide others to large successes, I decided to step back and analyze what really mattered for our breakout growth. I’ve boiled it down to the following three key factors:
- Achieved strong product/market fit
- Obsessive experimentation to “figure out how to scale growth”
- Pushed through organizational friction with strong CEO support
1. Achieved Strong Product/Market Fit
Unfortunately, product/market fit has proven elusive for many companies. It’s just very hard to predict what customers will truly love.
For anyone that aspires to be successful in a growth role, you are wasting your time if you are in a pre-product/market fit situation. I know that last sentences may upset some founders out there, but the truth is that you are wasting your precious capital paying a marketing or growth salary if you have not reached product/market fit. There is no amount of growth execution that can make up for a lack of product/market fit.
But once you have achieved product/market fit, you have created an amazing asset that should be fully leveraged to drive true customer impact.
2. Obsessive Experimentation to “Figure Out How to Scale Growth”
Successful growth starts with understanding your product/market fit. On the “market” side you need to understand what the market that needs your product looks like, and why they believe it is a necessity. On the “product” side, you need to understand the product experience that makes it a “must have.”
Once you have uncovered these critical insights about your market and product, it is largely about aggressively executing to connect the dots. The challenge is that there isn’t a single team that controls these dots. Traditional organizations have a marketing team that works to understand and attract the target market to try your product, and a product organization works to make the product as appealing as possible once someone has tried it. Most product teams have a long list of features and improvements that they hope will make it more appealing to existing customers and maybe make it possible to expand into additional market segments.
Unfortunately, this is a pretty simplistic view of how growth works. Even so, it still would require an effective handoff of the customer between marketing and product. What generally happens is that neither team spends a lot of time thinking about the first time user experience. It is this onboarding experience where most potential customers are lost. New users that don’t have a great first experience rarely come back for a second experience.
The most effective growth companies work to understand all steps in the customer creation process from consideration, to onboarding and activation, to optimizing referral and engagement loops and finally optimizing monetization. By holistically executing across all of these growth levers, teams are able to generate substantially more revenue from prospects and can afford to spend a lot more money attracting new customers. Sometimes, as in the case we had at Dropbox, the integrated customer creation machine becomes so effective that the company does not need to spend money on external customer acquisition channels. When that happens, rapid customer growth tends to scale much more sustainably (Dropbox was the fastest SaaS business ever to reach a $1B revenue run rate).
Unfortunately, the challenge of working cross-functionally has proven insurmountable for many companies. That brings us to the final point.
3. Pushed through organizational friction with strong CEO support
I was fortunate that every one of the unicorns that I helped build was still in the very early stages when I started with them. They were past product/market fit, but the organization was still malleable so we didn’t have to break down the siloed culture and habits of later stage companies. Yet even in these companies, I needed CEO support to align all teams around driving growth. For example, Dropbox only had seven employees when I joined, but I needed to work closely with CEO Drew Houston to encourage the engineering team to implement early experiments. Eventually, the successful experiments helped the team buy into the process and develop the needed growth mindset to continue testing momentum.
Later stage companies have a much harder time adopting the cross-functional growth approach that has proven so effective in today’s fastest growing companies. Siloed culture and habits are often too deeply rooted to displace. Outside of Silicon Valley, most new companies are still setting themselves up to mirror the siloed approach of yesteryear so even early-stage startups need to transform.
Breaking through these legacy habits requires a rethinking and resetting of your company’s entire approach to growth. I’ve tried a more gradual approach in the past but these teams always seemed to fall back into their old ways.
Solving the Organizational Friction Challenge
Fortunately, the right path to getting teams to reset and rethink their approach to growth is easier than it sounds. I’ve developed and continue to refine a program that strives to help teams buy into and achieve this transformation.
I start by getting teams to take a step back, focusing on the overall company mission and how the company impacts customers’ needs. After we’ve established how customers get value, then we break down all elements of your value delivery engine. Once your team has a good understanding of this value delivery engine, well be in a much better position to talk about how the cross-functional teams can better work together to accelerate this value delivery engine. Sometimes that means introducing a growth team, other times it means just enhancing cross-functional cooperation for driving improvement.
Last week I delivered this program to a 20-year-old company in the Boston area, and it was amazing to see the walls break down between various silos. I’m confident that the positive energy and agreed approach to execution will keep this business on the right path as they transform how they work together to grow.
I also had the opportunity to work several dozen companies across Europe in recent months in group workshop formats. For these workshops, I typically work with 8–10 companies who send a group of the cross-functional team leaders to the full-day workshop. In each section of the workshop, I train the team on a key growth concept and then they work together to apply it to their business. I try to keep the workshops small enough so I can provide hands-on help to each team.
I know I’ll continue to refine and improve the program, but it’s extremely gratifying to get positive feedback from the teams that have participated. Many have shared that not only has the cross-functional growth process cooperation taken root, but they are also already seeing significant improvements in results. I was excited recently when a company invited me back for a 3rd private workshop. This is a fairly large company and each private workshop has been for a different business unit, but it’s very encouraging to know that word is spreading from one business unit to another business unit about the value of the program. I’ve also had two other companies that traveled to attend my public workshops invite me back to their home city so more of their team members can experience it. I’m sure in both cases, they were surprised how much the program had evolved from the time they experienced it only a few months prior.
While running the workshops can be exhausting, the real-time feedback I get while helping to break down the walls between silos and establish cross-functional growth habits has been so exciting that I’m often able to maintain a pretty intense workshop schedule on my international trips.
It may be surprising that I haven’t yet run this workshop publicly in the USA. With our book in so many languages, my time has largely been booked for international public workshops in addition to private workshops both abroad and in the USA. I’m trying to find a time and venue in mid-October to run a workshop in the SF Bay Area and then I plan to do a broader USA workshop tour in early 2020. For most of the rest of 2019, I’m back on the road for several international workshop tours. Here is a full schedule of my workshops including several in Europe and one in Brazil.
If you would like to understand more about developing and growing products as a start-up or within an organization, you can obtain more information here.
Note: All images have been taken from Canva.com and are not subject to copyright.