Growth Teams have a common purpose. As we covered in our first essay, they focus on maximizing one clearly defined metric to fuel hypergrowth. In that introduction, we explored how Growth Teams have evolved and how they all harness the power of network effects to achieve astonishing results.
But while they share a single goal – to fuel hypergrowth – how they are set up to achieve it can vary. That is what we will look at in this second essay.
There are, broadly speaking, three different ways to set up a Growth Team: functional, independent, and hybrid. Which model a business chooses will be determined by company size, team objectives, and consideration of various trade-offs that will have to be made.
But regardless of which model a company chooses, several key factors are necessary to ensure Growth Teams are effective. We’ll look at what the setup options are, the trade-offs they imply, and the key factors that make Growth Teams successful.
Functional, Independent, and Hybrid models
Growth Teams combine from the outset a cross-section of skills from different functions. A typical core team includes four to five key roles: a product manager, an engineer, a designer, a data scientist, and potentially a marketer1. In large organizations, representatives from finance, operations, or security may also be involved.
Let’s take a closer look at the three Growth Team set-ups:
1. Functional Growth Teams
These sit within separate functions and typically report to the VP of that function. Examples of companies using this structure are Twitter, LinkedIn and Dropbox.
Pros of Functional Growth Teams:
- Leverage support and resources from around the organization
- Force functions to break down silos and build lines of communication
- Ensure a growth mindset is incorporated into everyday teams
- Provide a higher level of transparency of growth efforts
Cons of Functional Growth Teams:
- Increase reporting lines as members report both to the growth lead and their existing boss
- Can generate conflicts of interest between Growth Team responsibilities and normal team alignment (e.g., metric focus)
- Reduce speed and agility
- Can lead to power struggles within a team
2. Independent Growth Teams
These are set up like a separate business unit and are typically headed by a VP of Growth. Individual functional capabilities work below this team and liaise with various functions across the business. Examples of companies using this structure are Yahoo, Uber and Facebook2 – and while Independent Growth Teams can clearly achieve outstanding results, they can also introduce some challenges – not least in creating power dynamic issues between growth team and product team objectives. We’ve outlined some of the benefits and drawbacks below:
Pros of Independent Growth Teams:
- Increase the ability to focus a team around one metric or goal due to streamlined reporting lines
- Alleviate power dynamic issues within the Growth Team
- Increase speed and agility
Cons of Independent Growth Teams:
- Suffer from becoming a trend and being forgotten or falling out of favor with leadership
- Can create power dynamic issues between Growth Team objectives and product team objectives
- Make it hard to maintain user experience and attain growth targets simultaneously
- Decrease transparency of growth efforts and can create distrust
3. Hybrid models
Companies can also structure their Growth Team as a hybrid of the two models. In this arrangement, some growth practitioners will report to the VP of Growth and others to their respective function’s VP.
Finally, and perhaps most importantly, Growth Teams must be set up for success. That means they need access to data, authority to act, and a company culture that embraces and encourages experimentation and change. Successful Growth Teams work outside the constraints of the larger organization. They enjoy broad authority to test changes in the product, customer experience, marketing messaging, and other dimensions.
Choosing the right model
Any company seeking to develop the capabilities required to drive rapid and substantial growth should explore what Growth Teams can do. But choosing the correct model structure can be difficult. The checklist below is designed to help guide that decision:
- If your organization tends to be siloed, Functional teams can help to bring things together and break down silos in the process.
- If you are targeting growth in an existing product and want to embed a growth mindset in that existing product team, the Functional option makes more sense.
- If you want to focus on speed and interaction, the Independent model is more impactful.
- Some companies design their own hybrid models when neither functional nor independent models align with their own operating model.
Weighing the options
Although there are some general guidelines that can help companies choose the best model for their business, studies show that Functional and Independent teams achieve broadly similar results. Companies should carefully weigh their options and evaluate how well their specific company structure will accommodate the possible tensions that either model may create. And as with so many other business initiatives, the choice of talent for the team and especially its leader will make all the difference. They must embody all the attributes needed to be successful.
That’s a quick summary of how Growth Teams can be structured. In the next essay in this series, we’ll look at how to get started with this process and what factors need to be in the mix for assembling a successful Growth Team.