Last time we explored how Growth Teams are structured, typically in one of three ways: functional,independent, or hybrid. The model an organization chooses is influenced by a range of factors,including company size and team objectives.
In large organizations, it can be tricky to create the environment required for a Growth Team toflourish. That said, we believe putting effort and resources behind a growth capability is essentialto compete in a market where growth is table-stakes for survival.
Some companies have been more successful than others in driving sustained growth. In this essay,we’ll outline what we consider to be the keys to success in building this capability, as well asidentifying some of the most common pitfalls encountered along the way.
Optimize for the long term
In the early 2000s, a leading high-tech player with extensive enterprise and consumer businesses made a strategic decision to grow enterprise value. As a result, between 2005 and 2010, the company’s revenue grew nearly 50%. Since then, however, the company’s growth has slowed. The reason traces back to their decision to optimize short-term revenue – a decision that came at the cost of investing in product innovation.
The shift to focus on ROI rather than core product value meant that the company had unintentionally alienated its existing customer base. So, when a competitor that could offer a better product emerged, the company struggled to sustain its growth. However, the consequences were not immediate. In fact, it took the company nearly six years to realize that it had a growth problem.
notThe lesson that we can learn from this high-tech company’s experience. The key to success lies in having the discipline to optimize for whatever offers the shortest and most immediate ROI. Focus instead on the sustainable metric that allows you to build something useful and long-lasting.
How to build your Growth Team
To deliver sustained growth, Growth Teams need to follow a six-stage structured process tied to a clearly defined corporate strategy.
1. Evaluate your company’s market position
The first step is to ensure that your offering has a strong product/market fit.
This comes down to the strength of the core product: without strong retention, there’s no point in having a Growth Team because there will always be a leaky bucket. Look at Airbnb, for example, viral growth accelerated when a Growth Team focused on the six platform features it identified as most likely to drive scale.
Along with product/market fit and retention, it’s best practice to ensure that your company has developed target customer personas – detailed descriptions of fictionalized personas representing your core markets. These personas should be based on robust market data and will have the characteristics of ideal customers, with assigned demographic status, interests, motivations, and purchasing behaviors.
Another crucial consideration is timing. One of the most common mistakes is trying to focus on rapid growth too soon. According to Chamath Palihapitiya, the most important action they took at Facebook in the early days: eliminate any discussion of virality1. Instead, their exclusive focus was answering the three most difficult questions that companies face: 1) how do you get people through the front door? 2) how do you get them to an “aha moment” as soon as possible (i.e., how do you get them to realize the core product value and convert) and 3) how do you deliver core product value as often as possible (i.e., retention).
Only after Facebook had consolidated core product value and customer strategy, did they start to consider how they could get more of their users to bring more people onto the platform1. In contrast, there have been countless examples of companies that have focused on viral growth too early. They see meteoric rises, followed by massive falls because they haven’t solved for those three most important questions centered on core product value and customer behavior.
2. Identify your team’s goals
Provide a platform for success.
Now that you’ve demonstrated product/market fit, have stable retention, and feel comfortable with your established customer segments, it’s time to identify the team’s goals. At this stage, it’s okay to keep these objectives at a high level, but leadership should clearly define and align on the Growth Team’s mission, the problems it will solve, and its specific areas of focus.
For example, Google stood up a Growth Team to focus on driving adoption of the core product in emerging markets. This team spawned an entire division dedicated to driving adoption through new products focused on unique needs in emerging markets. As users got their first taste of the web, it was through this team that Google became synonymous with the internet2.
Once all these are clearly identified, leadership should circumscribe ownership and authority for its Growth Team. Because they’re all-encompassing – focused on every stage of the product funnel and across all functions (marketing, engineering, etc.) – friction between Growth Teams and existing teams can develop. To address this, leadership should clearly define the authority that their Growth Teams have and reinforce that with visible support and influence. Otherwise, the Growth Team will lack the ability to drive growth effectively.
3. It all starts with your Growth Lead
Building the right team with the right characteristics is vital.
This starts with your Growth Lead. This person oversees standing up the Growth Team and ensures intensity and focus. Companies need someone in this role who has the respect of product (and other) teams required to build buy-in, and the growth-focused mindset and social capital needed to secure respect among their peers. Of course, all of this should be combined with a deep knowledge of the market into which they’re trying to expand.
From the start, it’s important to develop and foster an impact-driven focus in the Growth Team. New Growth Teams can often fall into the trap of focusing on their own beliefs, the loudest customer complaints, or the prettiest, most challenging problems to solve. Effective hiring and a data-driven approach both help to counter this.
First, recruit and hire employees who are motivated by driving impact. It’s common to have a desire to work on the most challenging company problems, the sexiest marketing campaigns, and the most publicized product features. These do not, however, always correlate with the highest level of business impact.
Second, companies should ensure that the proper procedures and checks are in place to focus the team’s time on the most impactful growth initiatives. This is accomplished through qualitative and quantitative evidence requirements and constantly challenging the importance of projects. These teams should also be rid of the mundane bureaucracy that slows down many companies.
4. Build out your team
It’s important to focus initially on a small team to spearhead a growth initiative, then build out from there.
For this reason, Amazon chose to keep team size below the number of people who can be fed by two pizzas. There’s a learning curve associated with a successful Growth Team and it takes time to put the relevant capabilities and competencies in place.
Starting small is especially important for SMBs or resource-constrained companies. Once this team has demonstrated success through company growth, that will trickle down to an expanded budget and increased resourcing and staffing. Each company’s needs will vary, but common positions needed to fill out a team include a Growth Engineer, Growth Marketer, Growth Data Analyst, and a Growth Designer.
5. Determine the appropriate team structure
Leaders often choose from three different Growth Team models: functional, independent, and hybrid.
Naturally, there will be tradeoffs to consider for each one, and companies should choose the model with the most easily navigable negative implications.
6. Get to work: hypothesize, test, iterate, repeat
A Growth Team is a tool that hypergrowth companies have successfully used to target, capture, and exploit growth.
The C-suite – often led by the Chief Strategy Officer, Chief Revenue Officer, or Chief Growth Officer – is on point for setting the vision. This leader is responsible for identifying what growth looks like and defining success metrics. The Growth Team should report directly to this leader and work through a series of steps:
The first order of business is to IDENTIFY the potential metrics that correlate to the growth vision. Successful Growth Teams start by identifying a long list of potential growth metrics to influence and prioritize impact-driven (over activity-driven) metrics. A common trap is for teams to measure success based on the number of campaigns launched, features introduced, or new products developed. These are all important metrics, but they don’t necessarily result in growth. Try focusing instead on the extent to which a campaign increases sales driven, session time, and new user acquisition.
Next, Growth Teams should TEST the long list of metrics based on hypotheses on how they drive growth. Test historical scenarios through modeling and, more importantly, run rapid sprints to evaluate how changing a given metric drives desired behavior.
PRIORITIZE metrics to focus on, choosing no more than a handful initially. Expand these into a longer list to monitor over time.
ACT by partnering with product, engineering, and marketing to target each metric, while constantly monitoring whether a metric is impacting overall growth.
Don’t be afraid to DISRUPT yourself. If a growth metric is not yielding overall growth in line with the initial hypothesis, revisit the prioritized list and evaluate others for consideration.