Last time we looked at how to get started with a Growth Team, identifying the keys to success in building this capability and some of the pitfalls that organizations may encounter along the way.
Our work with leading platforms – large and those still in hypergrowth mode – gives us a unique vantage point on internet-driven disruption. In this essay, the fourth and last in the series, we share our perspective on eight characteristics of highly successful platforms, nearly all of which are present in the most disruptive industry leaders.
Growth Teams play a key role in embedding these characteristics – “platform accelerants” – into the fabric of the most successful internet companies. Whether they’re sustaining platform growth or in the process of becoming a platform, companies must stay focused on these accelerants, with Growth Teams ensuring the laser intensity of that focus right from the start.
Eight platform accelerants
This means creating a real step-change: whether that’s 10x better experience, lowering costs by 10x, or increasing speed by 10x.
The largest digital disruptors have done just this – making it quicker to find information, receive a purchase, stream a movie, or move people or packages. Platforms use Growth Teams to ensure that this emphasis on experience disruption is always a key focus for the business.
These teams often evolve as a company matures, moving on to ensure that 10x better isn’t just part of the company culture – it’s a mentality that’s baked into every new product.
So, while they often drive a lower ARPU, it’s on a base of users that is orders of magnitude larger than the companies they disrupt. Leading platforms create a positive feedback loop between user experience and reach, often combined with a negligible marginal cost structure and the ability to amortize spend across a large user base.
This enables disruptors to challenge incumbents with superior offerings at lower price points. Growth Teams are used by platforms to target growth opportunities that enable scale. One example? A leading streaming provider used Growth Teams to identify and target opportunities for driving growth in international markets at the first detection of organic uptake. This enabled the platform to expand opportunistically with limited marginal cost.
It’s where platforms take advantage of their large cash reserves and favorable cost-of-capital – as well as large user bases for cost amortization – to develop physical infrastructure and drive cost efficiencies.
This is how leaders widen the gap between disruptors and disrupted. Growth Teams are often the drivers behind major capex investments like these. Take Amazon, for example, which uses “two-pizza”-sized Growth Teams to drive its own monumental efforts.
This includes the major investments Amazon made in its delivery infrastructure to compete with the local leader in India1. The team was responsible for targeting the investment required and ensuring it was deployed in a way that quickly positioned the business for success.
This is underpinned by platforms’ flexibility, which allows them to adjust business models in real-time to introduce and monetize new features.
Growth Teams have played a key role at platforms by targeting value chain friction with user experience as the overarching goal. Tesla reimagined how cars are made and sold, Airbnb rearchitected how overnight stays are booked, and Uber disrupted last mile transportation.
All used some form of Growth Team to target and drive seismic and truly disruptive change. In doing so, they changed their markets completely.
Platforms achieve an extremely low-cost structure on a per-unit basis by pooling demand across a massive customer base and investing heavily to aggregate and control supply so they can better serve users.
Whether its drivers and riders, consumers and merchants, or eyeballs and content, vibrancy on both sides of the platform is critical to success. Growth Teams are widely used to identify and drive key metrics that ensure the flywheel of a platform starts to move and continues to spin faster.
On the buy side, this is often user growth or user engagement. Facebook famously identified that user retention dramatically increased when new users made seven friends or more in 10 days2. Others target sell-side metrics like the number of items listed. Through Growth Teams, companies can be laser-focused on a specific metric needed for success – ensuring platform growth is sustained.
They do this by tapping engineering talent in key technology hubs and accelerating their acquisition of strategy and operations talent through generous compensation packages, amenities, and brand equity.
Growth Teams are increasingly being applied to talent recruitment and retention. Bar-raisers at Amazon ensure that as the company has grown, the quality of talent increases with every hire3. With the fight for top talent intensifying as we emerge from the pandemic, expect to see more and more Growth Teams being applied to HR.
Digital disruptors innovate at an unmatchable pace, with the leaders continuously exploring non-core technologies and strengthening internal capabilities through in-house research, partnerships, and acquisitions.
Apple increased chip performance by nearly 3x between the A13 and A9 chip. Tesla extended car range by nearly 50% over six years. Cloud players, meanwhile, have reduced the price to transfer and store information by nearly 100% in a decade.
In many cases, Growth Teams were assigned to target long-term innovation that underpinned these advances. This focus on continual innovation has, for years now, enabled major platforms to avoid being disrupted themselves.
This clean-sheet approach goes hand in hand with a focus on business model purity and a drive to create material changes in the experiences they provide.
By solving for the robust system, it’s possible to completely redefine a category and the fundamentals of how things get done. Tesla did this by reimagining the car, from how its components are designed and sourced to how consumers buy. Amazon redesigned how consumers buy anything and everything, from how they find products to how those products are delivered.
Growth Teams play a key role in this focus on robust systems. They do this by tackling the most challenging components of a process or system with the goal of simplicity front of mind.
Driving forward momentous disruption
Eight accelerants have underpinned the momentous disruptions driven by platforms since the turn of the century. And Growth Teams have been used to weave these accelerants into the fabric of the most disruptive platforms of all.