Growth introduces unfamiliar challenges for organizations. One is the ability to balance efforts towards the core business while validating new opportunities for growth.
Many organizations work with the belief that they have a balance between the core business and new opportunities. This belief is tested when markets shift, competitors pivot, or existing growth curves flatten resulting in eventful slack threads.
Shifting focus in one direction will determine the sorts of skills and knowledge an organization accumulates. As a result, going too far one way can create an imbalance that is hard to shift.
In his book Loonshots, Safi Bahcall calls this change a ‘phase transition’:
“Phase transition: Imagine a large bathtub filled with water. Hit it with a hammer: a splash, and the hammer slips through the liquid. Lower the temp until the water freezes. Strike again, and the surface shatters.
The same molecule behaves like a liquid in one context and a rigid solid in another. If we drop a molecule of water onto a block of ice, what happens? It freezes. If we drop the same molecule into a pool of water, what happens? It slushes around with all the other molecules.” - Safi Bahcall
Using Bahcall’s example, growth lowers the temperature of an organization until it eventually freezes; Hacked together workflows and features scream for attention as usage skyrockets. Large lists of projects are created and hour-long resource meetings are held.
This core work needs to happen, but what Bahcall pushes for is finding a dynamic equilibrium between these two areas of work.
Leadership should embrace the philosophy that they must be right, and on time to win the market, which means riding an outside force that is out of their control. Validating or invalidating new opportunities will prepare the company for outside forces through an accelerated ability to learn.
“This is fundamentally about learning velocity, and whoever learns the fastest wins”
— MacMillan & McGrath
This isn’t an internal battle, it’s simply aligning the right people to the right projects. Looking at growth teams, companies can leverage their skillsets to optimize the core business and explore new opportunities for growth to help strike this balance.
Where do you position growth teams?
In ‘Discovery Driven Growth’, Rita Gunther McGrath & Ian C. MacMillan have a framework for diagnosing how a business balances their work.
They start with this question:
What’s actually going on in our company in terms of strategic initiatives?
Build a list and categorize them into the following quadrants:
An organization feeds its strategy into these quadrants to allocate resources appropriately. There is no perfect formula, your resourcing changes and shifts as the company faces new challenges and milestones.
For growth, I see teams fitting into the following quadrants:
Core Enhancements:
For growth teams, an increased volume of customers coming into the core business is a dream come true. The team runs multiple experiments concurrently across the funnel at a rapid rate with achievable sample sizes. They will focus on product onboarding, purchase flows, upgrade experiences, and retention loops to connect users to the existing value of the product. They are not looking to add to the core business. Instead, product teams will add value from platform launches and this creates more experiments and opportunities for growth to connect people to that value.
Scouting Options:
A business needs to unlock new channels, target new segments, and explore new business models. Growth teams have the skillsets to validate the uncertainty an organization has behind an idea. With no historical data or AB test to run, a growth team applies their scrappy approach to validate bigger swings without running into technical challenges.
The Clear Gap
You validate a new channel for the business, how does that get shipped into the core business?
Leaders need to manage the transition and separation of work that is tied to core enhancements and work that is tied to areas of uncertainty.
In this case, growth builds strong relationships with product. A product team is in the best position to take a validated idea and push it into the core business. Growth teams are built to validate and optimize, not ship big features or changes into the product.
“Finding this balance is difficult because these ideas follow such different paths. Surviving these journeys requires passionate intensely committed people, with very different skills and values.”
— Safi Bahcall
If you don't build strong ties with other product managers, two groups will work in complete silos, rarely influencing each other’s work. You may have a balance between core enhancements and scouting options, but with nothing in place to do something about those options, the impact won’t be felt.*
*Note: This is also applicable to product teams exploring opportunities in the "stepping stones" and "positioning options" quadrants. For example, a product team is diving into how to apply AI to the software. They figure it out! Who is working with them to integrate that into the core business? That team was built to discover and uncover how AI can be applied, not to bring AI into the core business.
Overall
Businesses need to diversify their portfolio of work as they scale. Leveraging McGrath & MacMillan's quadrants is one way of doing this. Growth teams should be positioned to optimize the existing business and validate new opportunities for growth.
Ensure you have leaders to manage the transfer of new ideas feeding into the core business. It takes a different skill-set and way of working to be successful within each area of focus. Both skill-sets are equally important, and aligning the right people to the right projects is a must to be successful.