What’s the best structure for Growth? Part 1
Updated: Nov 24, 2020
What’s Stopping your Growth?: How to identify constraints and blockers
In the first of this ‘What’s the best structure for Growth’ three-part series, Yara Paoli, founder of GROWTH OS, explains how to identify the blockers that may be inhibiting your business’ growth as the first necessary step to understand how to structure your company.
I have always thought of ‘growth’ as being a personal project first. My career in business growth was just a natural progression from my interest in human development. Because as soon as you are born, your mind, heart and body are continuously asked to learn and grow.
I have been acutely aware of this since I was a child and this interest led me to study developmental and clinical psychology, where I learned about the stages, processes and dysfunctions of growth in children and adolescents.
I then moved on to learn about organizational psychology and how you can impact growth through behavioral, cultural and systemic approaches. This lifetime of fascination with growth at a personal, group and organisational level, has naturally led me to growth marketing and growth methodology, at first for startups, then to Growth as an Operating System where I help scale-ups to unlock their growth potential.
In this first part of this series I talk about the ‘user-centric’ blockers that might inhibit your company’s growth. In part two, I will dig into the people part of the equation, and why company politics and the desire for power can inhibit growth if not checked, and in the third and final part I’ll present examples of successful growth structures for different stages and types of organisation.
What is the best structure for growth?
This is the number one question I get asked by the startups and scaleups that I work with, and by the audiences at conferences and events, when I speak about growth from a business perspective.
It’s a very good question to ask. Every business wants to create the perfect structure within their organisation that will unlock growth and lead them to new successes. But the question is often asked with the wrong intention, focusing on the surface and not the depth of a problem, namely: “If I make some random change to the structure of my company, I will be able to impact growth positively”.
Without careful consideration and execution, the opposite is more likely to happen; the disruption caused by structural changes will reduce, not increase your growth. If you are not ready to understand the real reasons for your structure to exist and the root causes for which the existing one is not helping you to achieve your growth goals, it’s highly unlikely any change will systematically deliver more growth.
Leaders or founders who ask me this question often expect me to reveal a simple organisational chart that will magically unlock greater growth, rather than being open and ready to dig into the “why” a structure exists and what growth problem or opportunity could be addressed with a structural change.
It’s important to understand that the best company structure is not about a ‘shiny’ new growth team that you can show off, but a deep molecular change to your organization aimed at becoming more functional in unlocking growth systematically. This means arranging your organization to enable better connections between your company vision, the people and functions that make that vision happen, and the tools required to execute that vision. When done correctly - this allows growth to be achieved better, faster, more sustainably, more creatively, more efficiently and more painlessly.
The Inconvenient truth: there is no single perfect structure for growth
Given that the question of the best organisational growth structure is such an important topic, I would like to dig deeper into it. I will do this by helping you to identify the questions you need to ask of your organisation, not necessarily by giving one answer. Because unfortunately, there is no single perfect structure for growth.
Let me tell you why. Your structure needs to keep adjusting as you grow, and depends on the maturity of your organisation. The structure that helps a start-up with 50 employees get to their next 100,000 users, will be completely different for a scale-up of 500 employees. A business that is pre-PMF (product market fit) will benefit from a different structure to a business that is post-PMF. A company that already has a growth team in place, will have different requirements to one that does not. And your level of cross-functional collaboration, from ‘pretty decent’ to ‘almost non-existent’ will also factor strongly into what growth structure will benefit you most. In this sense, the perfect structure exists, and is the one that can enable your people to flexibly adapt to new business heights and needs, because growth is never a completed task.
I often find that when someone asks me about the “best” structure for growth, they have only just started the journey of understanding “growth”. In more traditional company settings, you think about a change in structure as you want to impact your customer acquisition, or your revenue. But the journey from acquisition to revenue passes through several other key phases: activation, retention, referrals and especially through the sustainable creation of value for the users and understanding how to connect that value to an increasing number of users, with an increasing ‘stickiness’ to your product.
So, that question allows me to explore how a company has considered growth so far and why it is asking that question right now. Most likely it is because they are reaching, or have already reached an inflection point, where their user numbers are not growing as fast as desired, or revenue is flatlining. Or perhaps it’s because they have achieved product market fit in one market, but now want to scale their product and open up to new markets.
Your company structure is your best enabler of growth
The good news is that your company structure is overall the best enabler of your business growth. Ultimately, without the people who build, maintain and sell your product, your business does not exist. So organising and enabling your people for optimal growth is the best thing you can do to achieve growth.
A functional company structure is one where people know their place, their function, the expectations that come with their role, but especially know very well how the parts of the structure can collaborate with each other to grow even further and where politics do not creep in to diminish team impact in favour of personal gain.
So going back to the million-dollar question then, what is the best structure for growth?
First, we must identify our growth constraints and blockers. Right now, what’s stopping your business from reaching more customers, more markets, more revenue? Locating these growth blockers will reveal the biggest growth opportunities, rather than simply hoping that yet another superficial change in structure will lead to greater and more sustainable growth.
The approach to structure needs to be scientific. And for this reason it is likely you will need to keep adjusting it as you grow, because the growth constraints will be different, at each stage of your company growth. Remember, there is no perfect structure. But for each stage of your company, there is a ‘more-functional-than-before’ structure.
So, before deciding on what structure is best for your stage, you must conduct an analytical, user-value-driven approach to a change in structure. Your goal here is to keep satisfying an increasing number of customers, sustainably, while enabling an increasing number of employees to do that, effectively, over time. The user-value approach to building the best growth structure for your startup therefore moves across two broad areas:
Your external customers – i.e. how efficiently your current structure creates your healthy growth funnel from user acquisition to revenue generation and referral
Your employees – i.e how effectively your structure enables people to deliver and unlock growth for your business. This will be covered in part 2 of the series, where we’ll look at the three core areas: a) How a person or role functions within a team b) How your teams function - are they capable of executing growth? c) How cross-functional are all the teams in your organisation?
The right structure, in an ideal scenario, enables you to deliver user-value sustainably over time, resulting in significant business growth.
For this article, we will focus on your customers and your growth funnel - and we’ll cover your employees in part two.
The Questions You Must Ask About Your Growth
Why am I not growing?
How can my product grow faster and more sustainably?
What are the core blockers to further growth?
When will I reach the ceiling of my current growth tactics?
And how can I move past that?
What does my growth funnel look like - from user acquisition through to revenue and referral?
At which points in the user funnel are we leaking and how can we fix those leaks?
How can I make my growth loops more efficient?
To illustrate with fictional examples, such questions might reveal growth blockers such as:
We are trying to scale before we have achieved product market fit
We have saturated our current growth channel, tactic, market
We don’t get enough users referring us to their friends
We can’t replicate our initial growth in other countries
The cost of user acquisition has increased
Our CAC:CLV ratio is not healthy enough
Our users are growing but our revenue is not
Our amazing user acquisition tactic on that shiny new social platform no longer works
We’re losing users because we can’t fix bugs fast enough
Competitors are taking a larger share of the market than previously
Of all new users acquired in the past 6 months, only 40% actually become “activated” (a lead, trying out our product)
As we can see, there are many potential reasons why your growth - from a product market fit to growth optimisation point of view - might have slowed or stopped altogether. The good news is that now we have identified the reasons, we discover that there is a tremendous opportunity for growth.
It starts to become apparent that the current structure and governing rules do not facilitate nor support that user-value-centric focus…yet. This might be a way to find good changes to our structure, changes that are customer oriented and growth-enabling.
What I often discover is that existing growth teams are completely focused on the acquisition of new users and on the revenue they generate, but no one is taking care of the other vital parts of the user journey, that take a new user from acquisition, all the way to revenue generation, and on to the referral of new customers.
Conclusion: Step 1 done
By asking these questions you should by now have a list of answers that reveal growth blockers in your users’ journey - and answers as to where you can fix leaks in your funnel. However, there is likely to be a set of reasons as to why these leaks were not already identified and fixed.
The root cause is often because technical or organisational reasons prevent a team from working directly on the product. For example, they may not be able to quickly and easily edit and experiment with landing pages, onboarding messaging etc., to improve conversion from acquisition to activation, or retention to referral.
A very simple example: your marketing team are unable to change text on landing pages themselves. They must submit a request to the development team for such changes. But the development team regard such text changes as low-priority, as they have different and more interesting goals to focus on. This structural set up causes both teams frustration, impedes test cycles, uses valuable development resource to work on items that could easily be done by the marketing team, and therefore stymies the overall growth of the business.
And this is where the second part of our growth questions come in, which I shall explore in part two of this series. We’ll ask questions about your functional setup to identify the best structure for growth around your employees, the clarity of direction, how you set up objectives and measure them, and the rules that govern your peoples' interaction.
About Yara Paoli
Yara is currently Chief Growth Scientist for Growth OS, a validated framework for sustainable long term growth, and she is board director and growth advisor for Kolonial.no, the leading Norwegian online grocery retailer.
She is also a growth mentor for the cross-border accelerators ChinaAccelerator and MOX (operated by the venture fund SOSV, which has $700M+ AUM and operates 5 global accelerators) and Singapore She1k, enabling dozens of start ups and innovating companies across the world to implement the best growth science and culture to build their own growth operating system.
Prior to this, she was the global VP of Growth at Skyscanner, where she was part of the company’s explosive growth success story, going from a 32-employee tech start-up, to a 1.4 Billion GBP acquired company with over 1000 staff.