What’s the best structure for Growth? Part 3
In the third and final part of this ‘What’s the best structure for Growth?’ series, Yara Paoli, founder of GROWTH OS, reveals how your organisation can optimise itself for growth.
In the first two parts of this series, we looked at the questions that you first had to ask your organisation in order to identify your opportunities for growth, both externally - i.e. from a customer perspective, and internally - i.e. from an employee perspective. If you answered both those questions, you should by now know which areas you can now prioritise in order to unlock business growth.
In this final part of my growth structure series, we’ll look at some different organisational set-ups and discuss which type might be best for your company, depending on the level of maturity of your business.
As we have already learned from parts 1 and 2, sadly - there is not a universal BEST organisational structure for growth. Because the best structure depends on various factors, including the size, maturity and culture of your company. But although there is no single magical org chart - the good news is that there is almost always a ‘better than before structure’ for your company.
Going back to the original goal - we are trying to find the best way to organise, lead and motivate your people, in order for them to be able to grow your key metrics and advance towards your North Star. So - we are aiming to create a company 'growth operating system’ that will allow your people to deliver measurable and sustainable growth.
When should startups start organising for growth?
At first, you might think that startups should aim for growth from day one. And in some ways they should; in terms of getting your product in front of as many users as possible, as cheaply as possible, and achieving Product Market Fit as quickly as possible. That is indeed a type of growth.
However, when we are talking about the bigger picture of organisational structure that is designed for growth, startups shouldn’t waste resources on this until they have achieved sufficient product market fit. Why? Because 74% of startups fail by scaling prematurely.
As we have learned from parts 1 and 2, changing the structure of your organisation is disruptive and time-consuming in the short term. Therefore - you should only explore this option, once you are sure there is a genuine and sufficient demand for your product. Before this stage, you should put all efforts into early experimentation and testing, to validate that your product actually offers value to users in the real world.
If you are at the stage where you have achieved a good degree of product market fit, and you are now looking to expand your user base - perhaps by moving into a new geographical market, or another vertical - then now is the time to think about your organisational structure, and how that could unlock growth efficiently in those new areas.
In reality, most companies start thinking about their org structure a little too late. The natural assumption made by most startups is to just continue increasing staff numbers and growing teams, without embedding a true growth operating system first.
This normally results in growth at first, but at some point after, the company sees an inflection point - a slow down, or even decline - in their growth, despite having hired additional people.
Don’t worry if you have already reached such a point in your company. It’s very normal, and thankfully, fixable, as long as you carry out the analysis of your user funnels and employee setup as discussed in my earlier growth articles (and further below).
Of course, it’s even better if you are proactive, and carry out such analysis before you hit any major slow down in your growth. By doing so, you should be able to avoid the inflections, and massively increase your chances of continued growth.
What is growth?
So, you’ve done the analysis, you know that you need to change your structure and you’re ready and willing to make it happen. But how exactly, should you organise your people in order to optimise for growth?
Firstly - you need to define growth. Because if you ask different people from different areas of your business, chances are, they will each have a different idea of what growth is to them.
So you must create a company-wide definition, where everyone agrees on exactly what growth is, and how it will be measured. This is the single most important step, because without everyone in your organisation understanding exactly what the goal is, everyone will be pulling in different, and possibly even competing, directions leading to slow or no growth at all.
It may sound simple and even obvious, but my work with many companies has revealed that often there is no single agreement on what goal everyone should be aiming for. So often I see a great divide between each discipline. For example, programmers concerned only with solving ‘hard’ engineering problems, designers who care only about how beautiful the product looks, marketeers focussing only on the acquisition of new users, and commercial teams who prioritise money above all else. Other important areas of growth, such as activation, retention or referrals, often have no clear owner, of course, and are thus left unharvested.
Whilst of course each function must focus upon their area of expertise, without zooming out and looking at the bigger picture, I find that often the functions are actually working against each other, with an action by one team causing a negative effect on another. This is of course nonsense. Everyone is working for the same company, and that should be the only concern. But this is not the fault of the individual teams; the underlying reason for such internal competition, is that each function is following their own metrics, which don’t necessarily contribute to the company’s ultimate North Star Metric and goal of sustainable growth. Hence why it is so important to define this, measure it, and ensure EVERYONE in the company is working to positively impact it.
Defining your North Star Metric
You must define your growth and your North Star Metric, and ensure everyone in your company understands it. You might think that the only metric you need to measure is revenue. But whilst revenue is of course extremely important for almost all companies, it’s not necessarily the best North Star Metric to use. This is because actions taken to increase revenue in the short term, can lead to slower growth, and even a loss of users (and therefore revenue), in the medium and longer term.
For example, if you plaster your product with adverts, or use your newsletter mailing list to send out masses of ‘sponsored marketing’ emails, you might initially see an increase in revenue due to money received from those advertisers. Your commercial teams will be delighted, because they have increased their Key Metrics, whilst your customer care teams perhaps less so, as they are seeing an increase in complaints.
If you overdo it, you’ll annoy your users, who may then stop using and recommending your product, and therefore in the longer term you’ll see a loss of customers, and ultimately a loss of revenue.
So - getting your North Star Metric right is very important.
Remember: your North Star Metric is the single best metric that captures the core value your product delivers to your users.
How do you go about defining your North Star Metric? Well, there will likely be many potential metrics you could use and choosing one which works will require detailed analysis.
Here are some North Star Metrics used by some well-known companies:
Airbnb - total number of nights booked
Facebook - monthly active users
Quora - number of questions answered
Whatsapp - number of messages sent
Spotify - time spent listening
Uber - rides per week