Growth is essential for every company. It is the oxygen that companies breathe to stay alive and active in the market. But sometimes that oxygen gets choked off, and companies struggle to achieve or maintain rapid growth. More often than not, its for a few critical reasons.
Over half of my career as a technology executive and entrepreneur has been at companies that were growing revenues over 100% per year. But I have also spent time at or advising companies that were growing more slowly and trying to accelerate, or had been growing fast in the past but were now slowing down and wanted to reignite the growth engine.
The 5 things below are the critical difference between companies that are crushing it, and companies that are not. I’ll summarize each below, then expand more on each one in future blog posts at Rocket Scale. Other things may also be holding your company back, but if you can nail these 5 things, you’ll go a long way towards accelerating like a rocket!
This is the most basic foundation for any business: does the target market want my product? Without a solid product-market fit, you can never build a really large company. You might get some early traction with some inspired marketing and savvy selling, but ultimately the lack of fit will be exposed – especially in a subscription business where renewals and upsells are key to growth. On the other hand, if you nail the product-market fit, you can grow extremely fast and capture massive market share before anyone else can react. Product-market fit is square one for how to scale fast.
Most go-to-market (GTM) executives look for a yes or no answer to the product-market fit question, but unfortunately the answer is rarely that black or white. Markets are not uniform, but made up of segments and sub-segments based on any number of different attributes. Some segments might fit your product capabilities, but others might not. Can you get enough traction with those that fit? Sometimes there will be early traction, but it will then go away due to changes in the market or competitive landscape. Tivo, Flip videocams, and GoPro all had early rapid growth that slipped away quickly (I hope GoPro makes a comeback!). Also, the market might not exist yet, and you’ll need to create it like Spanx and UnderArmor did in a very crowded apparel space. This might sound bad if there is “no market” but it can be really good if you can create it and position yourself as the leader.
If you want to grow fast, you’ll first need to nail product-market fit and make it last.
Hand in hand with the product-market fit, is the size of the market you are targeting and is it large enough by itself to build a big business? You can own a market segment that loves your product, but if it’s a small segment, you’ll quickly saturate it and growth will hit the wall. A common mistake is to feel confident about some early traction and extrapolate forward by assuming if these 50 customers bought my product, then the other 1,000 should also. This again assumes market uniformity and ignores the different attributes of different market segments. Timing also plays a significant role in market size since new markets emerge all the time and tend to start out small, but ideally grow quickly and often overtake larger, mature markets.
A great place to start is a segmentation analysis characterizing the different attributes of your target market segments, and identifying which you can capture with current capabilities, and which will require new or enhanced products. Also a TAM (Total Addressable Market) analysis showing current size and projected growth rates of all the key markets you are evaluating will help to prioritize your company’s focus and product priorities. Ideally these are performed by external analysts who will conduct an impartial market study. You may find that to scale faster, you’ll need to expand your addressable market with new products, attack more market segments or new geographies.
Sales and Marketing Alignment
Now that you have great product-market fit, with a really large target market, the rest is just execution, right? If only it were that simple! Many companies with great market opportunities can’t capitalize on them due to Sales and Marketing not being aligned properly. This can take many forms but you’ll know you have a problem when you see: marketing generating leads that sales does not follow up on, sales follows up on marketing leads but says they are the wrong targets or titles, sales messaging to customers is different from marketing messaging on the website and in campaigns, low lead to opportunity conversion rates, and low opportunity close rates. These are just a few things that result in an inefficient sales and marketing engine due to misalignment.
Often this misalignment can manifest itself due to misaligned goals. For example, Sales is goaled on revenue production, but marketing is goaled on leads or number of events or PR coverage. Marketing can hit their goals, but Sales doesn’t hit theirs and seems unappreciative of marketing’s efforts. Solve this by setting identical goals for Sales and Marketing. If Sales has a revenue target, then Marketing should also, for at least as part of their goals. Sales and Marketing (and product for that matter) are one team and should all win together or lose together. Sending Marketing and Product people on a large number of customer calls can also give them first hand experience in following up on leads, seeing how value proposition messaging works, understanding how the competition is perceived and most importantly, better understanding the customer need. And have Sales participate in Marketing messaging brainstorms, campaign planning and product reviews, which will bring their critical input of what works in front of customers into all Marketing and Product activities.
When your Sales and Marketing teams start acting as one team, better conversion metrics and rapid growth will follow.
Strong leadership in critical functions is key to success in any organization. That is no secret, but if you want to scale rapidly, you need a certain type of leadership because of the on-going set of challenges you’ll face as you grow. Companies grow fast in part because they move fast to seize opportunities. Which means they see the opportunity first, quickly put together a plan and mobilize resources to capture it, and evolve and alter course as needed to maximize the return. If your leadership can’t do this, you’ll be late to the game, and miss opportunities that could spur growth.
Some leaders are really good at building new things, taking the offensive and creating something where there was nothing before. Many see that as a challenge they want to step up to in order to test their skill-set and make a name for themselves in the process. And some leaders are really good at protecting what is already there and establishing strong defensive positions. To grow fast, you need the former: offensive leaders who are comfortable taking risks, not afraid to fail, and can rally people across organizations, not just within their own teams, towards common goals. They are not afraid of confronting sacred cows or long-standing assumptions that may be holding back growth. And they lead cross-functionally because GTM is a cross-functional game – just leading one area by itself won’t have nearly the impact of a cross-functional approach.
People often confuse leadership with being in charge, and they are not the same thing. Leaders can come from any part of an organization, not just the top. Find the right type of offensive leaders to spearhead key GTM initiatives and you will drive higher growth.
Staying with the same game-plan too long
Every story has a beginning, a middle, and an end. And growth strategies are not that different. Things may work great for a while as your new product gets traction, or you expand into a new vertical or a new territory, but ultimately these gold-mines of opportunity will become tapped out and result in slower growth. It can be really hard for companies to move away from what has worked so well in the past. The tried and true feels comfortable because we understand it well and just want to keep mining it, even after it has run dry. The key thing is to figure out where you are in the story, is it the beginning, the middle or the end?
You’ll see the end coming when your conversion metrics start to turn south – meaning its taking more time and money to generate the same amount of business. You’ll start hearing from your experienced sales teams that their territories are not big enough, or they don’t have enough large accounts. What’s happening is you are moving past the low-hanging fruit that fueled fast growth, into higher-hanging fruit that is tougher to reach and harvest. Or the market has changed, and customer needs have shifted, or the competition has become stronger, or another product category has begun to impinge on yours.
Nothing stays the same in business for very long. What did your market look like 3 years ago, or 5 years ago? Probably very different than today. The future will move just as fast if not faster than the past, but the future is opaque and tough to see clearly. Don’t assume what is working now will work forever. To maintain high growth over an extended period of time, you’ll need to understand how far your current GTM strategy can take you, and start preparing for a new strategy before the current one comes to an end.