Learn faster with a Growth Process

Learn faster with a Growth Process

Dani HartMay 3, 2017 · 9 min read

One of the biggest surprises Morgan Brown uncovered during his research into the fastest growing companies for his and Sean Ellis’ upcoming book, Hacking Growth, was that none of the companies in his research were sure bets.

As Morgan explains…

“Most people think of companies like Facebook, Uber and Airbnb as once-in-a-generation ideas that are a bit like catching lightning in a bottle. That somehow they were destined to be great.

That’s actually not true, it turns out. All of these companies faced existential moments of crisis that could’ve killed (or could still kill) any of them.

What they all do, which goes under appreciated I think, is that they learn faster than anyone else what it takes to grow, and they use that speed of learning as a massive competitive advantage.

All of the companies, regardless of business model, learn faster than anyone and use that learning to grow faster.”

Please note that all quotes in this post, unless otherwise noted, are direct quotes from Hacking GrowthNow on sale.

What does it take for companies to learn faster?

In order to learn fast and realize sustainable growth, companies must understand that:

  1. A high-tempo process, where teams test idea after idea, is what allows companies to learn fast and grow sustainably. This is referred to as the growth hacking process. “Generally, big successes in growth hacking come from a series of small wins, compounded over time. Each bit of learning acquired leads to better performance and better ideas to test, which lead to more wins, ultimately turning small improvements into landslide competitive advantages.”
  2. A simple “hack” or silver bullet, might contribute to initial fleeting growth, but that growth is unsustainable and won’t last long.
  3. Product Market Fit has to be achieved before transitioning to growth. If you haven’t determined a product is valuable, why would you waste time and money trying to grow it?
The Startup Pyramid by Sean Ellis (startup-marketing.com)

Pre-work— Identify a North Star Metric

Before jumping into a high-tempo process, it’s vital for your team to identify and measure a North Star Metric (NSM).What is a North Star Metric?Drive Your Company’s Sustainable Growth with a North Star Metricblog.growthhackers.com

Sean Ellis explains that your NSM should reflect the aggregate value delivered to customers. For example, Airbnb’s NSM is the number of nights booked. Their core value is connecting people who need a place with people who can host. This valuable experience drives repeat usage for both hosts and guests.

There are many benefits of rallying your team around a NSM.

“To hone your growth equation and narrow your focus, it’s best to choose one, key metric of ultimate success that all growth activity is geared toward. This is hugely helpful in keeping teams focused on the most productive use of their time and avoiding the wasting of resources that generally results from haphazard scattershot approaches to growth experiments.”

Once your team is rallied around a metric that contributes to long-term sustainable growth, it’s time to dive into the process.

What is the high-tempo growth hacking process?

At a high level, high-tempo growth hacking can be broken down into a repeatable four-step process:

  1. Analyze — data analysis and insight gathering
  2. Ideate — idea generation
  3. Prioritize — experiment prioritization
  4. Test — running the experiments

and repeat.

Now, to go into more detail on each of these steps…

1. Analyze your data & gather insights

By understanding more about your customers and how they interact with your product, you will begin to identify opportunities for growth experiments.

Start by diving into the initial wave of users you’ve acquired since launching your product. Separate the engaged users from the inactive ones. Sean and Morgan recommend asking three broad questions with additional detailed questions that help you dive deeper for each one:

  • What are my best customers’ behaviors?
  • What are the characteristics of my best customers?
  • What events cause users to abandon the product?

These questions should be looked at from both a quantitative and qualitative perspective. While an analyst can work on identifying trends in the data, a marketing expert should interview and survey your customers. Getting qualitative feedback will likely expose your own blind spots, inspire new ideas, and help guide research into quantitative user data.

By analyzing the data up front, you’ll go into the ideation step of the process armed with the data to create ideas for experimentation that have clear hypotheses and supporting evidence.

2. Generate thought-out ideas

Ideas are the leading input for growth. If you don’t have ideas going into the process, there’s a lesser chance your team will make an impact on growth because there’s less to test and learn.

There are many ways to generate new ideas. Look into what has worked or not worked in the past and ask yourself why?

Try brainstorming with other people in your company. By gathering members of your team and asking “how do we solve this problem?” or “how do we meet this objective?” you’ll find that unique ways to solve a problem will arise and they will likely be more feasible since multiple stakeholders are involved.

A good idea should explain how it contributes to a current growth objective. For example, if your team is focusing on improving activation of new users, your team should be contributing ideas that are aimed to improve that metric.

Here’s a basic outline to organize ideas for testing:

  • Idea Name: What is the gist of the idea that others can understand from a glance?
  • Idea Description: What is the idea? How do you see it contributing to the objective? What qualitative feedback from customers or quantitative data do you have to back up this idea? What examples from other companies have worked well? Is there a minimal viable product (MVP) version of this idea that could be tested first?
  • Growth Lever: Is the idea focused on Acquisition, Activation, Retention, Referral, or Revenue?
The Growth Lever adopts Pirate Metrics (AARRR)
  • Objective: What is this idea contributing to improve?
  • Hypothesis: What is the expected result you predict from this idea?
  • ICE Score: More on this below.

3. Prioritize your ideas

To identify the best ideas for meeting a growth objective, it’s important for the contributing individual to assign their ideas with scores so that the team can rank ideas against one another.

At GrowthHackers, Sean developed the ICE scoring system. This allows teams to have a standard for measuring the impact, confidence, and ease of an idea amongst the rest.

  • Impact: How much of an impact will this idea have if it’s successful?
    “You might think that only ideas that are very high impact are worthy of being submitted, but remember that a team should be selecting a mix of potentially high-impact experiments, which will generally require more work, and some that are easier to implement but also have a good, if not great, chance of producing meaningful results.”
  • Confidence: How confident are you that this idea will work?
    “This rating should be based just on conjecture, but on empirical evidence of some kind, whether from data analysis, review of industry benchmarks, published case studies, or knowledge of previous experiments.”
  • Ease: How easy is it to implement this idea?
    “The ease score both provides the growth team a reality check about overly ambitious ideas and helps identify some ‘low-hanging-fruit’ tests to run each time through the growth hacking process.”

The average of these three scores makes up the ICE score.

“It’s important that the team not get bogged down in trying to fine-tune the score too much. The score is to be used for relative prioritization and will not be perfect… It’s better for the team to use the score as a valued guide, rather than the be-all and end-all for test prioritization.”

Each member of the team should use the guide of the ICE score to then nominate a set number of ideas leading into the team’s weekly growth meeting. Here at GrowthHackers, we each nominate two ideas every week.

The ideas nominated that week are then presented by each person in the growth meeting. The team concludes the meeting with which ideas will be moved into the Up Next queue where the chosen ideas are then prepared for testing.

4. Test ideas

In this step of the process, the outputs of the growth meeting are put into motion. To keep organized, the “Up Next queue” represents all tests that need preparation. This is where ideas should be assigned to different members of the team to move forward.

Visualization of “Up Next queue” within the Tests workflow

“Once the experiments are ready to go, the growth lead will send a notification around the company that they are being launched so that there are no surprises for other teams also working on the product. If roadblocks to launching certain experiments are encountered, the team member in charge must inform the growth lead right away so that other experiments in their Up Next queue can be considered for deployment in their place.”

Each test should then be analyzed and measured against its hypothesis. The analyst will need to report whether the idea worked, didn’t work, or was inconclusive. Regardless of the outcome, it’s important for the analyst or growth lead to share a test summary that includes the lessons learned from a qualitative perspective as well as any supporting data.

All completed tests should be stored in a central knowledge base that everyone on the growth team can access at any time. It’s important to keep a record of these tests so that new employees can get up to speed on what’s been tested to date, and so that anyone on the team can easily search results and consider variations to what’s already been tested. Which takes us full-circle to the ideation step of the process.

∞ Rinse and repeat

The growth hacking process is an ongoing loop. Once you start getting into a groove with the process, increasing the testing velocity is an important next step, assuming the resources are made available to do so.

“The more experiments you run, the more you learn. It’s really that simple. The high volume is ideal, because most experiments fail to produce the results you’re hoping for. Others produce some indication of success but are inconclusive, not producing results significant enough to support making the change tested. Some produce small but not earth-shattering wins. Only very few tests produce dramatic gains. Finding wins, both big and small, is, in other words, a number game.”

“The volume and tempo of experiments that growth teams can run vary greatly depending on the size of the company and the resources available to support testing. Many of the leading growth teams regularly run 20 to 30 experiments a week, and some run many more. Early stage startups might be able to launch only one or two tests per week and then steadily build up to a higher volume, while later stage start-ups and large, established firms might well be able to start out with a much higher number.”

Do you have a growth process that works well? I’d love to hear about it! Please comment below so that others can learn from your experience. 🙂

Thanks to Anuj Adhiya, Danielle Olivas, and John Phamvan.

Dani Hart

Sustainable Growth & Diversity Advocate at GrowthGal.com