"Growth" - a 3 dimensional word salad
We really did it this time, noone knows what they're talking about
There is almost no other term than “Growth” which is more misunderstood in the product and tech space.
The problem is 2 layered
The word means 3 different things in the same industry
Every one of those meanings is commonly misunderstood
Growth - The Function
"Growth - Teams": end-to-end responsibility in a product-led company
A cross-functional product team that affects acquisition, retention, and monetization at the same time. Typically attached under product or marketing silos.
Growth affects much more of a traditional user journey than classical product teams and validates often with hypothesis-driven experimentation.
Growth teams are usually comprised of Product & Marketing competencies in one team, which makes them unique.
Wrong: "So Growth teams do acquisition only?"
Growth - The Company Stage
"Growth-Stage": After finding Product-Market Fit, the company is ready to scale.
The Growth-Stage is addressed by your distribution model after having good retention. Product-led and Sales-led Growth is the most common.
Wrong: "So explosive growth is always good, right?"
Growth - The Business Metric
"Growth-Rate”: Increase of size in a business, revenue etc.
Together with ROIC (Return Of Invested Capital) important metrics to determine a company’s value. By itself a relatively useless metric.
While growth in a valuation is an important metric it is one that is easily manipulated by itself. It does not give a clear indication of whether that growth is of good quality and at what cost it happened.
In the current climate, ROIC is a more important metric because it tells you how efficiently a business is running. How many dollars are you getting back per dollar invested?
Without this perspective, no business can be run effectively because it’s getting increasingly harder to scale your acquisition efforts in a sustainable manner.
Together the two metrics are a predictor of long-term value.
Wrong: "A growing company is always a healthy company!"
Further reading on Growth
Growth and Organizational Scaling
This guide gets you started on growth and organizational scaling. What is Growth? How to prepare your org for it and what to focus on with your first growth hire.
This guide gets you going on product-led growth, what it means, what the ideal conditions are for it, and how to employ it.