The Shift to a Growth Engine: A Paradigm, Process, and Reality Check

Building a growth engine for your business is no longer an option, it’s a necessity. Gone are the days of relying solely on traditional marketing funnels and strategies. A paradigm shift has occurred, and we must now think in terms of creating exponential, compounding growth loops. This new reality demands a process and a reality check that measures everything accurately, while working on the forgotten areas of your product, experimenting, and building a cross-functional team.

In this article, we’ll dive deep into what it takes to build a growth system that drives success for your business.

The Paradigm Shift: From Funnels to Loops

The era of traditional funnels is over. The fastest-growing businesses are now built on a system of loops, not funnels. Loops are closed systems where the inputs, through some process, generate more outputs that can be reinvested in the input. By focusing on developing these loops, you can create exponential growth that compounds over time.

Some examples of growth loops that serve different value creations include new users, returning users, defensibility, and efficiency. Creating these loops requires a strategic shift in your approach to growth: you must now focus on building compounding loops into your product, rather than solely relying on linear funnel tactics.

The Reality Check: Measure Everything Accurately

Measurement is the foundation of a growth engine. Without accurate data and metrics, it’s impossible to know what to work on and what’s actually working. To build a successful growth engine, you must be able to measure reality.

One of the most significant pitfalls businesses encounter is the desire to be “data-driven” without understanding what that truly means. Data-driven decisions must be supported by action rather than endless discussions.

Being data-driven means when you’re trying to decide between two options, you test both and let the data decide. It’s about weighing your opinions less heavily and relying on your accurate model of reality to guide your decisions.

The Process: Building a Growth Engine Through Cadence and Rhythm

What you do daily and weekly – the cadence and rhythm of your work – is of much greater importance than the specific tactics you use. Process is antifragile and allows for automatic course correction. To create a growth engine, you’ll need to focus on three primary areas:

1. The dark, forgotten corners of your product (onboarding, email, pricing pages)
2. An experimentation process (what have you A/B tested recently?)
3. A cross-functional team (whether it’s just you or more people, you’ll start to see growth opportunities in all parts of your business)

By honing in on these aspects, you’ll develop a sustainable and repeatable framework for growth.

Growth Loops: The Key to Compounding Success

A growth loop is a cyclical process where the output creates more of the input. Consider a house party getting out of hand: people arrive, enjoy themselves, and then call their friends to join. This cycle repeats, with the output (more guests) generating more input (more phone calls) that leads to exponential growth.

To build a growth engine, we must identify and develop these self-reinforcing loops within our businesses. Look for opportunities where one successful feature or tactic can lead to increased engagement in another area, thus driving more growth.

Building a Cross-functional Team to Fuel Growth

To execute your growth engine effectively, you need a cross-functional team with a mix of engineering, product, data, design, marketing, and sales skills. The specific mix will depend on the problem you’re solving and the objectives you’re pursuing. By bringing together diverse expertise, you’ll be better equipped to identify and address the most significant growth levers in your business.

Bringing It All Together: Building Your Growth Engine

In summary, creating a growth engine requires a paradigm shift from traditional funnels to compounding growth loops, measuring everything accurately, and focusing on a sustainable process. By developing a growth engine built on these principles, your business will be more resilient and adaptable, ensuring exponential growth over time.

So, take a look at your current strategies and embrace the shift to a Growth Engine: Loops and Funnels and Tests, Oh My! By leveraging the power of growth loops, accurate measurement, and a diligent process, you’ll pave the way for success and drive your business into the future. Remember that growth is a continuous journey, always iterate and improve, and soon, you’ll be unstoppable.