Navigating the Growth Crossroads: When to Shift from Sales-Led to Product-Led Growth

I often speak to organisations who find themselves at a crossroads. One of the most critical junctures is the decision to transition from a sales-led growth strategy to a product-led growth strategy. Sales-led growth focuses on acquiring customers through sales efforts above all else. In contrast, product-led growth leverages the product itself to drive customer acquisition, often using growth hacking along the way. Some well-funded (startups are organisations set up to prove product-market fit through validated learning) scale-ups go down the product-lad growth route from the outset. Knowing when to make this shift and IF to make it is crucial for the long-term success of a business. This article aims to provide insights into why and when to make this transition and how a product growth coach can be an invaluable asset during this shift

Understanding Sales-Led and Product-Led Growth

  • Sales-Led Growth: Here, the primary driver of customer acquisition is the sales team. This strategy is common in B2B companies where the sales cycle is longer, and the focus is on building relationships with the customers.
  • Product-Led Growth: In contrast, product-led growth relies on the product itself to attract, retain, and expand the customer base. This approach is more common in consumer-focused companies or those with a shorter sales cycle.

Why be product Led? Apple & Tesla?

Apple and Tesla are renowned for being quintessential examples of product-led organisations, where the emphasis is placed on product innovation and customer experience. Until recently, Tesla has primarily relied on the allure of its cutting-edge electric vehicles and the public persona of its CEO, Elon Musk, for promotion, rather than traditional marketing efforts. However, during a recent investor meeting, Tesla announced its plans to explore conventional marketing channels.

Apple, on the other hand, has masterfully built a loyal customer base, often referred to as ‘Apple fanboys and fangirls’. This is a testament to the powerful impact of investing in products and understanding customer evangelism – a strategy whereby customers become ardent advocates for a brand or product. The devotion of Apple’s customer base is rooted in the company’s commitment to design excellence, seamless user experience, and continuous innovation. These customers are so enamoured with Apple’s products and brand that they not only eagerly anticipate new product releases but also passionately promote them through word-of-mouth and social media – such is the power of great products and great service

For both Apple and Tesla, the focal point has been creating products that resonate deeply with consumers. This strategy has led to the organic growth of a community of brand evangelists who are profoundly connected to the products and are willing to champion them to others. This form of marketing is incredibly powerful as it is based on genuine customer satisfaction and trust, and often results in higher customer retention and acquisition rates – key reasons for being product led

Product Led → Sales Led Atlassian Software SaaS B2B

Atlassian’s IPO in 2015 was noteworthy because the company had shown strong financials, efficient growth, customer loyalty, and an intriguing cost structure. Atlassian’s IPO documents revealed that it was a rapidly growing software business. For example, in its fiscal year 2013, the company generated $149 million in revenue, which rose to $215 million in 2014, and by fiscal year 2015, it had a total of $320 million in revenue. This revenue growth was underpinned by a significant increase in its customer base, which grew at a compounded annual growth rate of 34% between fiscal years 2010 and 2015

Three key financial elements stood out in Atlassian’s IPO documents:

  1. Efficient Growth: Atlassian demonstrated a history of efficient growth, indicating that it was able to grow its business without excessively increasing its costs. Efficient growth is vital for a company’s long-term success as it ensures that the company is not just growing revenues but also managing its costs effectively.
  2. Customer Loyalty: Atlassian had established strong customer loyalty, which is crucial for sustaining revenue streams. Customer loyalty can lead to repeat business and can also create advocates for the brand, leading to new customer acquisitions.
  3. Intriguing Cost Structure: The company had an interesting cost structure (considerably lower cost of sales & marketing). That played a role in its growth. Having a well-thought-out cost structure can help in managing expenses in a way that supports sustainable growth.

Atlassian’s case is a good example of the advantages of a product-led growth strategy. By focusing on building a strong product that met customer needs, the company was able to attract a growing customer base. Jira had a free 30-day trial that was front and centre on the homepage and instrumental in growing loyal customers. This led to the below-industry average costs of sales and marketing. In 2023 for example, Salesforce allocated 43% of its total revenue to marketing and sales expenses, which is a slight decrease compared to 45% in both 2022 and 2021. But way above what you would expect from a product lead organisation. Atlassian product focus contributed to its revenue growth and made it an attractive investment during its IPO. The product-led growth strategy often focuses on letting the product itself be the primary driver of customer acquisition rather than heavy spending on sales and marketing efforts. This can lead to a more efficient and sustainable growth trajectory, as seen in Atlassian’s case. Clearly, since the IPO they have shifted to more of a sales-lead strategy interested in how their customers feel Companies that offer freemium models generally tend to be product led and have confidence in their customer/user experience. Always be wary of products that don’t allow trials. It generally means the products are over-engineered, with poor user experience resulting in costly and time-consuming setup and training, further increasing the overall cost of ownership!

A checklist for product led

Before making the leap from sales-led to product-led growth, it is essential to evaluate if both the product and the organisation are ready. Here is a checklist to guide this assessment:

  1. Product Maturity: Is the product developed enough and does it have unique features that can attract and retain customers without heavy sales efforts? have you build feedback loops into the product that allow customers to share their good experiences with your prospects
  2. Market Demand: Is there sufficient market demand for the product that can be tapped into through product-led strategies?
  3. Customer Feedback: Have customers indicated that the product is solving a significant pain point for them? Have you confirmed problem → solution fit and product → market fit?
  4. Internal Capabilities: Does the organisation have the necessary skills and resources to support a product-led growth strategy? For example, are you going to invest in improvements in support, addressing the top 5 recurring support issues every six months? Or invest behind what you are learning from measuring customer satisfaction measurement (I.e. NPS).
  5. Scalability: Can the product and the organisation scale without a proportional increase in costs? For a service business, product-ising the service offering is an essential first step.
  6. Competitive Landscape: Is the market saturated, or is there an opportunity for rapid growth through product differentiation?
  7. Organisational Alignment: Is the entire organisation, especially the sales team, aligned with the shift to product-led growth?

So what does it ‘feel’ like when you shift to product-led

When a company shifts from a sales-led to a product-led growth strategy, several changes occur in its operations, strategies, and interactions with customers, prospects, and employees. Let’s break down what this shift entails and how it impacts different stakeholders:

1. Focus of Growth Strategy:

  • Sales-Led: The company primarily relies on the efforts of its sales team to acquire customers. This usually involves direct outreach, cold calling, sales presentations, and relationship building.
  • Product-Led: The product becomes the main driver for growth. This means that the focus shifts to making the product so valuable and user-friendly that customers come to it organically. The company might offer a free trial or freemium model to allow users to experience the product before purchasing.

Implication: The company will invest more in product development, user experience, and customer feedback. Sales teams might still play a role, but they will focus more on facilitating product adoption rather than being the primary driver of new customer acquisition.

2. Customer Acquisition and Experience:

  • Sales-Led: Customers are often acquired through persuasive sales pitches and might not have a clear understanding of the product until after the purchase.
  • Product-Led: Customers are more likely to discover the product through recommendations, online searches, or trying it out themselves.

Implication for Customers: In a product-led model, customers are likely to have a better understanding and affinity towards the product because they tried it before making a purchase. This might lead to higher customer satisfaction.

3. Sales Cycle:

  • Sales-Led: The sales cycle tends to be longer as it involves nurturing leads and building relationships.
  • Product-Led: The sales cycle is usually shorter as customers are making the decision based on the value they perceive from the product itself.

Implication for Prospects: Prospects have more control over the buying process in a product-led model. They can decide at their own pace, based on the value they find in the product.

4. Role of Employees:

  • Sales-Led: Salespeople are the stars in this model. They have targets to hit and are crucial to the company’s growth.
  • Product-Led: The product team takes center stage. Engineers, designers, and product managers become vital for growth.

Implication for Employees: Sales teams might feel a shift in their role and importance. They may need to adapt to new ways of engaging with customers that are more focused on supporting product adoption. The product team will likely experience an increase in resources and responsibilities.

5. Marketing and Messaging:

  • Sales-Led: Marketing in a sales-led model might be more focused on generating leads for the sales team, often through content marketing, events, and partnerships.
  • Product-Led: Marketing shifts towards product education, showcasing its features, and encouraging trials or adoption.

Implication for Marketing Team: The marketing team will need to adapt their strategies to focus more on product messaging and education.

The Role of a Growth Coach

In any organisation, internal dynamics such as politics, egos, and insecurities can pose challenges. Research suggests that a well-aligned and supportive leadership team is not common in businesses of all sizes. This is where a product growth coach comes into play and strong product management leadership.

  • Neutral Perspective: A growth coach provides an independent and unbiased perspective, free from internal politics.
  • Alignment and Support: They work towards aligning the goals of various departments, with particular emphasis on how we make the product better for the customer, removing the friction from all of the processes across the customer journey which is critical for product-led growth.
  • Operational Efficiency: By promoting alignment and resolving internal conflicts, a product growth coach can drive improvements in business operations.

Conclusion

Making the shift from sales-led to product-led growth or visa versa is a significant decision that requires careful consideration and planning. Investing more in the product, CX and support over sales and marketing is a strategic decision that will ultimately build a more valuable and sustainable asset. Such a shift in strategy does now work make sense for everyone and might require a new CEO in order for this to successfully happen. Early sales lead startup CEO often struggle to make such a transition. Understanding the readiness of the product and the organisation, coupled with the guidance of a product growth coach, can be instrumental in navigating this critical transition. The ultimate goal is to create a growth strategy that is sustainable and aligned with the market demand and organisational capabilities. If your business is at this crossroads, it might be time to consider bringing in a product growth coach to facilitate this transition and set your company on a path to sustainable success.

The Human Condition: Why we kill productivity

Day dreaming

Understanding the complexities of the human condition is crucial in pursuing the 10x productivity revolution. The human condition has been explored by many philosophers, artists, and writers throughout history, including existentialist philosophers like Friedrich Nietzsche, Jean-Paul Sartre, and Martin Heidegger. It involves a deep understanding of the nature of humanity and the purpose of existence. Having a deeper understanding of the human condition can help individuals navigate their own emotional experiences and develop resilience in the face of life’s difficulties, providing a more profound sense of connection to others, a greater appreciation for the challenges and rewards of life, and a clearer sense of purpose and meaning in one’s own life.

In addition to the benefits of understanding the human condition, it is essential to recognise and address cognitive biases that can negatively impact productivity. Biases such as confirmation bias, where we seek out information that confirms our preexisting beliefs, or the sunk cost fallacy, where we continue investing time and resources in a project that is not delivering results, can lead to irrational decisions and unproductive behaviours. These biases are common among all individuals, including knowledge workers, and can be particularly damaging to productivity in the workplace.

Another factor that can negatively impact productivity is the ubiquity of technology, including smartphones and social media. Our natural tendency is to be easily distracted and seek immediate gratification, and these technologies can exacerbate those tendencies. Parents need to consider screen time for children and young adults, with one in four (23%) demonstrating addict behaviours, ranging from 10-30% across the different studies. By being mindful of where we spend our time and identifying any negative productivity aspects, we can work to overcome these distractions.

The pursuit of the 10x productivity revolution requires a deep understanding of the human condition, an awareness of cognitive biases, and a mindful approach to the use of technology. By recognising and addressing these factors, we can improve our decision-making and increase our productivity, both as individuals and as organisations.

#humancondition #cognitivebiases #technology #productivityrevolution #10xHero #dalle

AI, No/low code & citizens development one of the ways to drive 10x Productivity

Are you tired of feeling bogged down by unproductive tasks and processes in your organisation? It’s time to become a 10x productivity hero and challenge the status quo!

As companies scale and become more complex, lost productivity and a lack of alignment between departments can become even more significant. But by adopting AI and low/no code citizen development, organisations can streamline their workflows and automate repetitive tasks, freeing up valuable time for strategic thinking and innovation.

Small issues can also undermine our productivity on a daily basis. For example, something as simple as naming a document can make all the difference. But what if there was technology smart enough to name documents for us based on criteria we define, standardising the process across the entire organisation? AI has the potential to structure the unstructured without the work becoming reductively homogenised.

In addition to AI, low/no code development platforms can be used to build custom applications in hours and days, not weeks and months, to meet the specific needs of individual teams and departments.

As we move toward the future of work, it’s clear that organisations that can adopt these new technologies and digitalise their operating model will be the ones that succeed. 10x The Productivity Revolution will empower you with the insight you need to drive productivity shit in your organisation.

#ProductivityRevolution #AI #lowcode #nocodedevelopment #digitaltransformation #futureofwork #innovation #strategicthinking #productivityhero #dalle

How to deliver 10X productivity (Part II) for Knowledge workers?

Part 2 of a 3 part essay on the future of work in a post COVID-19 World. 

As we discussed last time, in order for 10x productivity not to be just a pipe dream for your organisation, the four different types of knowledge work that you and your employees wrestle with every day need to start working for you, and not against you. In the second of my three-part essay on the future of work in a post Covid-19 world, I’m going to be examining four key areas that demand your focus if we are to move forward towards 10x productivity. Interestingly each also relates to a question, Why, Who, How, What and although I don’t discuss when, timing is always a critical aspect of being productive.  

Purpose – Why 

An organisation’s big purpose, its why, mission, vision, is supported by many smaller purposes, which in turn are supported by its knowledge workers. These smaller purposes make up all the different objectives that when optimally aligned, keep the organisation productive. So, a clear and defined purpose, big or small, with clear and defined objectives, is key for a high performing organisation. A major part of this is down to clarity decreasing waste, which therefore increases time for problem solving work, which in turn engages employees, and if you can turn that engagement into inspiration, it’s been shown that employees who are inspired can be 125% more productive (source: HBR). Yes, that 125%.  So, purpose deals with two essential needs – clarification of work and workforce inspiration. One is tangible, the other less so. The level of increased productivity between highly motivated and unmotivated members of staff has been shown to be significant (source: Forbes). Problematic levels of motivation during the Covid-19 pandemic have been widely reported such as with video conference fatigue, demonstrating these challenges in a very real ways. Bestselling author and motivational speaker, Simon Sinek is quoted as saying, ‘There are only two ways to influence human behaviour: you can manipulate it, or you can inspire it’. In the third part of my trio of essays, I’ll be discussing how new ways of working can help turn engagement into this ever-illusive inspiration.  

People and Connections – Who

If you can’t describe what you are doing as a process, you don’t know what you’re doing’ – 

W. E. Deming, engineer, author, and management consultant. 

Work stems from people and for the most part, it is done by people. Concepts like work in progress (WIP) limits can help staff manage their workload and work optimally. However, this concept is not widely adopted outside of the automotive and some manufacturing industries. The switching costs, switching from one type of work to another (reactive, planning, procedural), should not be underestimated and has a significant impact on the most productive type of knowledge work; problem solving. Switching costs therefore impact on peoples’ ability to get into a state of flow and deliver quality pieces of work. Flow is the concept of being in the moment. Everyone has experienced flow at different times in their life. It’s when your brain is firing on all cylinders, you see connections and possibilities that weren’t there before, and when you remember to check the time, inexplicably, hours have passed. This is not because you haven’t been paying attention, but because you were in a state of flow. Distraction is the enemy of flow, and yet we allow email and instant messaging to fuel our work worlds and continually interrupt us, making it harder than ever to get into this state.  Work stems from people. At least at the moment for the most part. Artificial intelligence has the potential to change this, but more on that later.   Businesses are like living beings, they react to stimuli. When change happens, the effects ripple throughout the entire organisation; and if the change is not managed efficiently this can result in wasted time and energy, a bit like a stubbed toe turning into a broken foot. And just like a living being, the knowledge contained within an organisation needs care and attention as it’s not just held in files and folders. How information is exchanged around a business depends on connections, and the standard of these connections will impact on productivity.  You can’t stop an employee from leaving, but you can provide clear connected pathways to ensure that the knowledge in their head remains within the organisation. And the knowledge workers that remain need to understand how their work impacts and contributes to the whole. The McKinsey Global Institute has shown that productivity improves by 20 – 25% in businesses with highly connected people. Communication, be it face to face, software, though API’s or middleware; much of it stems from its tools and processes which are often narrowly focused within an organisational silo. Increasing and improving the connectivity, therefore increases and improves productivity. However, 74 percent of employees say they miss out on crucial company communication (Source: Mindshare), which should make you wonder just what else your business is missing out on.  

Process – How

The next fundamental block is process. Although many of us may not realise it, every piece of work we do has a process. This could just be the way you’ve always done it, it might be notes or tasks you create, or it might be a clearly documented process that every employee is required to follow. But all work has a process behind it.  Great organisations recognise this and invest in documenting and optimising their processes creating standard operating procedures and target operating procedures. They use continuous improvement to identify and deliver better ways of working. It’s through this work, core competencies can be established and used for significant competitive advantage. Great examples of this would be General Electric, and SONY who are both well known for their use of ‘Playbooks’ and six sigma to define their process.  Unfortunately, the vast majority of businesses don’t have clear processes, instead they rely on recruiting smart people and letting them do it their way. This can work, but when people leave, the owner of the process leaves too, and so does the institutional intelligence they brought with them.  

The Message – What 

But if you want successful connections, you will also need to get the messaging right. In fact, if any of the above fundamental blocks are to work efficiently, it all comes down to the messaging. Messages are everywhere in our modern world, from the 280 character tweet, to the hefty documents we use to educate and inform. Organisations rely on sound bites, press releases, meeting minutes, sales decks, emails, IMs, FAQ sheets, the list goes on and on. Message creation, and then subsequent message updates can result in organisational waste if the initial clarity is lacking. The creation of assets left unadopted by teams across an organisation, or a message so jumbled that every employee interprets it differently, are all stumbling blocks to productivity. Simply put, messaging is knowledge sharing and knowledge management, and unless a business has invested in the right communication tools, as the organisation grows, any messaging problems, and therefore hindrances of attaining 10x productivity, grow with it.  Traditional ways of working are evolving, we didn’t need a pandemic to show us that, but maybe it’s taken one to make us see where the fault lines our in our companies and organisations lie. In my final essay, I will be pulling everything together and showing how the application of artificial intelligence is the next stage in the 10x productivity revolution.  

Corporate social responsibility: Can we afford not to get this right, and can creative problem solving play a part?

I was struck by Apple’s recent public commitment to be carbon-neutral by 2030.  It’s no surprise to me that Apple, which prides itself on thinking differently, has demonstrated real leadership in this area.  However, it is my firm belief that all similar Fortune 500 companies should demonstrate this kind of leadership.  

Doing the right thing should never be a hard decision, but in reality, it can take real guts, especially if that decision runs counter to making a profit. A good example of this is Delta’s CEO Edward Bastian (whom I have had the pleasure of meeting) who recently said:

“If you board the plane and you insist on not wearing your mask, we will insist that you don’t fly Delta in the future.” It is a clear message that is backed by science, but has become political in the US for various reasons.  This is a clear example of doing the right thing. It’s right for the company as it encourages safe travel, it’s right for travelers because it improves their safety, it’s right for society because it reduces the spread of the virus and it’s right for shareholders because it supports sales in the mid and long term.  

Delta has also demonstrated great leadership with regard to the environment. In February 14, 2020 Delta announced its intention to become the first carbon-neutral airline.  Now, with all the challenges facing the travel industry, this might have been a premature wish.  But it demonstrates the kind of stance and commitment that business leaders at all levels need to take.  This program will cost the airline well over 1 billion dollars to implement. However, directionally it seems like the same type of ‘win win’ approach as the mask wearing statement. This approach is right because it protects mid and long term profits for Delta – and not just Delta, because ALL businesses require a sustainable environment and a functioning and stable society to protect revenues – both for today and for future generations. 

These kinds of challenge can be addressed in part by programs like Salesforce Pledge 1%, in which 1% of sales, support, time and products are given to good causes. These kinds of programs will need to be more broadly adopted if we are going to overcome the kinds of challenges that many parts of the USA are witnessing.

COVID-19 has been an acute and real problem, swamping everyone’s thoughts but we should not forget the significant environmental changes we will face in the next fifty years which bring their own, very real challenges. To that end, even oil companies like BP are getting in on the act with a 2050 goal of being carbon neutral. Oil and gas operations are being completely offset by more efficient production, production reduction strategies and carbon sink projects. I believe that 2050 is a cop-out target personally but directionally at least, the right leadership stances are being taken. 

Now Imagine if Delta and BP could accelerate their business model changes to support each other to create a real win for all stakeholders.  With just a little creative problem solving, the possible becomes probable. We need more of this kind of thinking. Creative thinking that looks at constraints as opportunities, that see problems as a catalyst to drive significant and real change. We need more effective partnerships that avoid win-loss and strive for success for all stakeholders. 

With a focus on network analysis and the connections between businesses, we can enable new partnerships that can lead to breakthrough business models which solve society’s most pressing problems. We should use employee diversity and creative problem solving to do the most important and valuable work in the post-COVID-19 world, leaders of all spheres of influence need to demonstrate new levels of humanity and compassion for each other and raise the bar for their organizations and society. 

This leads me to a future topic—is there such a thing as good profits and bad profits?

I am interested in everyone’s views as a business leader, employee or an investor. Please share your thoughts. 

#leadership #corporatesocialresponsability #creativeproblemsolving