Building and optimizing a growth team
Growth teams have become a popular topic recently due to their potential to drive business growth and improve customer acquisition. In this article, we’ll explore what a growth team is, how they’re structured, and analyze the different types of growth team structures.
What is a Growth Team?
A growth team is a cross-functional team dedicated to driving sustainable growth for a company. It is responsible for developing and executing experiments to improve customer acquisition, retention, and revenue. The team often comprises marketers, product managers, engineers, data analysts, and designers, each bringing a unique skill set.
How is a Growth Team Structured?
Growth teams are structured differently depending on the company’s size, goals, and resources. Some companies have a centralized growth team, while others have decentralized teams that are embedded within product teams.
How is a Growth Team Structured?
A growth team is typically structured in the following way:
- Growth Lead: This person oversees the growth team and is responsible for driving growth initiatives.
- Growth Product Manager: This person is responsible for developing growth strategies and tactics for the organization’s products or services.
- Growth Marketer: This person is responsible for developing and executing marketing campaigns to drive customer acquisition and retention.
- Growth Engineer: This person is responsible for developing and implementing the technical infrastructure to support growth initiatives.
- Data Analyst: This person collects and analyzes data to inform growth strategy and decision-making.
- UX Designer: This person is responsible for improving the user experience to drive customer engagement and retention.
Why is a Good Growth Team Structure Important?
A good growth team structure is important for several reasons:
- Clarifies Roles and Responsibilities: A well-structured growth team clarifies each member’s roles and responsibilities, ensuring everyone knows what they’re accountable for and how they fit into the broader growth strategy.
- Promotes Accountability: A good growth team structure promotes accountability by assigning specific roles and responsibilities and clarifying who is responsible for achieving specific goals and objectives.
- Encourages Collaboration: A growth team structure encourages collaboration between team members, as everyone has a specific role in achieving growth goals.
- Improves Efficiency: A well-structured growth team is designed to work efficiently, with each team member focused on their expertise and working together towards a common goal.
- Enables Rapid Iteration: A growth team structure is designed for rapid iteration and experimentation, allowing teams to test and refine strategies quickly to achieve better results.
A good growth team structure is essential for clarifying roles and responsibilities, promoting accountability, encouraging collaboration, improving efficiency, and enabling rapid iteration. Organizations can achieve their growth goals more effectively and efficiently by having a well-structured team.
Different Growth Team Structures
There are four common growth team structures:
- Centralized Growth Team: This type of team is independent and has its own budget and resources. It works on growth initiatives for the entire company and reports directly to the CEO or CMO.
- Decentralized Growth Teams: This structure embeds growth teams within product teams. Each product team has its growth team responsible for driving growth for that particular product.
- Functional Growth Teams: A functional growth team is responsible for a specific function, such as customer acquisition or retention. This team comprises experts in a particular area, such as marketing or data analysis.
- Hybrid Growth Teams: This structure combines elements of centralized and decentralized structures. A hybrid growth team has a centralized team that works on growth initiatives for the entire company and decentralized teams embedded within product teams.
1. Centralized Growth Team
A centralized growth team is a team that sits at the center of an organization and is responsible for driving growth across all departments. This structure is typically used by larger organizations with multiple product lines or business units. The centralized team comprises growth specialists with product development, marketing, data analysis, and engineering expertise. The team collaborates with other departments to develop and execute growth initiatives.
2. Decentralized Growth Team
A decentralized growth team is a team that is embedded within individual departments or business units. This structure is typically used by smaller organizations or those with a single product line. Each department has its own growth team, with team members focused on driving growth within their specific business area.
3. Hybrid Growth Team
A hybrid growth team is a combination of a centralized and decentralized structure. Mid-sized organizations typically use this structure with multiple product lines or business units. The hybrid growth team has a central core team responsible for developing and executing growth strategies across the organization. However, embedded growth teams within individual departments or business units also focus on driving growth within their specific business area.
4. Functional Growth Team
A functional growth team is a team that is made up of individuals from multiple departments who come together to achieve a specific growth goal. This structure is typically used for short-term growth initiatives or projects. The functional growth team comprises individuals with different skill sets and expertise collaborating to achieve the specific growth goal.
Analyzing the Different Growth Team Structures
Each growth team structure has its own advantages and disadvantages. Centralized teams provide better control and coordination but may not be as responsive to product-specific needs. Decentralized teams are better suited for product-specific growth but may lack consistency across the company.
Functional teams are great for deep expertise but may lack the cross-functional collaboration necessary for driving growth. Hybrid teams offer the best of both worlds but can also be challenging to manage.
Benefits of Growth Team Structures
Growth team structures offer several benefits, including:
- Cross-functional collaboration
- Faster experimentation and iteration
- Alignment of growth goals with company objectives
- Improved customer acquisition and retention
- Better measurement and tracking of growth initiatives
Pros and Cons of Growth Team Structures
- Better coordination and alignment
- Faster iteration and experimentation
- Improved customer acquisition and retention
- Potential lack of consistency
- Challenges with managing hybrid teams
- Difficulty in measuring the success of growth initiatives
Decision-Making Tips for Choosing the Best Growth Team Structure
When deciding on a growth team structure, it’s important to consider factors such as the company’s size, goals, and resources. Centralized teams may be better suited for larger companies, while decentralized teams may work well for smaller startups. Hybrid teams can be effective in medium-sized companies.
Some of the considerations would be:
- Assess the size and complexity of your organization.
- Identify the specific growth goals you want to achieve
- Consider the strengths and weaknesses of your existing teams and departments.
- Evaluate the level of collaboration needed across departments.
- Analyze the resources and budget available for a growth team.
- Determine the timeline for achieving growth goals.
- Consult with experienced professionals or seek guidance from industry experts.
- Regularly review and adjust the growth team structure as the organization evolves or new challenges arise.
It’s also important to consider the company’s culture and how different team structures may fit into that culture. Ultimately, the structure should align with the company’s growth goals and objectives.
Growth Teams in Different Types of Organizations
Corporate, start-up, and unicorn companies all approach growth teams differently. Corporate companies may have more resources and a more established infrastructure for growth teams, while startups may have smaller teams embedded within product teams. Unicorn companies often have a mix of centralized and decentralized teams.
Growth teams can be implemented in different organizations, including startups, corporations, and unicorns. Here are some considerations for each type of organization:
Startups are typically small, agile organizations that are focused on growth. In a startup, the growth team is often composed of a few individuals with diverse skills who work closely together to drive growth. The team is usually embedded within the broader organization and works closely with other departments to identify and execute growth initiatives.
- Startups often have limited resources, so the growth team must be resourceful and efficient in achieving growth goals.
- The growth team must be flexible and able to adapt quickly to changes in the market or the organization’s goals.
Corporations are typically larger, more complex organizations with multiple departments and product lines. Depending on the organization’s specific needs, the growth team may be centralized or decentralized in a corporation. The team is usually composed of growth specialists with expertise in product development, marketing, data analysis, and engineering.
- Corporations often have more resources available for a growth team but may face challenges in collaboration across departments.
- The growth team must be able to navigate complex organizational structures and bureaucracy to achieve growth goals.
Unicorns are privately held startups valued at over $1 billion. Unicorns often have a strong culture of innovation and are focused on rapid growth. The growth team in a unicorn is typically composed of growth specialists with a deep understanding of the market and customer behavior.
- Unicorns may have more resources for a growth team than startups but may face challenges maintaining a startup culture as they scale.
- The growth team must adapt quickly to market changes and maintain a culture of innovation even as the organization grows.
Cultural and Behavioral Issues with Building a Growth Team
Building a growth team can be challenging due to cultural and behavioral issues. Resistance to change, silos, and a lack of cross-functional collaboration can all pose challenges to the success of a growth team. Establishing a culture of experimentation and collaboration is important to ensure everyone is aligned with the company’s growth goals.
Incentivizing and Motivating Growth Teams
Incentivizing and keeping growth teams motivated is crucial for their success. Performance-based bonuses and equity options can be effective motivators. It’s also important to celebrate wins and recognize the team’s achievements.
Incentivizing and motivating growth teams is critical to their success. Here are some specific examples of ways to incentivize and motivate growth teams:
- Bonuses are tied to specific growth metrics, such as user acquisition or revenue growth.
- Equity or stock options to reward team members for long-term success.
- Performance-based commissions or profit-sharing agreements.
- Opportunities for professional development, such as attending conferences or workshops.
- Mentoring and coaching programs to support growth team members’
- Career advancement opportunities within the growth team or the broader organization.
Recognition and Celebration
- Public recognition for achievements, such as highlighting successful growth initiatives
- Celebrations or team events to recognize and reward success.
Autonomy and Empowerment
- Growth team members with autonomy and decision-making power to pursue growth initiatives.
- Encouraging risk-taking and experimentation, even in the face of potential failure.
- Fostering a culture of continuous learning and improvement.
The key to incentivizing and motivating growth teams is to provide financial and non-financial rewards that align with the team’s goals and values. By offering meaningful incentives and creating a supportive work environment, organizations can help their growth teams achieve their full potential and drive sustained growth.
Building a Growth Team from Scratch
Building a growth team from scratch requires careful planning and execution. It’s important to define the team’s goals, roles, and responsibilities and ensure cross-functional collaboration. The team should also have access to the necessary tools and resources to execute experiments and measure success.
Building a growth team from scratch can be daunting, but with a clear plan in place, it can be done effectively. Here is a step-by-step plan for building a growth team from scratch:
Define your growth goals and objectives.
- Determine what metrics you want to improve and what impact you want the growth team to have on the organization.
Determine your growth team structure.
- Decide on the type of growth team structure that best fits your organization’s needs, whether centralized, decentralized, or hybrid.
Identify the roles and skills needed for the growth team.
- Determine the roles and skills required for the growth team to achieve your goals.
Recruit and hire growth team members.
- Identify potential candidates for each role, and develop a hiring process that allows you to assess each candidate’s skills and experience.
Develop a growth strategy.
- Work with the growth team to develop a growth strategy that aligns with your goals and objectives.
Provide the growth team with the necessary resources.
- Ensure that the growth team has the necessary resources, such as tools, data, and budgets, to execute the growth strategy effectively.
Foster a culture of experimentation and continuous improvement.
- Encourage the growth team to experiment with new ideas and approaches and to learn from their successes and failures.
Track and measure progress.
- Develop a system for tracking and measuring the growth team’s progress towards achieving your goals, and use data to make informed decisions about future growth initiatives.
By following these steps, organizations can build a growth team from scratch aligned with their goals and capable of driving sustained growth.
Optimizing an Existing Growth Team
Optimizing an existing growth team to measure its performance and identify improvement areas is important. Regular retrospectives and data analysis can help to identify areas where the team is excelling and where it needs to improve. Continuous learning and development opportunities can also help to keep the team motivated and engaged.
Optimizing an existing growth team requires a focus on continuous improvement and performance measurement. Here are some specific steps that can be taken to optimize an existing growth team:
Conduct a performance review.
- Review the team’s performance against its objectives and goals to identify areas for improvement.
Set new goals and objectives.
- Use the insights from the performance review to set new goals and objectives for the team.
Analyze performance metrics
- Look at the team’s performance metrics: acquisition, activation, retention, revenue, and referral rates.
Calculate the relevant performance measures.
- Calculate key performance indicators (KPIs) for each metric, such as conversion rates, customer lifetime value (LTV), customer acquisition cost (CAC), and retention rates.
Analyze the KPIs
- Analyze the KPIs to identify areas where performance can be improved. For example, a high CAC may indicate that the team needs to focus on improving the efficiency of its acquisition channels, while a low retention rate may suggest a need to improve the product or customer experience.
Develop an optimization plan.
- Develop an optimization plan outlining the team’s steps to improve performance in each area.
Test and iterate
- Test new approaches and strategies to improve performance and iterate based on the results.
It is important to note that what constitutes a “good” or “bad” performance result can vary depending on the industry and business model. However, some general benchmarks include:
- Conversion rates: Good conversion rates depend on the industry, but a benchmark is around 2–5%.
- Customer LTV: A high LTV relative to CAC is desirable. A benchmark for the LTV to CAC ratio is 3:1.
- CAC: A low CAC is generally better. A benchmark for CAC depends on the industry and business model but is typically around 10–20% of the LTV.
- Retention rates: Good retention rates depend on the industry, but a benchmark is around 30–40%.
An existing growth team can be optimized to deliver even better organizational results by focusing on performance measurement and continuous improvement.
Developing a Growth Team for Your Organization
To develop a growth team for your organization, it’s important to define its goals and structure. You must also identify the necessary skills and resources and ensure cross-functional collaboration. Establishing a culture of experimentation is important as providing the team with the necessary tools and resources to measure success.
Developing a growth team
Developing a growth team for your organization requires a thoughtful approach considering your business model, growth objectives, and available resources. Here’s a step-by-step practical breakdown of how to develop a growth team for your organization:
Define your business model.
- Clarify your business model, including your value proposition, target market, customer acquisition channels, and revenue streams.
Identify your growth objectives.
- Set clear growth objectives, such as increasing customer acquisition, improving retention rates, or expanding into new markets.
Evaluate your existing resources.
- Assess your existing resources, including your team’s skills, expertise, budget, and technology infrastructure.
Determine your growth team structure.
- Decide on the structure of your growth team, considering factors such as the size of your organization, your growth objectives, and your available resources. You can choose from a centralized, decentralized, or hybrid growth team structure.
Hire and onboard the right people.
- Hire the right people for your growth team based on the skills and experience required for your needed roles. Onboard them effectively to ensure they understand your business model, objectives, and the roles they will be playing in your growth team.
Define your growth experiments.
- Develop a set of growth experiments to test new strategies and tactics to achieve your objectives. Use data-driven insights to prioritize experiments and determine which ones to pursue.
Measure and analyze results.
- Measure the results of your growth experiments using relevant performance metrics, such as customer acquisition cost, retention rate, and revenue growth. Analyze the results to determine which experiments are successful and which must be refined or abandoned.
Optimize your growth team.
- Continuously optimize your growth team by learning from the results of your experiments, making improvements, and refining your growth strategy.
Communicate progress and results.
- Communicate progress and results to your organization to build support and momentum for your growth initiatives.
Scale your growth team.
- As your organization grows and your growth objectives evolve, scale your growth team accordingly by hiring additional team members, expanding into new markets, and pursuing new growth strategies.
Developing a growth team requires careful planning, effective execution, and ongoing optimization. By following these steps, you can create a growth team aligned with your business objectives and capable of delivering sustained growth for your organization.
In conclusion, growth teams can be a powerful tool for driving sustainable growth and improving customer acquisition and retention. The success of a growth team depends on careful planning and execution, cross-functional collaboration, and a culture of experimentation. Organizations can develop effective growth teams that drive business success by understanding the different growth team structures and considering factors such as company size, goals, and resources.
Key Considerations for Developing a Growth Team
When developing a growth team, there are several key considerations that organizations should keep in mind:
- Define the team’s goals and structure: It’s important to define the team’s goals and structure upfront, so everyone is aligned on what the team is trying to achieve and how they will work together.
- Identify necessary skills and resources: Depending on the team’s goals, specific skills or resources may be required, such as data analysts or marketing automation software. Identifying these needs upfront will help ensure that the team has the necessary resources to succeed.
- Foster a culture of experimentation: Growth teams should be encouraged to experiment and try new approaches to improve performance. Organizations should foster a culture that encourages experimentation and risk-taking while focusing on the company’s overall growth goals.
- Measure success: Growth teams should be measured on their ability to drive sustainable growth, increase customer acquisition and retention, and meet other key performance indicators. Organizations should establish clear metrics for success and regularly review the team’s performance against these metrics.
Developing a Growth Team in Different Types of Organizations
Developing a growth team may look different depending on the type of organization. Here are a few key considerations for developing growth teams in different types of organizations:
- Corporate: In a corporate setting, developing a growth team may involve working with multiple departments to achieve growth goals. It may require more structure and processes to ensure cross-functional collaboration and alignment.
- Startup: In a startup, developing a growth team may involve working with a small team of individuals who can move quickly and experiment with different approaches to achieve growth.
- Unicorn: In a unicorn company, developing a growth team may involve scaling an existing team to accommodate the company’s rapid growth. It may require more focus on maintaining the team’s culture and ensuring everyone is aligned on the company’s growth goals.
How to measure the performance of members of a growth team
Here are five potential measures that could be used to assess individual performance on a growth team:
- Individual Experiment Velocity: This metric tracks how quickly an individual can ideate, design, run, and analyze experiments.
- This is calculated by taking the number of experiments an individual can complete within a given period (e.g., a month) and dividing it by the total number of days in that period.
- Formula: (Number of Experiments Completed) / (Total Number of Days in Time Period).
- Experiment Effectiveness: This metric measures how successful an individual’s experiments drive growth.
- This is calculated by taking the percentage increase in the targeted metric (e.g., signups, retention, revenue, etc.) as a result of the individual’s experiments.
- Formula: [(Metric Post-Experiment — Metric Pre-Experiment) / Metric Pre-Experiment] x 100.
- Learning Velocity: This metric tracks how quickly an individual can learn from their experiments and adjust their approach.
- This is calculated by dividing the number of experiments an individual completes within a given period by the number of insights they generate.
- Formula: (Number of Experiments Completed) / (Number of Insights Generated).
- Process Improvement: This metric measures an individual’s ability to improve the growth team’s overall process for ideating, designing, running, and analyzing experiments.
- This is calculated by tracking the number of process improvements an individual proposes and successfully implements. Formula: Number of Process Improvements Implemented.
- Cross-Functional Collaboration: This metric measures an individual’s ability to work effectively with other functions (e.g., product, engineering, design, marketing, etc.) to drive growth.
- This is calculated by tracking the number of cross-functional projects an individual works on and the level of satisfaction from the other functions.
- Formula: Number of Cross-Functional Projects Worked On x (Average Satisfaction Rating from Other Functions).
These metrics help identify individual strengths and weaknesses and provide a basis for coaching and development. However, it’s important to note that they should not solely measure an individual’s performance. Growth is a team effort; success often depends on collaboration and teamwork.
Cultural and Behavioral Issues with Building a Growth Team
Building a growth team can pose cultural and behavioral challenges, such as resistance to change, lack of buy-in from other departments, and fear of failure. Organizations should address these issues head-on by providing training and development opportunities, establishing a culture of experimentation, and celebrating wins to build team morale.
Here are the top 10 cultural and behavioral issues with building a growth team, along with practical solutions:
- Resistance to change: Some team members may resist changes to established processes and workflows.
- Solution: Communicate the need for change and involve team members in decision-making.
- Lack of trust: In a growth team, members may come from different backgrounds, leading to a lack of trust.
- Solution: Encourage team-building activities and foster an environment of open communication.
- Fear of failure: Fear of failure can prevent team members from taking risks and trying new things.
- Solution: Create a culture of experimentation and learning where failure is a necessary part of the process.
- Siloed thinking: Team members may focus only on their tasks and not see the big picture.
- Solution: Encourage cross-functional collaboration and provide opportunities for team members to learn about other business areas.
- Lack of diversity: A lack of diversity in the growth team can limit the creativity and innovation of the team.
- Solution: Ensure the team is diverse in gender, ethnicity, background, and skillset.
- Communication barriers: Communication breakdowns can lead to misunderstandings and delays.
- Solution: Use tools and processes that facilitate communication, such as regular team meetings, project management software, and collaboration platforms.
- Lack of ownership: If team members don’t feel ownership over their work, they may not be motivated to put in their best effort.
- Solution: Empower team members by giving them autonomy over their work and recognizing their contributions.
- Burnout: Growth teams often have aggressive goals and tight deadlines, which can lead to burnout.
- Solution: Encourage work-life balance and provide resources for stress management.
- Unclear goals: If the team doesn’t have clear goals, they may not know what they’re working towards.
- Solution: Set clear, measurable goals and regularly communicate progress.
- Micromanagement: Micromanaging team members can stifle creativity and initiative.
- Solution: Trust team members to do their jobs and provide guidance and feedback when needed, rather than constantly checking in on them.
Conclusion on how to build and optimize a growth team
Building a growth team can be a valuable strategy for driving sustainable growth and improving customer acquisition and retention. Organizations should consider their goals, resources, and company culture when developing a growth team. Organizations can develop effective growth teams that drive business success by fostering a culture of experimentation, providing the necessary tools and resources, and measuring success against clear metrics.