The Path to Growth: Five Stages of Position-Product-People Alignment
Posted onFor nearly any business, growth happens when you know your market, and have your product and your people aligned to the needs of that market. For young companies, such as the technology startups with which I work, this alignment can make the difference between a future IPO and shutting down the business.
Exceptional growth requires expert navigation
As companies start and grow, they begin to discover not only their own expertise, but more importantly, their market, its niches and segments, as well as its quirks, needs and wants. I think of this as navigating the discovery of a new land, full of opportunity and fraught with danger. Finding the path to growth is challenging, but the closer you get to your particular path, the more rewarding it becomes.
The path to exceptional growth is the precise alignment of your product (and capabilities), your position (the needs and wants of the market) and your people (their execution of your processes.
Most businesses go through five stages of alignment:
Typical Revenue Range | Position-Product-People Alignment |
---|---|
>$50 million | Acceleration |
$10 million–$50 million | Navigation |
$5 million–$10 million | Map-Making |
$1 million–$5 million | Discovery |
<$1 million | Suspicion |
I’ve outlined this for a typical technology startup, but this can apply to any business or product line.
Suspicion
When a company is just starting out, the founding idea comes from some knowledge that a handful of potential customers may need something like the product being contemplated and a founder’s belief she can address that need differently from how it is being solved now.
The market is unknown territory. Whether there are more than a few potential customers is unknown. Any knowledge of a path to growth is nothing more than a suspicion. The product is brand new, so it is still trying to find the needs with which to align.
Discovery
As the company starts to sell products and find customers, it has also found a wider range of ways its product meets the needs of a wider range of customers. There may be little consistency from one customer to the next, but they all find the company has something that meets some set of needs.
This stage of discovery is an important step for every company. The company learns some of what is possible and can start to consider which of the many types of customers will suit it best.
At this stage, there is still very little alignment among position, product and people, as the company is trying to do everything it can to meet the needs of any customer who shows up. The most common cause of failure at this stage is a product that is not growing to meet these diverse needs, meaning the company can’t deliver on its promises.
Map-Making
The company has now become more adept at finding customers, and finding ways to discover and meet their needs. While there may be little consistency as to these needs from customer to customer, some commonalities are beginning to appear.
These areas of commonality are the segments and niches in the company’s market. Knowledge of these shows the company what will work best for its own strategy and objectives, and will eventually help it better understand how to compete with direct and indirect competitors.
This is where alignment becomes critical. As the company learns where it can be most successful, understanding the needs of that segment and how the company can meet them differently from what has come before becomes critical to continued growth and advancing to the next stage.
The most common causes of failure at this stage are either not seeing the emerging segments making it hard to focus, or not continuing to build product that meets the needs of the coalescing segments, again causing the company to miss keeping its promises.
Navigation
The company has seen success in one or more segments and must now choose to focus on one at a time. Exceptional growth requires thinking smaller. Let me repeat, as this is not always intuitive:
Exceptional growth requires thinking smaller.
Focusing on one position in the market — one set of needs, met in a differentiated way, in one segment — allows the company to build a product, train its people and develop processes to focus on demonstrated success — and start to repeat that success. This repeatability is the key to scale.
The most common cause of failure at this stage is not aligning product and people with the chosen position — the needs of the customers in the company’s market segment. This is lack of focus, one of the critical elements of exceptional growth.
Acceleration
With product and people aligned to position (market needs), the company is seeing an increasing number of customers, as well as a decrease in the effort it takes to find a customer. The repeatability inherent in focusing on a chosen position allows the company to scale its operations and delivery in a very precise way.
This same repeatability allows the company to define segment after segment and pursue them in the same way that it pursued the initial segment, creating another layer of scale and accelerating growth.
The most common cause of not being able to achieve this scale is not getting the people and processes in the company aligned to delivering the needs of the chosen segment(s), causing the company to stumble in execution.
Understanding your market and how you can meet the needs of the customers in that market in a different and differentiated way is the foundation of creating exceptional growth for your budding business. Once you get your position right, precisely align your product and your people to that position, and you can find your unique path to exceptional growth.