Step Function Improvement
Big improvements do not come from small changes.
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There are companies that are growing as fast, or faster, than they want to grow. Like a rocketship, the business has a life of its own and the team is along for the ride. Customers come to you, sales just keep happening and the challenge is keeping up with the pace of the business. I’ve been lucky to be on one of those rocket ships and it’s an amazing, intoxicating feeling.
Unfortunately, rocket ships like that are extremely rare.
Most of us run businesses that are growing more slowly than we would like, and in some cases the business isn’t growing at all!! In these cases, our mandate is to grow faster.
Before we can even start to plan, we need to understand our growth goals. Do we want to grow 5% faster, or do we need to grow 50% faster? The answer is important because it determines the kinds of strategies we can choose between.
A 5% improvement is what I call Incremental Change and a 50% improvement is a Step Function change. These are easy to understand if you see what they look like on a chart:
Step Function change is a very radical change in a very short period of time, which looks like a step. Incremental change is a series of small changes over a long period of time. While it’s possible that both kinds of change can end up in the same place, most often incremental change leads to smaller long term results than step function change.
Of course, step function improvements are hard to do! Such radical change requires you to do things very differently, and take on a number of high risks. Often, in search of step function improvement you might actually hurt the business because of those changes and risk. It’s a gamble.
Let’s say you want to grow your business 5% faster this year. A 5% improvement in conversion rates might do it, or a 5% increase in price might do it. A 5% reduction in churn might do it as well! There are lots of paths to reach your goal. However, all of those changes put together would not help you reach a 50% growth target.
If you want your business to grow 50% faster this year, something significant might need to change. You might need to find new distribution channels, new customer profiles or launch new products to sell. Any of those are big bets to make, but you need to make them if you want a chance at hitting such a high target. If the bets work, they will have an immediate step function impact on your business. If they don’t work, the business might be in worse shape than before.
Simply put, big changes don’t come from incremental improvements. If you want to make significant improvements, significant changes are necessary.
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