The Principles of a Growth Mindset
Over the last few year’s there’s been a fundamental shift in the growth mindset of scaling tech companies.
With a move away from the traditional top of funnel marketing approaches that focus solely on awareness and acquisition before a customer bought. Towards a data-driven, experimentation heavy approach towards the product and full marketing funnel.
Growth marketing (or hacking) has become the defacto term for a growth mindset that lives at the intersection of data, product and marketing.
This new breed of growth marketers focus on developing a scalable and repeatable method for growth by leveraging their creativity, product instincts and analysis of data.
The end goal, to build a self-perpetuating marketing machine that is able to reach millions.
These goals can be achieved in a variety of ways, whether it be product experiments (a methodical approach based on data and used in conjunction with A/B testing), digital marketing (SEO, content marketing etc.), guerrilla marketing or other unconventional methods.
We sat down with Anna Cheng, who has been leading Growth at Australia’s fastest growing startup Spaceship to get a better understanding of what it takes to incorporate a growth mindset.
Since December, Anna has helped Spaceship acquire over 40,000 signups and more than $100m in Funds under Management (FuM).
She’s also a regular speaker/contributor to Growth Hackers Sydney and an instructor at Academy Xi’s Growth Marketing course.
Why Growth ‘Hacking’ is failing most of us
To incorporate a growth mindset you really need to know how to think!
These days we’re addicted to ‘growth hacks’, tricks and band-aid solutions, however, Anna believes that to be successful in Growth you need to to know how to think and reason using first principles thinking.
First principles thinking is a physics-oriented way of looking at a problem where you start with the essential facts and once you have those then you can begin on your tactics.
This approach has been popularised by the likes of Elon Musk who in 2002 had $100 million in the bank after selling his previous company and a dream of sending a rocket to Mars and creating a colony there.
However, the price of purchasing a rocket was incredibly expensive (up to $65 million for a single trip) so he approached the problem from a first principles view.
He asked himself what is a rocket made of?
Aerospace-grade aluminium alloys, titanium, copper and carbon fibre. Then he asked himself what the value of those materials must be on the commodity market?
It turned out that the materials cost of a rocket was around 2% of the typical price. So he built his own and founded SpaceX.
He stripped things down to the fundamentals, bypassed the high prices of the aerospace industry and designed a much more effective solution.
Musk has applied this logic to multiple scenarios, for instance with Tesla the problem was creating affordable batteries. Everyone was convinced that it couldn’t be done and as a result, electric cars weren’t considered a viable option.
Again, he looked at the costs for the raw materials and asked: “What is the stock market value of the materials?”
It’s got cobalt, nickel, aluminium, carbon, some polymers for separation and a seal can. Break that down on a material basis and say, if we bought that on the London Metal Exchange what would each of those things cost?
It’s like $80 per kilowatt hour.
A growth mindset starts with the most essential facts. The next step is tactical where you develop a process and framework you can then apply to different scenarios.
The Fundamentals of Growth
The four principles of Growth are a mix of quantitative and qualitative data that work in a matrix similar to Brian Balfour’s Reforge model.
“Growth starts with an understanding of the data you collect.”
Everybody likes to think they’re data-driven these days but while everybody likes looking at data, not everybody acts on it.
With your growth mindset when you looking at data, ask yourself: “What will I do differently based on this information?”
If nothing, then you’re probably dealing with vanity metrics that are always up and to the right – but won’t tell you anything actionable to change your approach.
Actionable data is:
- Comparative – compare to other time periods, groups of users or competitors (increased conversion rate by 8% from the last month)
- Understandable – If people cannot talk about it, it is much harder to use it as an actionable insight
- Ratio or rate – easy to act on (distance travelled vs speed), comparative
At this point you want to build a quantitate model, this is how you will use your data to drive your future predictions and next decision.
For example, if you’re looking to run an experiment to look at which Value Proposition is going to work better you’d look at the data and say that you’re going to use this one in your future campaigns.
At this point, you’ll need to get on the phones, talk to your ideal customers face to face to understand them, their problems and how they respond to your solution.
Finally, storytelling plays an important role.
Storytelling is how you make all you’ve learnt relevant to your end users. This is where you need to leverage your creativity because the way you frame your story will be what sets a good company apart from a great company.
“Don’t underestimate how long you will need to spend on the fundamentals”
Once you have a hold of these fundamentals you can begin to build on top of them with your tactics.
The greatest opportunity you will have in Growth is that you will be tackling problems that never existed before.
So a major shift will need to be your change in your mentality towards marketing. You will need to incorporate a growth mindset into everything you do.
Because Growth is more than just a book of ideas and hacks it’s a framework you can apply to new problems in a repeatable, scalable way.