The Right Way To Set Goals for Growth: Connecting the Dots

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Sep 15, 2023
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The Right Way To Set Goals for Growth: Connecting the Dots
Setting goals for growth is crucial for any business or organization. It provides a clear direction and helps teams stay focused on what truly matters. However, it is essential to approach goal setting in the right way to ensure success. In this article, we will explore the concept of setting absolute goals, the importance of focusing on active users and decreasing churned users, and the significance of the flywheel effect in achieving long-term growth.
When it comes to setting goals for growth, the best approach is to set absolute goals. Absolute goals refer to measurable outcomes, such as the number of active users or the decrease in churned users. These absolute numbers are what truly matter in driving growth. Teams should take credit for their actions and achievements, not for what happens naturally. For example, if you solely focus on growing traffic to a lower converting country like Germany, while neglecting a higher converting country like the U.S., you may hit your traffic goals but fail to meet your signup goals. It is important to align your goals with the desired outcomes and track the metrics that truly impact growth.
One crucial metric to consider in goal setting is the activation rate. The activation rate is determined by the number of activated users divided by the total number of users. To move this metric in either direction, you have two options: change the number of activated users or change the total number of users. By focusing on increasing the number of activated users, you can drive growth and improve your overall performance. It is essential to analyze and optimize your activation processes to ensure a higher conversion rate and ultimately achieve your growth goals.
Now, let's explore the concept of the flywheel effect, as described by Jim Collins. The flywheel effect emphasizes that all efforts are connected and contribute to moving the flywheel in some way. From the outside, these efforts may appear as dramatic breakthroughs or revolutionary moments, but from the inside, they are part of an organic development process. Building a great company or social sector enterprise requires consistent and cumulative effort applied in a specific direction.
The flywheel effect can be likened to the development of a chicken from an egg. While the world may perceive the egg as dormant, the chicken is evolving, growing, and incubating within. Cracking the egg is merely one step in a long chain of events that lead to the chicken's emergence. Similarly, in the journey towards greatness, there is no single defining action or key moment that exemplifies the transition. Instead, it is a series of interconnected steps and efforts that build momentum over time.
In contrast, companies that fail to embrace the flywheel effect fall into what Jim Collins refers to as the doom loop. These companies lack sustained momentum and struggle to achieve long-term growth. They often rely on one-time events, grand programs, or lucky breaks, rather than consistently building upon their accumulated efforts.
To ensure success in setting goals for growth, here are three actionable pieces of advice:
- 1. Set absolute goals that align with your desired outcomes. Focus on measurable metrics that directly impact growth, such as the number of active users or the decrease in churned users. Avoid relying on natural occurrences or traffic growth alone.
- 2. Prioritize increasing the activation rate. Analyze and optimize your activation processes to improve the conversion rate of users. By focusing on increasing the number of activated users, you can drive growth and achieve your goals.
- 3. Embrace the flywheel effect. Recognize that growth is a cumulative process that requires consistent effort and direction. Avoid seeking one-time breakthroughs or relying on isolated events. Instead, focus on building momentum through interconnected and sustained efforts.
In conclusion, setting goals for growth is a critical aspect of any business or organization. By adopting the right approach, such as setting absolute goals, prioritizing active users and decreasing churned users, and embracing the flywheel effect, you can drive sustainable growth and achieve long-term success. Remember to track the right metrics, optimize your processes, and consistently build upon your efforts to make significant strides towards your goals.
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