Continuous Improvement: How It Works and How to Master It

Continuous Improvement: How It Works and How to Master It

Continuous improvement is a dedication to making small changes and improvements every day, with the expectation that those small improvements will add up to something significant. The typical approach to self-improvement is to set a large goal, then try to take big leaps in order to accomplish the goal in as little time as possible. While this may sound good in theory, it often ends in burnout, frustration, and failure.

Improving by just 1 percent isn't notable (and sometimes it isn't even noticeable). But it can be just as meaningful, especially in the long run. If you get one percent better each day for one year, you'll end up thirty-seven times better by the time you’re done. We often waste the resources and ideas at our fingertips because they don’t seem new and exciting. In the real world, it is often easier to improve your performance by cutting the downside rather than capturing the upside. Subtraction is more practical than addition. In many cases, improvement is not about doing more things right, but about doing fewer things wrong.

We often measure our progress by looking forward. We set goals. We plan milestones for our progress. Basically, we try to predict the future to some degree. But what if we measure backward, not forward? This is a very important point of view. You can connect the dots by looking backward, not looking forward. Measure backward and then get a little bit better. What did you do last week? How can you improve by just a little bit this week?

Now, let's shift our focus to the world of consumer startups and the distribution and conversion models that power their success or failure. Distribution is how businesses acquire new customers, while conversion measures how successful a business is at optimizing the user experience to achieve specific goals. These two metrics are crucial for the growth and sustainability of internet businesses.

Every few years within the consumer ecosystem, new waves of distribution open up. Businesses experiment with and exploit these emerging distribution channels, and then these avenues of growth become crowded and far less attractive for new entrants. Take the example of Google, Facebook, and Amazon, which serve as a triopoly dominating online advertising. These three giants accounted for 90% of US digital advertising in 2020. Most companies that have reached mass scale without substantial paid acquisition are messaging companies that are inherently viral, such as Whatsapp, Snap, and Discord.

However, distribution alone is not enough. Distribution without conversion is like being eight feet tall on the basketball court but missing every layup. Monetization is the end result, whereas conversion is a business' never-ending art and process of deepening and optimizing engagement. Startup founders often fetishize monetization, when really, the focus should be conversion.

So, how can consumer startups improve their distribution and conversion models? Here are three actionable pieces of advice:

1. Embrace the power of social proof: Social proof is a well-observed consumer behavior where people mirror the actions of others in an attempt to reflect correct behavior for a given situation. By leveraging social proof, startups can create virality and drive engagement. Trust in groups of people and friends, and want to emulate behavior that we feel is validated by others.

2. Harness the Etsy Effect: Driving discovery is one of the hardest parts of building an audience of engaged consumers. By creating platforms where users can be discovered, startups can drive loyalty and create brand equity. The Etsy Effect refers to the idea that if users understand that they can be discovered on the platform, it drives loyalty to the platform and creates brand equity.

3. Tap into the power of influencers: Influencers enable the disintermediation of the social media superpowers. By tapping into the audiences of influencers, startups can leverage a highly fragmented distribution channel with more opportunities for exploitation. While scaling influencer marketing may not be trivial, the upside of low-cost customer acquisition is usually worth the hard work.

In addition to these actionable advice, it's important to keep an eye on new platforms and emerging trends. New platforms present new opportunities for startups to gain traction and reach their target audience. Mega platform shifts, such as the rise of IoT or voice devices like Amazon Alexa, autonomous or connected vehicles, and blockchain technology, can give rise to new distribution opportunities.

Furthermore, startups can leverage existing platforms for cheaper distribution by standing on the shoulder of giants. By exploiting the features and resources of large incumbent platforms, startups can tap into their user base and drive growth. However, there is a risk of platform dependency, so it's crucial to diversify customer acquisition engines as the company grows.

In conclusion, continuous improvement and mastering the distribution and conversion models are essential for the success of both personal growth and consumer startups. By making small, incremental improvements and embracing new opportunities, individuals and businesses can achieve significant progress over time. So, take the time to measure backward, not just forward, and constantly seek ways to improve and optimize your performance.