The Behavioral Design of Growth
How to apply Behavioural Design Thinking to growing a business?
The number one reason why most startups fail is that they haven't figured out how to find a working business model before they run out of cash. The goal of a startup is to learn as fast as they can how to produce paying customers. That's one of the most significant learnings from the bestseller 'The Lean Startup".
It's not too difficult to think about this problem in Behavioural Design terms: It's a classic habit-problem. Startups fail when they can't stick to the habit to go through these fast loops of Build, Measure and Learn. The best book that every entrepreneur should read on this topic is The Rockefeller Habits - or the second edition of this book, called Scaling Up -, by Verne Harnish. The whole book is about installing daily, weekly, monthly and quarterly habits to work towards achievable goals. The 5-minute daily sessions are about checking in on how everyone is doing and if anyone needs help. The 1-hour weekly meetings are all about sharing good news, tracking progress towards the quarterly goal and sharing customer feedback. Quarterly meetings are about choosing a quarterly "rock" to go for in the upcoming quarter.
The beauty of combining goals with habits is that it constantly reminds the team on what to focus. This simple design also triggers feedback and fast adjustment. It quickly surfaces when an individual, the team of the company is not on track towards reaching the goal.
Paul Graham, the founder of the startup accelerator program Ycombinator wrote something similar in a famous essay called "Startup = growth". He wants his startups to focus on one thing, and one thing only: 7% more customers on a weekly basis. I love his argument:
"We usually advise startups to pick a growth rate they think they can hit, and then just try to hit it every week. The key word here is "just." If they decide to grow at 7% a week and they hit that number, they're successful for that week. There's nothing more they need to do. But if they don't hit it, they've failed in the only thing that mattered, and should be correspondingly alarmed.
Programmers will recognize what we're doing here. We're turning starting a startup into an optimization problem. And anyone who has tried optimizing code knows how wonderfully effective that sort of narrow focus can be".
Both Verne Harnish and Paul Graham believe in the power of what BJ Fogg would call Tiny Habits: Chop a big problem down to its shortest components and try to figure out how to solve it right. If that works, go one step further. Habits are the secret to sticking to a focus on growth.
Tip: All the essays of Paul Graham are a great masterclass in startup thinking.
Tip: If you download our brochure, you get a free Tiny Habit training.
Tip: Habits versus Goals, a great blog post on the (awesome) Farnamstreet Blog.
Tip: The Accelerator Program of The Entrepreneurs' Organization is all about mastering the Rockefeller Habits. Check the international or the Dutch website, if you're interested in taking your startup to the next level.
Disclaimer: I (Tom) am a board member at The Entrepreneur's Organization in The Netherlands. More than half of our members work with the Rockefeller Habits.
Posted by Tom.