Systems of Growth

When we think about software, we usually think about the bevy of required fields we are forced to fill in. Those fields exist for a purpose: to create records that drive visibility for executives and governance for a business process.

The problem, of course, is that it creates a misalignment of incentives, with end-users feeling aggravated about admin work and asking the age-old question, “what’s in it for me?” (We covered the role of incentives, amongst other things, in our  Framework for Change post.) 

But what if software could be more than just a system of record(s) that was intended for visibility and governance, what if it could drive growth for organizations? I believe we are starting to see this shift happening, particularly in sales and marketing (S&M).

Let me give you an example: the traditional staple of an S&M technology stack was always a CRM system like Salesforce. These tools require a tremendous amount of manual data entry from individuals (sellers or marketers) and much of the work was about providing visibility like pipeline reporting or providing governance around data integrity (eg. updating contact so they are added to a nurture campaign). 

The world of software is undergoing a large shift in how the people that run sales and marketing teams are thinking about driving growth. Spurred on by Product Led Growth, increasingly “growth” teams are working closely with sales, product, and marketing to find creative and repeatable ways to drive prospects and customers towards buying more of their product. 

At the center of this are a sophisticated set of systems and rules that can automate much of the workflow. Let’s look at an example of how this can work. On Segment’s blog, they have an interview with Kyle Gesuelli, the Head of Growth at Frame.io. The post outlines how Kyle is using systems to drive growth. The first thing you notice is the staggering growth of tools since Kyle first started at Frame in 2017. 

The intention of Kyle’s stack isn’t for record-keeping with an eye towards visibility or governance inside the organization, instead, it’s purely for growth. And if you are surprised by the rapid expansion of Frame’s stack, you shouldn’t be. As you get better with growth systems, software likes to work with more software. “As the company scales and gets more sophisticated,” Kyle explains, “more complex and powerful tools are introduced.”

We shouldn’t be surprised by this: as you automate one process the newfound clean data is easier to automate in other parts of the process. Ben Horowitz of VC firm, Andreesen Horowitz, recently discussed this in looking at the coming trends in 2020: 

Today, systems of record are maintained through manual data entry, which can lead to data integrity issues and time-consuming data cleansing and prep. As AI has become more powerful, it’s started to automate data capture. (For instance, AI can create data records in Salesforce from email exchanges.) But if AI can identify what data should be entered and how to structure that data, then we may not need a traditional system of record. 

To bring this down to earth you can think about two big categories of how systems of growth are changing the way sales and marketing works:

1. Automating the capture, enrichment and nurture of leads: This process often involved a seller going in to a system and moving the lead along the prospect to customer journey. This process can now be automated. 
2. PLG: the movement known as Product Led Growth, allows for companies to leverage their product and tie it to specific outcomes of how to automate a customer’s journey from trial →  qualification → paid customer →  renewal → expansion. 
   

We are still very early in the days of systems of growth and a shift away from systems of record. But the trend is clear and will have knock-on effects: 

• Systems must automate low value, routine work and provide growth members with actionable triggers that allow them to do the more creative, non-routine work. 
• The Product Led Growth (PLG) movement arms sales teams with direct product usage data and insights from customers. 
• As you get better with growth systems you add more. According to IDC, between 2018 and 2023, 500 million new software applications will be introduced, which is equal to the number of apps built over the last 40 years
• Operators and the owners of systems are moving from systems of record to systems of growth, making software more strategic and aligned with a more measurable ROI. This moves the conversation of buying software from being about insurance or efficiency to being about driving revenue.
  

We are in an exciting moment, and one I expect will only accelerate as more PLG companies go public, and existing ones like Datadog, Zoom, Slack, and Atlassian continue to grow as public companies. The data first approach to sales and marketing will beget a whole new suite of systems that, while they likely won’t completely replace the tried and true CRM, will hopefully free up sellers and marketers from the drudgery of updating contact info. What do you think? I would be interested in hearing from you and how you are using systems differently now than in the past.