Hi there -
Here is this week’s “1 principle, 2 strategies, and 3 actionable tactics” for running lean…
1 Universal Principle
“Making happy customers is the universal job of every business.”
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Proof: Ask any founder if they have customers and want more customers. Irrespective of their business model type, they’ll answer yes. QED.
But making happy customers is NOT the same thing as making customers happy. The work of making happy customers happens in a customer factory.
This isn’t just a cute metaphor but one that opens the door to applying systems thinking to your business model.
2 Underlying Strategies at Play
I. All business models can be modeled as a system.
At a basic level, all business models take unaware visitors as input and turn them into happy paying customers. We can break this even further into a series of interconnected macro-steps:
Visualizing your business model this way helps you
- measure traction as customer throughput,
- build simple company-wide dashboards, and
- prioritize your riskiest assumptions (see next section).
Note: Multi-actor models (like multisided and marketplace) have two or more customer factories (one for each side) that interconnect to make the business model work.
II. All systems have a single constraint.
If you want to efficiently improve the throughput of a factory, start by finding the slowest machine on the floor. This is the essence of the Theory of Constraints (Goldratt).
Similarly, uncovering the slowest step in a customer factory is the key to improving throughput, aka traction, aka growth.
3 Actionable Tactics
I. Map your customer lifecycle as a customer factory.
Identify the key macro (measurable) steps your customers take as they move through your customer factory. This can change over time but focus on modeling current steps.
II. Build a weekly dashboard.
Create a slide deck with 52 slides (one for each week in the year) and start measuring and reviewing your customer factory with your team weekly.
CLICK HERE to download a 52-week Customer Factory template.
III. Break constraints systematically.
A steady state settles in quickly even in an early-stage product.
Compare your customer factory metrics across weeks (cohorts) to
- identify bottlenecks,
- chase root causes,
- formulate new solutions,
- test these solutions, and
- double down on the winning ones.
This is how you move mountains one domino at a time.
That's all for today. See you next week.
Ash
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P.S.
The Customer Factory Manifesto
