Creativity vs Optimization

What happens when product market fit is not a linear journey? What happens when early stage creativity gives way to incremental model optimization? What happens when that optimization stops working?

One possible start up journey is for a founding team to iterate and innovate to find a market, a buyer, a GTM cadence, a pricing model, the ICP. The founders are instrumental to the process of discovery and ideation. Then, once the patterns are established and PMF is achieved, the next step is scale and optimization. The founders give way to hired functional professionals who implement playbooks for how to optimize the GTM paths uncovered by the discovery journey noted above. The goal is to iteratively and incrementally improve funnel metrics, acquisition channels, close rates, renewal rates, etc. A new layer of management is brought in that are experts at scale who can track and measure every aspect of GTM. The founders may pull away from daily involvement in GTM...and defer to the scale team.

The need for creativity is supplanted by the need for optimization and predictability. This is the linear journey we often expect. The post founder-led sales teams have functional leads, VPs of sales, product, marketing, with SDRs, AEs, AMs, etc, all with ownership of part of the GTM motion and all comped to optimize a company-wide model for driving growth.

However, since the tech reset, many of the GTM playbooks are no longer working. See my post, "Lead Generation - When Nothing Works." At the functional level, the individual teams are working hard to execute their portion of the GTM function - MQLs, SQLs, booked meetings, renewals/expansions, new logos, etc. But, importantly, the market has shifted and the model built for optimization and scale needs fundamental overhauling. Too often, no GTM leader owns enough of the GTM activity to analyze and diagnose the slowdown in demand generation and sell-through as teams are tactically focused on optimizing the dials and knobs directly under their control.

The optimization work that does not generate growth is a wake up call that perhaps the path to PMF is non-linear but more like a sine wave. The assumptions that governed the model are failing to be realized...One typical reaction to the slowing metrics is to change the operators out - new VP Sales, new VP Marketing...ie it's an execution issue. If we operate the dials and knobs with more precision and instrumentation, we will see an improvement.

After a few new hires, the problems remain and it forces a more fundamental wake up call. The company is entering the trough of the recurring sine wave and just like the early days in the company the need for creativity outweighs the need for optimization. Creativity in product development, market expansion, pricing and business model, channel partners, ie, the model is not now one of extrapolation from a known set of datapoints but a fundamental reassessment of the customer, the product, the model itself. The immediate need is to rediscover the creativity that led to the early success and a new profile of professional is required, it may be the original founders or new hires that are focused more on discovery, experimentation, and learning, and less on optimizing a process.

In a market where everyone is growing by leaps and bounds, it can feel like a huge setback to revisit core assumptions. However, in this market, absolute growth is not being rewarded, but rather predictability, efficiency, etc is what the market values. So, slowing down, acknowledging lower growth, and exploring a set of structured, stack-ranked hypotheses for how to reignite growth is well worth it. It does, moreover, require the CEO/founders to lead the charge. No one but the senior leaders owns enough of the product and GTM functions to not only realize the need to shift from optimization to creativity, but also to have the power to make the necessary changes.

I am seeing more founders/CEOs retaking over key GTM and product functions, recognizing that a wholistic approach to rearchitecting the GTM and the core offering is required. Are you optimizing a set of processes that are not leading you to the goal? Are you changing people out in hopes that a new leader will better deliver on the operational execution? Is it time to revisit the fundamental assumptions made in the model and to shift the team's focus from incremental optimization back to the early days of testing, discovery, and intense creativity that led you to the success enjoyed to date?

In the early days, the team is small, communication more streamlined, and the founders are driving the bus. After funding and scale to $Ms in revenue, the team is much larger, the degree of specialization more important, and the siloes more pronounced. Leading a GTM reset as a 50+ person company is a much harder management challenge. The risks are high if you reintroduce a more discovery oriented GTM. However, the risks of not revisiting the fundamental assumptions, of not shifting back to creativity from process optimization may be far more costly. Welcome input and feedback on other thoughts.