This article originally appeared in the Huffington Post. Check it out here.
In the mobile revolution, user behaviors and technology change at rapid pace. Every few weeks, people become more proficient with their mobile products. Every 18 to 24 month, they upgrade to a new one. What worked a month ago, no longer works today. What was enough in a given context, no longer is in a different environment. What seemed worth buying, is suddenly offered for free from a competitor. There is no slowing down.
To be successful, mobile companies must adapt constantly. They need to try and test relentlessly until they find something that people want. Then, they do more of it. They rely on three key steps to keep up with the pace of innovation: goals, funnel and wild cards.
- Use a business equation to set goals.
Business is all about making money and making a profit. Profit is a function of volume, the number of transactions, and price. This translates into a simple, universal business equation for all businesses:
Often, companies break down the number of transactions by customer because they want customers to buy multiple times from them (it’s more effective for them to get an existing customer to buy more, than to acquire new ones). So their business equation has three factors instead of two. It looks like this:
Mobile companies set goals that roll up into one of these three factors. Their teams focus on one of three goals: increasing #transactions/customer by getting existing customers to come back; increasing #customers by acquiring more customers; or increasing profit/transaction by raising profit.
- Set up a funnel that feeds your goal.
They trace every customer interaction that contributes to their goal and identify which one converts, and which ones don’t. They identify gaps and try to fill them. They aim to optimize conversion in a very systematic and methodical way.
This approach is the foundation of Steve Blank’s lean startup methodology, which is designed to demonstrate empirically that there is value in a product or feature. What’s particular about lean startup, is that value is defined exclusively by funnel conversion. Anything that doesn’t contribute to the goal is considered waste.
- Systematically look for wild cards.
Wild cards are breakthrough opportunities that allow mobile teams to be creative and think outside of the box. These are high-risk-high-reward. Most of the time, people believe that finding a wild card is a matter of luck. But there is method to the madness. In fact, there are three types of wild cards:
- Hooks, which make the top of the funnel wider, as shown in this exhibit. They peak people’s curiosity. Think about the Facebook “like” or the Zillow “zestimate.” Hooks attract customers that would normally not have been interested. They provide a meaningful incentive for people to enter the funnel.
- Shortcuts, which cut a slice at the top or bottom (or both) of the funnel. Shortcuts remove an entire step from a user’s experience. Take Amazon’s personalized recommendations labeled “other books you may like” for instance. These recommendations appear immediately after a purchase. The step of searching for similar books is skipped all together.
- Layers, which open up a whole new layer in the funnel. For instance in the early days, Airbnb sourced a significant amount of its listings from Craigslist. While this wasn’t legally allowed by Craigslist’s terms of service, Airbnb used this layer to grow its inventory meaningfully. Layers are a new channel that allow mobile companies to reach their customers.
On mobile, impact is what matters. Regardless of their business’ maturity: in early stage, during the growth phase, and once they make money, mobile companies need to keep up with the pace of innovation. Speed is a matter of survival because user behaviors and technology change at such a rapid pace.