Building Growth Models: An Essential Skill for Product Managers
If you’re a PM, you need to know how to build a growth model.
But, let’s face it. Most attempts fell flat. Here’s why:
Three factors drive growth model failures.
- It’s not just numbers
- The growth model requires holistic understanding
- Building one requires the ability to model complex behaviors
Let’s break each down:
1. It’s not just numbers
Building a growth model isn’t just about crunching the numbers and putting together a multi-sheet excel model.
It’s about understanding the levers that are worth modeling, choosing the rows that are relevant.
2. The growth model requires holistic understanding
This is a holistic understanding of:
- Users
- Metrics
- The Actuals
Most people don’t have skill in all three, let alone the ability draw the interconnections between them.
3. Building one requires the ability to model complex behaviors
On top of having the ability to understand users, metrics, and the actuals, you have to be able to model them together. You have to be able to connect the user “why” to the actual metrics.
This is why it is important for PMs and growth professionals to have the growth modeling skill. Not finance.
I hear your skepticism. Amidst the millions of other things you have to do, the growth model is a tempting one to delegate.
But I think you should own it:
- You have the knowledge
- You have the intersection of skills
- Its applications are most relevant to you
You have the knowledge
The unique knowledge of users, metrics, and the actuals lives primarily in the growth team.
Other functions have isolated exposure:
- User Research → Users
- Product Analytics → Metrics
- Strategic Finance → The Actuals
You have the intersection of skills
Along with the knowledge, growth is most well-positioned to actually build such a model.
Great growth practitioners aren’t just PMs or spreadsheet junkies.
They bring together the intersection of skills.
Its applications are most relevant to you
The outputs of a growth model -
- What metrics matter most
- How to prioritize amongst many good things
Are most useful to the growth & PM teams. They help you align stakeholders.
All PMs need to know how to build growth models.
You can find it in-depth here.
