Gall's Law and the Holy Trinity of business systems

Or, how to not waste time

Hi all -

Last week I wrote about systems thinking applied to business - and why successful businesses design around demand, not supply.

This week I’m digging into the first three demand systems we all need to build.

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Backwards

The shift from “supply thinking” to “demand thinking” is the single most important shift businesses need to make. It’s how to go from a well-built product nobody cares about to a lean, differentiated, growing business.

Most founders start with a product idea or a future-state vision and try to jam that into something that can be sold.

The result is supply - a product that is trying to find its market. Which leads to spammy sales and marketing, nonspecific value props, bloated teams, product scope-creep, and wasted time and effort.

Instead, building for demand - what actual customers actually need - is how to get out of theory-land and build a meaningful, differentiated business.

This week, I’ve been thinking about minimum viable products and Gall’s Law (“complex systems that work always evolve from simple systems that work”), and realizing that you do not want to build a minimum viable product; you want to build three minimum viable systems.

Three minimum viable systems

The three systems are:

• Demand-capture system (this is trigger-based go-to-market)

• Demand-conversion system (this is your sales pitch & real differentiation)

• Value-delivery & retention system (this is your “product experience”)

DEMAND CAPTURE

Again, with an eye towards Gall’s Law, the simplest demand-capture system operates like this:

1. Something happens in a potential customer’s world that causes them to need to change

2. When #1 happens, they find you and/or you find them

We vastly over-complicate go-to-market, focusing on tons of different activities and metrics. Yet we forget that the simplest go-to-market system is best described as “opening your lemonade stand on a hot summer day on a busy suburban street, not in a Minneapolis back alley in January.”

Demand exists somewhere. The simplest system is to go where demand actually is. Perhaps someone needs to buy your product after hiring for a certain role; after raising money; after posting something on social media that nobody responds to.

Whatever it is, build the simplest way to find those people and talk with them.

Then you can worry about evolving the simple trigger-based system into a more complex system with multiple triggers, people who aren’t REALLY ready to buy, etc. etc. etc.

DEMAND CONVERSION

The simplest demand-conversion system:

1. The right person from the “demand capture” step finds you (or you find them)

2. When #1 happens, they are likely to choose you instead of any of their alternatives

It’s easy to get so lost in the deluge of sales “best practices” peddled by influencers, course-sellers, and well-meaning late-stage folks.

We forget the basics: The right buyer in the right situation needs to understand their options and, once they understand their options, choose you. That is your demand conversion system - helping your potential customers understand their alternatives such that the right ones choose you. (And, setting the right expectations so that they are satisfied when they do choose you!)

Complexity, nuance, and sales skills all may need to emerge later - when you’ve got multiple demand capture systems pulling in prospects in different stages of their buying journey. But early on, when you’re focused on a single trigger-based demand capture system, your demand conversion system can be simple.

I recommend it every other post I write: The best book on demand conversion is Obviously Awesome by April Dunford.

VALUE DELIVERY & RETENTION

Ah, yes, the product.

Recall - your product is a RESPONSE to demand, which means unless you understand your demand capture and demand conversion systems, your product will be unfocused and irrelevant to potential customers.

Once you understand the first two systems - what causes people to change; why they choose you - it is much easier to build a meaningfully differentiated product. You’re focused on the things that actually matter. Not the things you THINK actually matter, not the things that work IN THEORY.

And you can build a minimum viable system that uniquely solves a customer problem and retains them, then let the fun complexity emerge later.

The “fun” stuff emerges

My problem with startup Twitter - well, one of my many problems - is that it is obsessively focused on bullshit that only emerges once you’ve figured out these three systems.

Growth hacks. “THE reason Amazon was successful.” Messaging. Landing page teardowns. Branding. Category creation. Building an audience. Building a media company for your brand. PR. Goals. OKRs.

(I should just quit Twitter.)

This is all downstream, cart-before-horse thinking.

Once the three simple, nuts-and-bolts systems work, you can then explore the “fun” systems. Or you can just supercharge these systems. But until these three systems work, you’re wasting time on anything else.

PS -

• While startups usually start as “supply” ideas (product ideas), there’s no reason you can’t shift over to “demand” before building.

• Other startups start as “opportunity space” ideas - basically, seeing a strategy for capturing a piece of the market. This is a good starting point (perhaps better than “supply”) but you must build these three simple demand systems.

• There is probably some system around people / culture that’s important. “The enabling system for these three systems,” perhaps.