Stages of the customer-vendor loop

One other thing that seems useful is the idea that the feedback loops go through what appears like stages of development – I know! I am sorry! I see developmental patterns everywhere. Here’s a quick framing that captures the idea.

Let’s start with a stage I call aspirational. A customer-vendor loop at this stage isn’t actually a working loop, but rather just an inkling of it. Every team that sets out to build the next popular app has their customer-vendor loop here. There is not yet a product or users or interactions.  There’s just a bunch of folks who want to make it happen. When starting with a customer-vendor loop at the aspirational stage, it might be useful to capture the hypothesis and share it with your fellow teammates to ensure everyone is focused on bringing forth the same customer-vendor loop.

The stage that typically follows is nascent. All the components of the loop are either already in place or starting to come together, but the compoundness of the customer-vendor loop is not yet clear. There is a Product, some Customers, and even maybe Interactions, but a lot of tweaking needs to happen to get it really cranking.  The asymptotes first show up at this point and necessitate rethinking of the loop hypothesis. Here’s when the sudden realization hits that maybe the stock Customers is not as large as we thought, or that the Interactions do not generate value as we imagined. This stage is most often characterized by us messing around with the original customer-vendor loop hypothesis. We re-examine our assumptions about each stock and flow, looking to find the right combination of components.

If we are lucky, we find that combination. Enter the compounding stage. No sooner that we pat ourselves on the back, we are thrust into the constant game of keeping the compounding loop going and squeezing more and more compounding power out of it. These stages are thrilling success stories, and their visibility and appeal tend to leave us believing that they are more common than they actually are. Very commonly, this stage is characterized by optimization. However, a team with enough foresight will run forward looking for future asymptotes and invest heavily into moving them.

Despite all the effort put into pushing away the asymptotes, sooner or later, our loop reaches the mature stage. Customer-vendor loops at mature stages may still compound, but it is fairly clear that the growth is slowing down, stalled, or waning. The dreaded upper hook of the S-curve is here. At this stage, loops typically involve large quantities of stock and highly optimized flows, so even a tiny bit of compounding may sustain the team and allow it to keep going for a while. However, most interest in such loops tends to be in reusing its components for another loop. A successful reuse is what usually triggers growth in another, new loop that is born out of the ashes of the old one.

While visualizing these stages, I am constantly tempted by the idea that the process of moving through the stages is the process of constructing a viable compounding loop. My experience tells me that falling in love with this idea is fraught. It is more productive to view the stage progression as the process of searching. Compounding loops are found, not created. Sure, observing a novel combination of a customer-vendor loop might seem like it was created from whole cloth. However, upon closer examination, the path to every one of these lies through a patient, fits-and-starts exploration over possible combinations of loop components, rather than a matter of grand architecture.

Reflecting on a post from a year ago, this framing might be a somewhat more disciplined articulation of the three organizational missions: questing, scaling, and keeping. The “questing” mission is characterized by the “nascent” stage of the customer-vendor loop, with the “scaling” and “keeping” missions  matching the “growth” and “mature” stages, respectively.  The additional “aspirational” stage feels right as the early brainstorms that might precede any team mission. Hooray for another rewrite count increment!

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