Fast/Slow in 3X: Explore/Expand/Extract
“Are we slowing down?” asked the software executive.
“Well,” says me, the 3X thinker, “depends on where you are in the curve.”
It’s been a while since I’ve written on 3X, so here’s the basics. As an idea/product/company grows, value-maximizing behavior changes dramatically.
- Explore — to overcome disinterest, try many small experiments.
- Expand — to overcome bottlenecks to scaling, ease the limitations of the next rate-limiting resource.
- Extract — to sustain growth, continually increase profitability while you finish growing.
Fast and slow take different meanings depending on location on the curve.
Explore — How long from idea to measured feedback? Larger companies tend to increase this delay as social structures become more complex, tolerance for risk declines, and extract thinking comes to dominate the culture. Delay creates a feedback loop: fewer experiments->fewer successes->more pressure on each experiment->fewer experiments.
How many experiments per hour/day/week/month? Increased delay can temporarily be overcome by paying more people to run more experiments. However, delay grows exponentially and investment can only keep up temporarily. Volume is a good measure of exploration speed because exploration’s success are always surprising.
Expand — How quickly do people and money flow towards emerging bottlenecks? The bottlenecks that choke growth are almost always identified in time. However, the people or money that could alleviate the bottleneck are kept where they are because they are profitable there.
Facebook engineering did a great job of reacting to emerging bottlenecks. The best engineers would swarm to a knotty technical problem. Not many organizations are willing to pay the price in managerial complexity that Facebook was willing to pay to achieve this level of resilience in the face of overwhelming success, but it’s achievable.
Extract — How long do profitable projects take? These projects can increase revenue or decrease costs. Growing organizations retain process, handoffs, and delay that no longer add value. Growing organizations retain the focused urgency of expansion past its usefulness and thus don’t step back to see the need to eliminate process, handoffs, and delay that no longer add value (or the need to add process, handoffs, and delay that do add value by increasing resilience).
“Are we slowing down?”
“Well, if you’re exploring and experiments take longer for no essential reason, then yes. Or if you’re exploring and you have fewer experiments per month, then yes.
If you’re expanding and folks keep fiddling around while growth strangles for lack of a critical resource, then yes.
If you’re extracting and profitable projects take longer than necessary, then yes.”