Input / Output Thinking: Reducing Complexity to Unlock Growth

When considering revenue growth I like to think in simple terms of inputs and outputs - imagine the revenue-generating ‘system’ is a black box, inputs go in, outputs come out. Or in simple financial terms - $X goes in and $Y comes out.

Growth comes from measuring, managing, and optimising the inputs and the system.

This is a great example of first principles thinking. Leadership, process, technology, personnel and more - these are just some of the variables that, in my experience, affect inputs and therefore outputs.

Below I share some scenarios from my experience including a simple framework to keep in mind which also serves as a good exercise to run periodically.

I also share some added benefits I find from this approach.

Chasing Outputs Instead of Fixing Inputs

Thinking about increasing market penetration as an example (see previous newsletter here), many companies focus on the output, revenue, without deeper consideration of the system and inputs.

Some examples from my experience include:

• Trying to grow revenue without addressing deal volume - why are more deals not entering the pipeline? Band-aid solutions of the past did not have the desired effect. A competitive environment in a niche market required a whole new commercial approach including brand, marketing, product offering and more. Sales growth was unlocked.
• Trying to grow revenue without addressing conversion rates - why are more deals not converting? Proposals and contracts were reviewed and improved to make them more compelling. Client specific marketing budgets were introduced to support clients. Conversion improved.
• Trying to grow revenue without considering retention - why do we have poor LTV? UX / UI needed improvement. Better content updates and marketing efforts were also required. LTV improved.

As with everything there are many variables to each and every unique scenario - below is a simple framework to help focus your inputs and improve your outputs.

'Black Box' Optimisation Framework

1. Define the Outputs Clearly

Revenue, pipeline velocity, LTV/CAC ratio—what are you actually trying to improve? Keep the number of outputs as low as possible with a focus on what really matters to the business at the time. Review as required.

2. Identify and Optimise the Critical Inputs

What inputs truly move the needle and how can they improve? (e.g., deal volume, average selling price (ASP), conversion rates, sales cycle time). Get as granular as you can.

3. Remove Complexity & Focus on High-Impact Inputs

Where is effort being wasted? What is the cost / benefit of lower impact inputs? How do you remove lower impact inputs and focus on high-impact inputs with little / no disruption?

4. Optimise to Create a Scalable, Repeatable System

How can this new strategy be systemised, measured and managed (automation, standardisation, process refinement, reporting)? Optimise the system and review with relevant stakeholders periodically.

In Summary

Stop chasing revenue as the only goal - also focus on the mechanics behind it - first principles thinking. Diagnose your business by identifying the real inputs driving growth. Simplify, optimise, and systemise for faster, more predictable growth.

Final Thoughts (and added benefits...)

By reducing complexity and simplifying the revenue-generating system and its inputs, you will be able to execute more consistently. This is a fundamental foundation for growth.

By reducing complexity and simplifying the revenue-generating system and its inputs, you will allow room for strategic experimentation. New strategies and tactics for growth need room to be tested to ensure the business keeps up with market trends and maintains a competitive edge.

As always - I have a long list of other thoughts I brainstormed while writing this (yes, I wrote this, not AI) that might bring you some value.

Connect here and I'm happy to share.

And if you enjoyed this follow me for more Strategic Meditations where I break down powerful business frameworks into actionable insights.