Product-Led Growth and The Lanchester Strategy

Introduction: Lanchester?

I went to graduate school in NYC, studying International Marketing, and as a poor student, I would constantly explore the city as it was a cheap form of entertainment. An often repeated excursion was to visit the old Barnes and Noble Annex on 5th Avenue, a block from Union Square, where books were heavily discounted and browsing was encouraged. I stumbled across a Manga-style book, Lanchester Strategy, by Shinichi Yano during one visit. It looked like easy reading and directly related to sales and marketing, so I plunked down a few bucks and was immediately fascinated by the insights.

During World War I, British engineer Frederic Lanchester developed a set of mathematical principles to explain the dynamics of military conflict. One notable application of these principles was during the Battle of Britain in World War II. Though outnumbered by the German Luftwaffe, the Royal Air Force (RAF) used Lanchester's strategy to focus their limited resources in key areas. By concentrating their fighter planes on the most critical points of attack and using radar technology to anticipate enemy movements, the RAF effectively neutralized the numerical advantage of the Luftwaffe. This strategic concentration of force, a core tenet of the Lanchester strategy, played a pivotal role in the RAF's ability to defend Britain against a larger and more powerful enemy1 2.

Why Combining Product-Led Growth and the Lanchester Strategy Matters

There are valuable lessons to be learned from Lanchester's military strategies as applied to a PLG strategy. I assume you already know about product-led growth (PLG), so I’ll dive into how pairing it with the Lanchester strategy can give you a significant edge. Just like the RAF concentrated its resources to take on a bigger enemy, marketers can use PLG principles along with Lanchester’s strategy to optimize user acquisition, accelerate user activation, and leverage data analytics to improve the user experience, thereby continually outsmarting competitors.

Overview of the Lanchester Strategy

Lanchester’s principles, detailed in his work "Aircraft in Warfare: The Dawn of the Fourth Arm," revolve around concentrating force at critical points to overcome a numerically superior enemy(1) (2).

These are the fundamental principles of the Lanchester Strategy:

• Concentration of Force: Focus your resources on critical areas for maximum impact. Instead of spreading thin, put your efforts where they count most. This could mean focusing on critical stages of the user journey, such as acquisition or activation, where you can have the most significant impact.
• Attrition Strategy: Gradually weaken the enemy by continuously attacking their weaknesses. In a PLG context, you may have identified in-product support and experiences as a weakness in your competition, so you would constantly outperform a competitor until they can no longer compete.
• Maneuver Strategy: Use speed and agility, a basic tenet of PLG, to outflank and surprise the enemy, gaining an advantageous position. For PLG operators, this means being adaptable and quick to respond to market changes, thereby outmaneuvering slower competitors.
• Continuous Strategy: Regularly evaluate and adapt your approach based on real-time data and feedback to maintain a competitive edge. In a PLG context, this involves continuously optimizing user onboarding, activation processes, and in-product experiences to ensure they remain practical and relevant to user needs.

In PLG, the Lanchester strategy involves concentrating resources on core competencies and market segments where a company can dominate. It's about focusing on your strengths and exploiting the weaknesses of competitors. For example, a tech startup employing a PLG strategy might focus on creating an exceptionally smooth and intuitive onboarding process that differentiates it from competitors rather than trying to compete on all fronts.

Synergies between Product-Led Growth and the Lanchester Strategy

One of the primary principles of the Lanchester strategy is the concentration of force, which can be directly applied to PLG. This means identifying key user segments where your product can have the most impact and focusing your resources. For example, a company might optimize the onboarding process and enhance critical features that address the specific needs of these high-value segments, ensuring rapid user activation and retention.

For instance, when Notion identified that new users often felt overwhelmed by the tool's versatility, they concentrated their resources on improving the onboarding process. They developed an interactive onboarding experience that guided users through setting up their first workspace and provided personalized tips based on user input. This focused effort on onboarding enhanced the initial user experience and significantly increased activation rates and long-term retention, demonstrating the power of concentrating resources on critical areas to maximize impact.

Incorporating Lanchester’s attrition and maneuver strategies into PLG means continuously optimizing the user experience based on feedback and market demands. This approach ensures that the product remains relevant and constantly improves, gradually wearing down competitors who can't keep up.

For example, Zoom consistently gathered user feedback to enhance its video conferencing features and user experience. By focusing on speed and agility in responding to user needs, Zoom was able to quickly outmaneuver slower competitors, solidifying its position in the market during the sudden surge in demand for remote communication tools.

Applying Lanchester’s Principles in a Product-Led Growth (PLG) Strategy

Implementing a product-led growth strategy using the principles of the Lanchester strategy involves several key steps that are particularly tailored to PLG requirements. These steps can be organized around the four main phases of PLG: acquisition, activation, monetization and continuous evaluation and optimization. Additionally, integrating growth loops can significantly enhance each phase. Here's how these principles can be effectively applied in each phase while incorporating Lanchester's concepts:

A.???? Acquisition Phase: Optimize User Onboarding and Initial Experience

In the acquisition phase of a PLG strategy, the focus should be on providing an exceptional user onboarding experience to ensure new users quickly understand and see the product's value. This involves creating a seamless onboarding process that guides users through the initial setup and highlights key features that solve their problems effectively.

Integrating Lanchester’s Concentration of Force: Apply Lanchester’s principle of concentrating resources on high-impact areas. This means quickly optimizing the onboarding experience to convert new users into active users for the acquisition phase. For example, a video conferencing platform might develop an intuitive onboarding flow with interactive tutorials, personalized setup guides, and immediate access to essential features. By concentrating resources on improving the onboarding process, the company ensures that users quickly experience the product’s value, leading to higher activation rates and better user retention.

Integrating Growth Loops for Acquisition: Growth loops are self-sustaining processes that drive user acquisition through a cycle of user actions and results. This concept aligns with Lanchester’s maneuver strategy, which emphasizes using speed and agility to outflank and surprise the competition. For instance, a company might implement a referral program where existing users invite new users, creating a loop where each new user potentially brings in more users. This can lead to exponential growth and create a network effect, making it difficult for competitors to catch up. Another example is offering incentives for users to share the product on social media, thereby attracting new users organically. By designing and optimizing these growth loops, companies can leverage the maneuver strategy to enhance their acquisition phase, ensuring a steady flow of new users into the product while staying ahead of competitors.

B.???? Activation Phase: Concentrate Resources on High-Impact Features

In the activation phase of a PLG strategy, it's crucial to allocate resources effectively to ensure users quickly realize the value of your product. This means investing in developing and refining features that drive user engagement and satisfaction. For example, a project management tool might enhance features that help users manage tasks more efficiently and collaborate seamlessly. By prioritizing these high-impact features, the product can deliver significant value early in the user journey, increasing the likelihood of users becoming active and engaged.

Integrating Lanchester’s Maneuver Strategy: Apply Lanchester’s maneuver strategy by being agile and adaptive to user needs. In a PLG context, this involves rapidly iterating on and refining critical features based on user feedback and usage data. By concentrating efforts on identifying and communicating features that will impact user engagement and satisfaction, companies can outmaneuver competitors who are slower to adapt. This agile approach ensures the product remains relevant and continuously improves, keeping users engaged and loyal.

Integrating Growth Loops for Activation: Incorporating growth loops into the activation phase aligns with Lanchester’s maneuver strategy by leveraging user behavior to drive further engagement. For instance, a collaboration tool might implement features that encourage users to invite their team members to join the platform, creating a loop of continuous engagement. By focusing on features that promote viral growth and user collaboration, the product can achieve higher activation rates and maintain a competitive edge in the market.

C.???? Monetization Phase: Utilize Data-Driven Insights for Continuous Improvement

During the monetization phase, use data analytics to monitor user interactions with your product and identify opportunities for upselling or cross-selling. This information can help you understand which features users are willing to pay for, where they encounter difficulties, and how they use the product. Tools such as Mixpanel or Amplitude provide valuable insights into user behavior, allowing you to make informed decisions about product updates and pricing strategies. Continuously iterating based on user data ensures that your product evolves in ways that increase its value and usability, leading to higher conversion rates and increased revenue.

Integrating Lanchester’s Attrition Strategy: Apply Lanchester’s attrition strategy by continuously monitoring user interactions and behavior to identify patterns that indicate readiness for upselling or cross-selling. Focus on data-driven tactics to offer relevant premium features or additional products that meet users' needs. By analyzing user data, you can tailor your monetization efforts to target users most likely to convert, gradually increasing your revenue and wearing down competitors who cannot keep up with your targeted and strategic approach. This constant focus on user data and personalized upselling ensures you stay ahead while maximizing revenue from your existing user base.

By aligning the attrition strategy with data-driven insights for upselling and cross-selling, you can effectively enhance your PLG strategy during the monetization phase.

D.???? Continuous Evaluation and Adaptation: Stay Agile and Responsive

Landscapes are constantly changing, so it's crucial to regularly assess and adjust your strategies across all phases of PLG. This involves staying responsive to user feedback and pivoting when necessary. For instance, growth marketers continuously evaluate their market position and adapt their strategies to stay ahead of competitors in their respective industries. In a PLG context, this could mean adding new features based on user requests, improving existing functionalities, or exploring new market opportunities.

Integrating Lanchester’s Continuous Strategy: Regularly evaluate your position relative to competitors and adapt your strategies to maintain your advantage. This continuous assessment and adjustment ensure that you remain competitive and can quickly respond to changes in the market.

Integrating Lanchester Strategy with Product-Led Growth

Combining the principles of the Lanchester strategy with a product-led growth (PLG) approach offers a solid framework for driving success. Companies can outsmart competitors and fuel significant growth by concentrating resources on high-impact areas, continuously improving based on data-driven insights, and staying agile in response to user changes.

The Lanchester strategy highlights the importance of focusing efforts where they matter most. In a PLG context, this means identifying and communicating your product's unique value to grow and retain users. By applying Lanchester’s principle of concentrating force, companies can ensure their PLG marketing and development efforts hit the correct targets, maximizing impact.

The iterative nature of PLG aligns well with Lanchester’s attrition strategy. Continuous product enhancements, driven by user feedback and data analytics, help companies stay ahead of competitors who might not keep up with the pace of innovation. Regular evaluation and adaptation ensure businesses remain relevant and competitive in a constantly evolving market. Integrating continuous testing and optimization into this process allows companies to experiment with new features and strategies, quickly identifying what works and what doesn't, thus optimizing their product and user experience.

Footnotes

1 Overy, R. J. (2000). The Battle of Britain: Myth and Reality. Penguin Books. URL: https://www.amazon.com/Battle-Britain-Reality-Richard-Overy/dp/0393359030

2 Lanchester, F. W. (1916). Aircraft in Warfare: The Dawn of the Fourth Arm. Constable & Co. Ltd. URL: https://www.amazon.com/Aircraft-Warfare-Dawn-Fourth-Arm/dp/110384280X