The T-algorithm is a framework primarily built by Professor Scott Galloway and collaborators over the years. It’s based on research into the strategic moves that have produced modern trillion-dollar growth companies. Companies that have achieved strong growth and rising margins at the same time. That’s a rare combination.
The components of the T-algorithm
The T-algorithm is a set of identified strategic patterns, built from observing real life, not theorising behind a mahogany desk. Because of that, it may not slot neatly into your existing mental frameworks. But once you start using it, you’ll notice how it opens up your thinking.
The components that have been benchmarked across the companies used to build this algorithm are:
Visionary Storytelling
Visionary storytelling is a company’s (or its leadership’s) ability to articulate a bold vision and then take concrete action to deliver on it, influencing stakeholders along the way. Companies that do this well attract better talent, cheaper investor capital, and higher-value customers, getting all of them on board for the ride.
Here’s the thing: plenty of companies invest in painting a picture of the future. But they tend to forget the second part, consistently showing progress toward that vision through real actions.
The companies that have nailed this don’t just talk about a bold future. They demonstrate it systematically in everything they do. Not with rhetoric. With receipts.
Benjamin Button Products
Named after the character who ages in reverse, Benjamin Button products and services are those that become more vital the longer they’re used and the more people use them. Network effects are one example, but they only cover part of the category. These are products and services that improve as data, users, or some other critical mass grows.
Tech products are the easiest example, but far from the only one. Airbnb gets better for everyone as reviews, listings, and usage accumulate. Analytics tools improve with more data. The pattern is everywhere.
The companies that succeed here haven’t just found a way to improve their product or service over time. They’ve found the flywheel that increasingly runs on its own momentum.
Appealing to Human Instincts
Appealing to fundamental human nature is a strategy you’ll find in every organisation that successfully leverages the T-algorithm. The company taps into some or all of its customers’ deep-rooted instincts, the ones that have played a critical role in our evolution and survival.
These instinctual areas can be roughly grouped into four:
- Brain and reason: The drive to make good decisions and find answers.
- Heart and emotions: The need for belonging and feeling safe.
- Gut and sustenance: The need to secure your own survival as efficiently as possible.
- Reproductive drive: Elevating your status in others’ eyes and attracting a partner.
You’ll find companies doing this well in both B2B and B2C across industries. Buyers are always humans, and humans are always influenced by these base instincts. How obviously this strategy plays out depends on the industry and the target market.
Appealing to human needs isn’t new in marketing. But here we’re talking about it as the core of a company’s entire product or service strategy, not just a messaging layer.
Rundle (Recurring Revenue Bundle)
The subscription model is probably familiar to you. A rundle is essentially the combination of subscriptions and product bundling. Think Amazon Prime: you pay a fixed price and get a video streaming service plus everything from fast delivery to pharmacy services, depending on your market.
Rundles typically feature a mix of quite different products and services that still revolve around a related theme. A good local example would be occupational health services, where a company pays a fixed rate for employees’ healthcare covering everything from physiotherapy to general practice and surgeries.
Rundles are often a kind of “IQ test” for the buyer, in the sense that they’re clearly cheaper than the sum of their parts. For the company, the profitability comes from customer loyalty, revenues scaling faster than costs, and the simple fact that not everyone uses every part of the bundle.
Vertical Integration
Vertical integration isn’t a new concept, but today it has become a significant strategic weapon. The idea: a company aims to own as much of the value chain as possible in delivering the end benefit to the customer.
A streaming service starts producing its own content instead of just hosting others’. An advertising platform adds e-commerce features. A company that used to only design semiconductors starts manufacturing them too. And so on.
One useful rule of thumb: if your company sits somewhere in the middle of the value chain, it’s usually safer to integrate toward the raw end rather than toward the end customer. The reason is straightforward. You don’t want to start competing with your own customers on their home turf.
Career Accelerator
Career accelerator means, in practice, that working at your company is a springboard for career advancement. The result? High-calibre recent graduates are willing to come in at entry-level pay and deliver outsized results.
Companies that lean into this strategy often get to pick talent like raisins from a bun. Turnover within three years is high, but so is advancement. Essentially, the company attracts, validates, and leverages the rising stars of the workforce.
Putting the T-algorithm to work
Using the T-algorithm starts with analysis. You compare each component against both your own company and the competitive landscape in your market. The goal is to understand where your company stands on each strategy, where competitors stand, and how much variation exists across the industry.
From there, you analyse what your end customers actually value across the different features of your product or service. Then you prioritise strategic objectives and weight the T-algorithm strategies accordingly.
Finally, you select the most important strategies from the algorithm to develop, plan the investments, and (as is typically the case) seek approvals for the strategic directions before bringing them to life through an execution roadmap.
My experience with the T-algorithm
Once you’ve internalised the T-algorithm and can use it as an intuitive part of your strategic work, it enables two approaches:
- Quick analysis: You can rapidly identify a company’s, market’s, and customer base’s current priorities and select which efforts are worth doubling down on.
- Deep strategy work: You can build more thorough analyses and plans, the kind that get board and shareholder buy-in.
I use this tool constantly, analysing companies’ strategies as part of my day-to-day work. In broader strategic engagements, we bring this model into companies and help build the strategic plan, and often help execute it, too.
Also read:
Strategic Moats Defend Your Business in Competitive Markets
Commercial Megatrend Analysis as the Foundation for Strategy Updates