How much money have you wasted?

Many leaders work to avoid higher comp for more experienced people, or tolerate low performers for too long.

I’ve seen high performing teams complete in days what others take weeks or months to perform. Often, the implementation is much, much better.

This applies to everything from a marketing web page to a funnel analysis to delivering new products.

I’m not exaggerating.

What’s the cost of this wasted time? Here’s a rough method for calculating both the operational costs and the opportunity costs…

A. Operational costs

Your monthly expense load

x

The number of months wasted

B. Opportunity cost

The revenue and scale lost from shipping late

+

The window of opportunity given to competitors to get a foothold against you

+

Loss of moral and momentum on your team

+

Loss of A players who leave because they won’t tolerate working with B and C players.

—

In short, the costs are astronomical. Often, they are catastrophic.

Hire slow. Pay high performers well. Fire low performers fast.

Work backwards

Rather than taking what’s in front of you and iterating on it, consider taking the time to figure out what’s ideal, and then work backwards.

Often times, when I walk people through this process, they either get very defensive (you can’t do that) or very confused (it doesn’t work that way) or very bemused (*smile* you’re so funny and nieve).

The reality is, however, it does indeed work that way.

There are many times when pragmatic iteration is important and necessary.

There are times (particularly when you’re creating a new market or trying to change the way the world works in some way) that the normal iterative process is slow or ineffective.

Take the time to clearly imagine the end state. What would it look like if everything worked the way it was supposed to? What systems, processes and patterns would be in place? What would the user experience look like? What deals and business models would make that possible?

Note: this does not mean that you keep your head in the clouds. Once you’ve imagined the ideal future you must quickly connect the dots backwards and start executing a series of pragmatic (but bold and well aligned) steps towards your eventual, ideal, goal.

You must live in two worlds. The ideal future tempered by an extremely focused and pragmatic present.

It’s not just about “ways of working”

It seems a lot of Product teams and scaleups in Australia think their product problems come from "Ways of working".

This is typically only partly true.

It typically comes from the way they are sales lead instead of developing an opinionated product strategy and roadmap.

It typically does NOT (primarily) come from the way that designs, requirements, stories, and engineering execution are "shaped up" and executed.

Constantly revisiting the "ways of working" is like rearranging the deck chairs on the titanic without patching the giant hole in the side of the ship.

Why not write a book?

A lot of people have asked why I don’t create some kind of courseware or book about startups, growth and/or product.

Of course I have my newsletter and my consultingconvos posts on social media. But ultimately my perspective is that educational content is not the constraint for successful companies today. There’s plenty of content on these subjects out there already. A lot of it for free.

The constraint for successful companies is experienced operators with “wisdom” that can participate in day-to-day decision making.

My definition of wisdom is knowing when to apply the right approach in the right context at the right time. Wisdom also requires consistency over time (i.e the decipline to avoid strategy drift).

Unfortunately I haven’t found a way to scale this yet.

Go straight for the prize

I meet a lot of founders building the wrong product because they think it’s easier or more profitable.

How do you know you’re building the right product and the right business model?

Do you care about hotel managers? Then build a B2B SaaS product for hotel managers.

Do you care about the hotel guest? Then build B2C product for travelers.

Instead, I will often see companies and founders that actually care about the hotel guest but are building a product for hotel managers. They often believe they have to do this because…

A. They can help the hotel manager offer a better experience to guests

B. That’s where the revenue is

C. It’s easier to go to market that way (b2b sales)

These founders are likely building the wrong product and business model.

Focus on the right persona and tackle the right problem based on your passions and beliefs - not on your theory on what’s easier or more profitable.

Sometimes that even means disrupting the way legacy operators work (see AirBnB or Uber) or imposing prescriptive best practices on legacy operators (see Expedia and others).

The first step is understanding the truth

It’s difficult to act effectively until you understand the ground truth.

To know the ground truth you need to ask the right questions.

To ask the right questions you have to step back and understand your business and the product from the customer POV.

To understand the business from the customer POV you need high degrees of empathy, good intuition, curiosity and data.

It shouldn’t be that complicated

Things are often both far less complicated and more complicated than people seem to assume.

This is true in product:

If you’re finding yourself lost in the complexity of your product you’re probably conflating too many things together.

Tackle the simple stuff first and iterate from there.

Managing customers when switching from Customer Lead to Product Lead

How do you manage customer expectations as a B2B SaaS company rotating from sales and customer lead to product lead?

You have to have a clean break from the past.

Set up a cross functional meeting with their key stakeholders to explain...

1. We have a new product team and process in place to create world-class products for you and all our customers

2. We have a set of product principles that shape all our decisions. They are...

3. We love working with you to collect your pain-points and validate product direction (note, I did not say collect your requirements and co-design our product with you). Specifically this work must be...

   • Cross-functional (Involving Domain + Product experts. Not your project manager's opinions vs. our account manager's pushback)

   • Focused on pain-points (Not solutions)

   • Calibrated (We come to you with our plans 80% baked so that you can help us calibrate our best thinking against your real-world experience)

   • Validated by users and data (Ultimately it's all educated guesses until we test it with real users and usage data)

4. Here are the current UX problems we're solving for now

5. Here's our vision of where this might go over 12-24 months

6. Here is our immediate, tactical plan for the next 1-3 months

Support ops meeting agenda

Your support team should have a standing sync meeting with Product team and other leadership. The agenda should include...

What's on fire

- Things that need to be fixed/escalated immediately

Themes and patterns

- What's generally going well

- What's generally going poorly that should result in product, docs and/or ops changes

Metrics

- How is support performing against KPIs

- How are things improving?

Product & Show and tell

- Product showing what they're working on next

- Support helping Product to refine their thinking

- Support taking on tasks to write or update support docs

Digital transformation is not enough

The real trick is not digital transformation, but digital disruption.

Digital transformation is about building better software systems to support your current business model and processes.

Digital disruption is about beaking your business model and rebuilding it digital first and customer first.

Your KPIs don’t matter

I’ll never forget a meeting I had while head of product at the Uber Developer Platform.

It was a weekly “business review” which, for my department, included some 10-15 people. It was basically a way to hold the product leadership (me) accountable for moving the business forward. It was always intense.

This specific meeting, however, was getting particularly heated.

Some of the stakeholders were upset about my lack of urgency about improving the “the numbers” (I.e the KPIs) that we were ostensibly supposed to focus on.

After trying to explain my hypothesis that we had built the wrong product, these particular stakeholders were unrelenting.

They only wanted to talk about the KPIs.

“I don’t care about the numbers!” I finally blurted out.

The reaction was shock and awe. The room went silent.

No one could believe that I had uttered such a sacrilegious thing!

The fact is that KPIs only matter if…

1. You have product market fit.

2. You’re not facing an existential threat from outside trends and competitors

3. Your goal is to manage toward incremental change

And that’s typically only true if you’re in a mature company acting as middle management.

If you are still trying to find product/market fit, and/or you’re trying to create step-function change, you need to step back from the KPIs and ask yourself larger, more existential questions.

Questions like…

1. How do we drive new levels of disruption

2. How do we solve real problems and delight users

3. How do we significantly grow our Total Addressable Market

Don’t just be a cog in the wheel navigating toward incremental change.

Take the time to lift your gaze and look at the horizon.

When was the last time you looked past “the numbers” and asked some bigger questions?

You have a product leadership problem if..

1. You have frequent change in priority

2. You lack clearly defined (highly specific and tactical) problems you’re solving for

3. There is frequent push back and frustration from Engineering

4. Things take too long to ship

5. When things ship they are not polished or effective

6. There’s a lot of action and maybe lots of things ship but nothing seems to ladder up to meaningful new value for customers

7. Customers don’t know what your product does or how to use it successfully

8. Your product usage is not growing

9. Your margins and/or your volume of business is too low

10. You can’t handle more customers without hiring more people

11. There is indecision about priorities and next steps across the company

12. The sales team doesn’t know how to sell your product “as is”

13. Each new customer is asking for materially new features

14. It’s hard to describe and sell your product on a website and at scale

Agile doesn’t solve everything

Agile is about organizing an engineering team for regular delivery of incremental improvement over time while paying close attention to market feedback.

It is not, however, a process well suited for a) developing a long term strategic roadmap or b) rebuilding a product that is relatively well understood (either through experience or intuition) for scale.

The latter requires a planning process that doesn’t fit into the “Sprint” construction.

Once you’ve got a plan (and therefore know where you’re going), you can then execute using agile.

The trick is to know how much to plan and how to break down the plan into small incremental releases without falling into a giant waterfall.

#consultingconvos

Slowing down to go faster + marketplaces

In rapidly growing teams there’s often - if you’re lucky - a proposal that inevitably gets floated when the chaos and confusion becomes too much:

It’s often referred to as “slowing down to go faster”

This principle applies to all business types and product types but it is particularly important in the context of a marketplace where you often want to do fewer, more standardized things so you can scale.

Here are some thoughts I’ve recently had on the subject - specifically for a marketplace business:

—-

I love the concept of “slowing down to go faster” when it comes to product.

I love it so much that I’d describe it more broadly and apply it across the whole company.

More broadly it’s really about..

“Structuring and standardizing everything so a company can achieve rapid growth, scale and liquidity in its marketplace”

(JFYI liquidity means the number and ease of transactions between the participants in a marketplace. This is a measure of its success and what makes it an unstoppable business model)

This requires that - across the business - the team pause for a moment on tactics to get broad consensus on principles, patterns, programs and templates so that we can

A) push responsibility and accountability out to the edges of a rapidly growing team while

B ) still ensuring that the team can act in alignment, execute in repeatable high-scale ways and make the right decisions without excessive meetings or additional ad-Hoc work

For product this means getting consensus on…

- Problems being solved (and roughly what order)

- Products being built for each problem

- Product principles

- Product taxonomy/vocabulary

- Ways the team will be organized behind each products (ideal org chart)

- Ways of working/responsibilities for each role/group in the team

- A mid-fidelity end-to-end idealized UX so that everyone understands the shape of what‘a being built

- Decomposing the idealized UX into A roadmap of Broad themes/milestones for the product (rather than prioritizing features)

- Getting 2-3 milestones of the roadmap fully spec’d out (inc high fidelity mocks) in a way that covers all the product principles

- Execute and stay ahead of the milestone curve

This process broadly applies to other operational aspects of the business such as partnerships and support. They all need to act this way so that every part of the business can scale at the same rate.

Obviously when applied to other parts of the business, some of the details of consensus change.

For example, for partnerships, replace the word product with partnership to create partnership taxonomy/levers and partnership principles. Replace the roadmap with a prioritized partner target list. Replace the idealized product design with idealized template agreements that are clear but flexible so that everyone understands the shape of the deals we want to create. This would look like this..

- A standard list of Partnership types the business needs (and roughly what order)

- Standardized Engagement Types the business will allow

- Partnership principles

- Partnership taxonomy/vocabulary

- Ways we’re organizing the team behind these partnerships

- Ways of working/responsibilities for each role

- Ideal template agreements for each partner type and engagement that is flexible and clear and communicates the shape of this kind of engagement

- A pipeline/hit list for each partner type

- Start placing each new discussion within this framework

- Execute and stay ahead of the milestone curve

The nice bonus is that standardizing something like partnerships and support reduces complexity in the product and drives a consistent user experience in marketplace. That in turn drives more liquidity.

Final note: many companies have a version of many of these things. But the devil is in the details. They need to be reviewed and taken to the next level.

Also, once they are roughly right, it’s essential that the whole team is briefed of this consensus and starts to act in accordance with it even while leaders are not in the room.

I.e. It needs to be in the water and inform all behaviorS

Do you know where your real value is?

Great design creates real value and may change/broaden your value prop and pricing:

Before trying to figure out what your unique differentiator or pricing strategy is - first dig deeply into how you’re going to solve a real problem for a real user. Go all the way to end-to-end mid-fidelity designs.

While doing so, you will often find that your actual unique differentiator and pricing strategy radically changes.

I’ve been involved in countless projects where the team had guessed that their value was in some magic AI/ML/Tech deep in some workflow, but it actually turned out that the beautiful user experience we designed to get to the “magic moment” was it’s own kind of significant innovation.

Three lessons:

1. Solve real problems

2. Don’t put the cart before the horse.

3. Great design is a form of innovation in-and-of itself

Hierarchy for how to solve clarity/usability problems in UX...

Often when there's a problem in a user experience, product managers and other leaders will jump to better documentation or tutorials.

Instead, there is a hierarchy of UX changes that should be tried first, second, third etc. Try fixing the problem using the tools at the top of the hierarchy before resorting to techniques lower down the list...

• Improve the visual metaphor
  Make it easier for the user to quickly - at a glance - understand what's going on based on the patterns and pixels on the screen
  

• Improve the word choice/copy
  Make it clearer what's expected and what's about to happen by using simpler, better sentences and button labels. It's surprising how much can be achieved with a simple word change.
  

• Coach marks
  Help users orient themselves when they first visit your app or when there's a new feature available by adding callouts and highlights.
  

• Simple animated explainers embedded in the UI
  Help users see a quick glimpse of what they need to do with a simple looping animation
  

• Video tutorials
  If you're going to educate me, then at least make it entertaining!
  

• Documentation
  This should be a last resort. The documentation should always be present but it shouldn’t be relied upon to help improve a user's day-to-day experience.

The art of saying "no" to enterprise customers

As a product manager for enterprise products with large "make-or-break" customers, you have to learn the fine art of telling customers who are demanding a new feature "nope, there's no way we're doing that" while making them feel so good that they thank you for the privilege of being rejected.

Take a step back and ask yourself the really big, scary questions

Ask yourself what might be fundamentally simplified and disrupted by re-thinking your entire business model from first principles.

For example:

1. Rather than partner with your customers, you might need to be disrupting them with a direct to consumer business. E.g. Netflix didn't help Blockbuster run a rent-by-mail business. They created their own B2C company and killed Blockbuster. Sometimes a B2B business seems obvious, safe, easy - but often a B2C approach can be far, far more valuable, exciting and impactful.

2. Rather than becoming a slightly more efficient company by automating traditional processes with better software, ask yourself if there's a fundamentally better, simpler approach that might now be possible thanks to shifting cultural trends and technology. E.g. Uber was only possible because the smartphone made the $100k Taxi fit-out unnecessary. Payments, tracking, meter - even security - were now possible with a device everyone carries in their pocket. Further, people were increasingly comfortable meeting people from the internet making peer-to-peer ride share possible. The cultural and technological realities had changed. A new, massively disruptive business could emerge.

What does it mean to be a product lead company?

It means that…

1. All feedback, ideas and data (from all functions and sources) flows into the product management team

2. The product management team digest and triangulate the data to develop a product strategy that is socialized with the company to drive alignment

3. The product team then develops a series of incremental tactics that ladder up to the strategic goals

4. The marketing team promotes the product that’s developed to drive interest and intent

5. The product and marketing should either sell itself or go a long way to sell itself

6. The sales team nurtures small bottom up adoption into large enterprise deals

You don't want an exclusivity deal...

You don't want an exclusivity deal

As a startup, there are very often deals that seem great but that you actually don't want.

For example, deals that include "exclusivity".

In many cases, exclusivity is death for high-growth, generally available, customer-facing software companies. Especially so for two or three-sided marketplaces.

Exclusivity can often cripple your ability to build a broad-based distribution strategy, partner with all the companies you need to partner with, and even entirely break your long-term business model.

The first way to begin diverting discussions about exclusivity with your potential "partners" is to remind them that they don't want exclusivity.

How could that be true?

Well because, presumably, they're picking your company as a partner because of the value it offers and its current and future strength in the market.

If an exclusivity deal undermines your business model and market position, then all it does is weaken your business and diminishes the value of the partnership. No one should want that - especially not your new partner.

Be careful about the deals you sign. Particularly the ones that seem great on the surface but will come back and bite you later.