Is your company falling behind competitors, no matter how many new product iterations you launch? Do you find yourself thinking, "This new feature is useless, but I have to deliver it to get a bonus"? If so, you may be stuck in the build trap by focusing on shipping features and developing ideas instead of on the actual value you can produce for customers.
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Escaping the Build Trap: How Effective Product Management Creates Real Value shows you how to shift a reactive project factory at risk of disruption into a successful product-focused organization creating products that customers love.
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Companies stuck in the build trap measure their success in terms of outputs rather than outcomes. They stop producing real value for their users, lose market share, and are vulnerable to disruption. To get out of the build trap and become a product-led organization requires four key components. First, develop an effective product manager role that understands the market, how the business works, the vision of the company, and the needs of the customers. Next, develop a corporate strategy that enables product managers to make good decisions. Step three is to develop a process of experimentation to determine what product to build. Finally, build a product-led culture that organizes around outcomes over outputs, one where learning and achieving goals is rewarded and getting close to customers is encouraged.
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Companies get stuck in the build trap when they are so focused on shipping features and developing cool ideas that they don't think about the outcome of those features and the actual value that they produce. The build trap causes companies to measure their success in terms of outputs rather than outcomes. They stop producing real value for their users, lose market share, and are vulnerable to disruption. A prime example of this is Kodak, which doubled down on how it had always done things, instead of responding to the challenge of digital photography.
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But any company can get out of the build trap by developing intentional and robust product management practices, shifting the corporate culture from delivering outputs to achieving outcomes.
There are four key components to being a product-led organization: creating a product manager role with the right responsibilities and structure; a strategy that enables product managers to make good decisions; developing a process of experimentation and optimization to determine what product to build; and building the organizational policies, culture, and rewards that support the approach.
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Misunderstanding value
Companies end up in the build trap when they associate value with the number of things they produce—outputs like products, features, and releases—instead of the outcomes they want to create for their customers. For the customer, value is only realized when a problem is solved, or needs are fulfilled. The organization has to recognize that products and services are not inherently valuable—it's what they do for the customer that has value.
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Products vs projects
Project-based development cycles dominate at many companies, leading many to assume that having a project-management framework is the same thing as having a product-management framework. But a project is a discrete piece of work, with a deadline and specific outputs to be delivered. Projects are an essential part of product development but thinking only in terms of projects leads to the build trap.
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A sales-lead company can end up shipping 30 features that no-one wants. A visionary-led company can be a powerful organization, but innovation needs to be part of its DNA or the vision becomes dependent on just one individual. A technology-led company is likely to lack a market-facing, value-led strategy.
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Product-led companies, however, optimize for outcomes, align their product strategy to specific goals, and prioritize the projects that will develop those products.
Product managers identify the features and products that will solve customer problems, while achieving business goals. They must deeply understand both the business and the customer, in order to identify which products will produce value.
The wrong archetypes
Many product managers see themselves as mini-CEOs, but the reality is that the product manager has to involve the team and listen to the customers. Others operate as waiters, taking orders without having a real goal or vision and without any real decision-making. But the waiter is reactive, when he or she should be a strategic thinker who really understands the customer's problems.
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A product manager is not the same as a project manager. The latter is responsible for when: when will it be done? When will it ship? The product manager is responsible for the why: why are we building this? How does it help solve the customer's problem? How does it help meet the goals of the company? Answering the why involves a strategic mindset.
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Many hats
Many product managers operate in a Waterfall environment, talking to internal stakeholders such as marketing managers and sales teams, then turning their requirements into detailed specs that are handed on to the designers. However, the real role of the product manager is to connect the dots in a meaningful way—working with the team to create the right product, and balancing meeting business needs with solving customer problems.
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An effective product manager has to wear a lot of hats, understanding the market, how the business works, the vision of the company, and the needs of the customers. He or she takes input from customer and market research, experiment results, and data analysis, and uses all that information to create a product vision.
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Career path
As an organization scales so responsibilities, including those of product manager, must be more defined. The balance of work—shorter-term tactical, longer-term strategic, and operational work that ties the strategic to the tactical—will also shift as the scale increases.
The starting point in a typical product management career is the associate product manager. This is a role not found in many companies outside of Microsoft and Google but creating such a role is the best way to start growing product managers in your company.
The next step is product manager—someone who works with a development team and UX designers to build customer solutions. The trick at this level is to resist becoming 100% operational, focused solely on the process of shipping products. A senior product manager oversees more scope, or perhaps a more complex product.
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A director of product is essential at larger companies, overseeing a group of product managers. The VP of product is more strategic, delegating tactical and operational components to others. Finally, the chief product officer (CPO) oversees the company's entire product portfolio. A company should think about adding a CPO once it starts developing a second product, expands into a new geography, or merges with another company. The CPO is a still-emerging role but is a critical one for a company aiming to be product-led.
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Whatever the size of the organization, product managers need the space to manage toward an outcome-oriented goal. This means organizing teams around a product strategy that prioritizes a few key goals.
A good strategy is not a plan—rather, it is a framework that helps everyone to make decisions. It transcends iterations and focuses on higher-level goals and vision. Product strategy connects the vision and outcomes of the company back to the product portfolio and to individual product initiatives.
Netflix
In 2005 Netflix had a clear vision: to provide movies and TV shows in the most convenient and easy way for customers. In an interview with Inc. magazine that year, founder and CEO Reed Hastings said, "We want to be ready when video-on-demand happens." The company started dabbling in the on-demand space and decided to build its own internet-connected device that plugged into TVs. This was Project Griffin; but after two years of development Hastings killed the project. He recognized that it would move Netflix into the business of hardware, which was not part of the core vision. Project Griffin was spun off as a separate company (today known as Roku). As Hastings told The New York Times in 2013, the company recognized that, "Executing better on the core strategy is the way to win."
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The company's vision has evolved as the market has evolved. Today, the core vision starts with, "Becoming the best global entertainment distribution service." Netflix is organized around key outcomes and strategies to help reach its goals—this helps it to make decisions about its products, including killing something that is near completion.
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Strategic framework
A good company strategy has two parts: the operational framework that keeps the day-to-day activities moving; and the strategic framework that guides how the company realizes its vision in the market. Part of this framework has to be a continual evaluation of where the company is and where it needs to take action.
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Spotify exemplifies this approach—instead of mandating what to build from on high, the company has set up an environment where it is safe to try new things and to fail. And, embracing experimentation and innovation allows Spotify to course-correct quickly, when needed.
Part of building the strategic framework is strategy deployment—communicating and aligning stories throughout the organization that explain the objective and outcomes. For executives, the story will be focused on a five-year time frame; for middle management it might be a yearly story that guides teams that, in turn, make decisions on a weekly basis.
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To create the strategic framework, start with the company vision—where is it you want to go? Then, identify the obstacles standing in the way of getting there, and experiment around ways of tackling them. Keep doing this until the vision is reached. A mission explains why the company exists; a vision explains where the company is going, based on that mission.
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Although the vision should be stable over a long period, the way you reach that vision will change as the company matures. Strategic intents communicate the current areas of focus that help to realize the vision. For example, as part of its vision to become the best global entertainment distribution service, Netflix had a clear strategic intent—lead the streaming market. Once that intent was met, the company maintained its position by shifting to a new strategic intent, creating its own content.
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Product managers use a process to identify which user problems the team can solve to further the business and achieve the strategy. Start with the strategic intent and ask what problem you can solve to further that intent. This becomes your product initiative. Create success metrics that can be measured on a short timescale, to determine whether you are getting closer to meeting the product initiative. These metrics should give feedback that the option is working as intended.
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Product metrics
Product metrics tell you how healthy your product is—but it's easy to focus only on vanity metrics that look impressive but don't actually help the product teams to make decisions. Also, avoid having only one metric—it's too easy to game a singular focus.
One of the first things any company should do is implement a metrics platform, like Amplitude, Mixpanel, or Google Analytics, something that has the tools to give you enough data to act.
Understand the problem
Data analysis is important, but it doesn't tell the whole story. To really understand your customer's problems, you have to talk to them. This means user research, observations, surveys, and customer feedback. This is not the same as usability testing; rather, it is generative research—going to the source of the customer's problem and understanding the context around it. Until you understand that context and the root causes of the problem, any solution you come up with is just a guess.
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One key tactic is experimentation—building solution experiments to learn. Explain to a limited number of customers why you are testing something, how the experiment will end, and what you plan to do next. This could be a new process that you test manually with a few customers; a prototype; a concept test; etc. Start with a small, representative population, learn from them, and then expand to more people.
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Story mapping
Once the product vision's direction is set, use story mapping to make sure everyone understands the context and the work that needs to be done. This could be in the form of a North Star document, something distributed to everyone in the team or company, that explains the problem being solved, the proposed solution, the factors that matter for success, and the outcomes that will result.
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This document is not an action plan; there is no "how to do it" included. For that, we need story mapping: the team thinks about all the factors needed to deliver a successful solution, breaks down their work, and aligns it around the goals.
There are many frameworks that can help you prioritize work; one of the best is Cost of Delay. What is the impact of time on the outcomes you hope to achieve? Consider the trade-offs between the amount of value you can capture with the scope of the product release and the time it takes to get it out the door. If a feature or component is high urgency, every moment you do not ship is a lost opportunity to reach your goal; if the feature or component is high value, it's a particularly strong problem or desire for the customer.
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The culture of a product-led company organizes around outcomes over outputs. Learning and achieving goals is rewarded and getting close to customers is encouraged.
Communication
Creating a product-led culture starts with communication up and down the company, tailored to each specific audience. Quarterly business review meetings of the senior leadership team should be used to discuss progress toward the strategic intents and financial outcomes. Alternating with these, quarterly product initiative reviews for the CPO, VPs of product, and design leaders should review the progress of options against initiatives, including the results of experiments and research; introduce new product initiatives; and adjust the strategy accordingly. Monthly release reviews give teams the opportunity to show what they have done and to discuss success metrics.
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Incentives and learning
One sure way of getting stuck in a build trap is to tie rewards and incentives to shipping product. Instead, incentives should focus on solving problems for customers and trying out new ideas even if they fail.
Learning must be at the core of a product-led organization. It is better to fail early, in small ways, and so learn what is needed to succeed. When you experiment early you can prevent a bigger and more expensive failure later on.
Tied in to this is the budgeting process. Most companies have a rigid annual funding cycle, but a product-led company should approach the funding of product development like a venture capitalist: invest in and budget for work based on portfolio distribution and the stage of the work. Allocate funds across product lines for things that are ready to be built; set aside money for discovering new opportunities; and allocate more funds to grow those opportunities as they are validated.
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Customer focus
The product-led company must have a strong customer focus, always asking, "What would make the customer happy and move the business forward?" Companies like Netflix, Amazon, and Google don't reactively build whatever customer request they get. They develop products with the intent to deliver value to their customers.
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