Idealog #3: Putting the [Customer] Problem First

If we’re a product company, who’s in charge?

Introduction

In my last blog post, I offered my own experience of looking to solve for product teams and leaders with the highest propensity for success, based on seeking an answer to one question:

“What is the primary responsibility of a product manager”?

The answer is primarily about internalising understanding and accountability for the sum total of capital (human, technical, financial etc) that is being deployed to solve for a particular need and being accountable for ensuring that the organisation sees the highest possible return for the deployment of that capital.

Based on my own experiences over the last 20 years I’ve observed that the depth and resilience of this internalisation is an important predictor of success for individual product leaders and the products and problems they solve for.  However too often the trap that’s implied here is sprung, which is the oft repeated hero narrative of the lone, passionate, focused, relentless product leader who somehow manages to ensure an effective and high return on capital in spite of and not because of the organisation.

So, much as I like a good hero story from time to time, I am much more motivated and energised by building effective systems of value creation as opposed to cultivating individual heroes.  Reflecting on some of the challenges I’ve seen, I believe that one of the most common barriers to accomplishing this product centric system of value creation boils down to one very common, understandable but also confusing & contentious question in an organisation.

“If we are a product led company, then who’s actually in charge here?”

I’ve seen and heard variations on this theme in many different settings.  Its also tended to be about asymmetries of power as different tribes debate loudly about who really makes the difference in a company and therefore whose opinion or needs carries the most weight.

Reflecting on the innumerable debates I’ve participated in and with the benefit of hindsight, I’d suggest that if you’re familiar with or in the middle of this kind of discussion or dynamic in your organisation, then maybe it’s worth pausing for a second and recognising that this power dynamic is an internalisation of an external problem.  

So by all means feel free to schedule another knock down, 3 falls or submission-based discussion about why sales or product are really in charge, however you may want to pause and reflect on the following:

The problem is really about value:  where its unmet, how its created and delivered and how its monetised.

…..which reminds me of a true story.

Where do you think your salary comes from?

In a much earlier role and time, I once heard an engineer in a requirements review meeting (we’d call it backlog grooming now, but that hadn’t been invented yet!) offer an interesting view:

“If we didn’t have these customers to deal with, we’d be able to get on and build a really good product”

In fairness I believe that the comment was well intentioned but highlighted a disconnect that often runs deep in organisations large and small. The fault line typically emerges between those primarily responsible for revenue and frankly everyone else.   And in many different ways I’ve heard that disconnect described as follows:

Sales are the people who make the money and everyone else are the people who spend it

In other words, you have sales/revenue generating tribes and you have everyone else.  Of course, sales are the cool kids, and the other kids just to feel cooler establish their own playground hierarchies like:

Q: How many enterprise architects does it take to change a light bulb?

A: None because they need to re-evaluate the rationale for why we need light in the first place

Q:  What’s the best way to pay a product manager?

A:  American Express – because they both love taking credit for things

 An SEO marketer walks into a bar, bars, tavern, pub, public house, Irish pub, drink, drinks, liquor, beer, alcohol…

It goes without saying that all companies need revenue – ultimately revenue solves a lot of problems as one of my old bosses liked to say.  If you don’t have revenue, then you don’t have a business.  So clearly sales should always be in charge?  Right?  Wrong?  Frustratingly the answer is – it depends!

Now, at this point at least some of you (particularly those of the current or aspiring product persuasion) are likely feeling very uneasy with this.  And I do understand why. 

And yes, I am biased towards the view that it shouldn’t be this way (sorry sales but it really shouldn’t). 

However, on a tactical basis very often it must be the case that sales are in the driving seat.  In the longer term when companies fail to recognise that this should only exist as a tactical phase vs a sustained operating model, then this model starts to have long term negative consequences.   To understand why this occurs so often in companies, I’ve rationalised this into 3 main forces I’ve observed which can have effects either in isolation or combination.

Monetisation and Value Creation are not the same

Businesses need revenue, profit and growth.  In the long run a business must solve for all 3 of these considerations otherwise it won’t be around for very long. 

Selling is hard, and good sales teams are worth everything they earn.  However, and this is the key insight – in a genuinely product led company sales does not create value, they are responsible for operationalising the sale of value already created. 

Why?  Because if you are a product centric company then the value has already been well understood, the systems and solutions of value capture have been very well designed, delivered and validated, such that the sales function is empowered and primarily accountable to operationalise and scale the monetisation of that value.

However when I’ve encountered environments where this isn’t the case, environments where, for want of a better description, sales IS in charge, then what I’ve come to understand is that this flows from an systematic failure of the organisation to ensure that value is being created elsewhere by the product organisation.  When this failure to create value occurs systematically over a period of more than a few operating quarters then a second accelerating force starts to come into play – asymmetric value exchange

Asymmetric value exchange

In a supplier/buyer relationship there are always value and power symmetries in action.  Value symmetry is ultimately measured by price/cost.  In other words’ value symmetry is achieved when a supplier and buyer agree on what price/cost basis a service or product can be provided and consumed.

When a service or product has clear thresholds of differentiation (because your company has effective systems of sustained and ongoing value creation), then value exchange generally remains in balance between buyer and supplier even over sustained long-term commercial relationships.

However, in the absence of sustained systems of value creation and increased commoditisation, asymmetries of value start to emerge whereby the buyer observes asymmetric power over the supplier in terms of:

a)     Threat of switching

b)     The cost of loyalty

c)     The demand for increased levels of customisation

Confronted with increasing asymmetries of value, sales teams are forced to move from being primarily challenged to be agents of monetisation and increasingly challenged internally and externally to become agents of value creation (to address the absence of value creation internally). 

Being forced to play the role of agents of value creation means that increasingly sales and commercial teams MUST call the shots to manage the threats caused by asymmetries of value in their customer relationship.

But as commercial teams, most of the options and strategies available to them are monetisation tactics not value creation strategies.  So what you observe over time is a sales led set of monetisation activities which become incorrectly interpreted, institutionalised and understood as value creation activities.

As the cycle progress, monetisation as value creation builds more and more long-term debt into the system (ever more aggressive discounting, increasingly fragmented and unsustainable customisation overheads).  Deal flow is replaced with ever more fraught and bespoke deal making. And at some point, companies see measurable deterioration in their competitive position, their ability to differentiate and their ability to find new ways to create long term value.

At this point the third force which I call the Contra-Cycle Phenomenon creates greater dissonance within the organisation.

The Contra-Cycle Phenomenon

The contra-cycle is my own way of rationalising behaviours and conflicts I’ve witnessed or first-hand experience of.  So, what do I mean by the contra-cycle?

Contracyclical views of investment, value creation and monetisation results from the absence of designing compensating mechanisms to reconcile the two very different value cycles that product tribes and sales tribes subscribe to.

In simple terms – Sales tribes think fundamentally in value creation cycles of 12 months and generally on a zero-based budgeting cycle.  While Sales tribes preach long term value, they are challenged with a monetisation harvest which follows a quarterly cycle and whose quota is reset every 12 months.

Product tribes believe that value creation is best served by 36-month cycles with sowing and harvesting in 6 monthly cycles of creation, validation, iteration and creation.

The net effect of this is that inevitably the cycles of activity that drive the sales calendar and monetisation goals are occurring in faster cycle times and often asynchronous to those that drive product value creation.  

Companies with weakly coupled sales and non-sales organisations are vulnerable as each part of the organisation seeks to address that power and value asymmetry in the presence of contracyclical rhythms of value creation.

In simpler terms – value both unites and separates sales and product tribes.  Both believe themselves to be driven by value creation.  However, sales are driven to monetise value and product teams should be driven to create value.  Because monetisation (i.e. selling) is typically measured in shorter timeframes than value creation (which is typically a multi-year perspective) any organisation which fails to build effective systems of value creation with an empowered, skilled and accountable product organisation will inevitably exhibit the behaviours of

• ·        Monetisation AS value creation (instead of Monetisation OF created value)

• ·        Value Asymmetry

• ·        Contra-cyclical dynamics

 So if you observe these in your organisation – maybe now’s a good time to shift from the debate about who’s in charge and instead spend more time and energy on the question of what needs to be done kick start your engines and systems of value creation.

 So who’s in charge? 

So, finally I guess I have to say who I think is in charge. 

The answer in my view is simple:

“it’s the problem, stupid”

If you think this is a rote or simplistic answer, it’s not.  Organisations that deeply internalise this as a principle will on average outperform those who don’t.

In such organisations there is extraordinary clarity about the problems at the heart of the organisations reason for existence.  Such companies develop systems of value creation and in the very best of these organisations value creation is understood to be part of the entire customer experience (including the monetisation experience, something Apple understood earlier than most)

It’s on that basis, that I argue for any organisation to have an absolute conviction that it is the primary responsibility of the product leaders to optimise the return on allocated capital in service of that problem that represents the customers’ needs vs wants including ensuring there are high performing systems of value creation (product building)  to support high performing systems of monetisation (marketing and selling).

If that conviction is deeply held, then any organisation that detects that its systems of value creation are compromised, and can recognise the signals of this such as the increased use  of systems of monetisation to sustain value, will accept nothing less than the most effective systems of value creation possible, embodied and championed by product leaders who understand their primary responsibility as ensuring high returns for the allocated capital of the organisation they represent.

Many companies really need to talk about being product led, customer centric, market driven and so on.   But too often these attributes end up being unevenly distributed across a company.   Too often this manifests itself as a battle for supremacy between sales and everyone else.

The disconnect arises because one tribe (sales)  is in the majority accountable ( and rightly so) for how the money comes in the door and with varying degrees of frustration and resignation, they view anything else that doesn’t help them in that goal as misdirected, misinformed or misguided.

The right kinds of product leaders can help your organisation become aligned and have that singular focus on value creation.  A popular legend is that on a visit to NASA in 1962, JFK met a man sweeping a floor.  When the President of the United States asked him what he was doing, he replied he was helping send a man to the moon.  Singularly focused, a universal definition of the value you are looking to create. 

It can quite literally take you to the moon, and back.

Idealog #2: Picking Winners in the Product Management Lottery

Picking Winners in the Product Management Lottery

Introduction

I wrote in a previous Linkedin article about listening to travel sales leaders comment on the question “is sales an art or science”. On that occasion the broad consensus was that selling is a science, but its execution is an art form.

The tension between art and science is not unique to sales, with a similar dynamic evident in the role of product leaders when defining, building, deploying and scaling propositions in global markets.

Over the last 20 years my own product-centric experience means I’ve been asked the same question multiple times over:

“So how did you do that?”

This blog post is the first in a 5 part series intended to offer an experiential set of notes as a reference to companies and teams looking at how to innovate, to create great new products and to build commitment within, across, above and below in their organisations.

If you’re reading this as a senior commercial or business unit leader, then you have my sympathies - product managers can be a frustrating bunch sometimes with their roadmaps, their views on markets versus customer needs, but mostly they are very well motivated and if you can learn how to communicate and collaborate with them you’ll be rewarded multiple times over.

If you’re a technology leader in a challenging relationship with your product peer group, then there are some things here that may help you but remember this above all else - your fate and future is joined at the hip with your product brothers and sisters.

If you’re a senior operating leader wondering how and why all the investment is failing to deliver the expected return in the timescales promised, then there may be some pointers in this that help you positively challenge your product and technology teams to find their momentum and path forward again.

And last but not least, if you’re a current or aspiring product manager, what follows is intended not to provide you with a 12-step plan or a structured methodology.  There are already plenty of those around written by people undoubtedly better qualified to do so than I am.  Instead, I’m offering a small set of observations whose purpose is to share some experiences from my own journey to date through product management and other roles in corporate life.  From these experiences there are several insights and learnings’ that I’ve gathered along the way that I believe may be of value to others on their own product management paths.  So, in this blog, lets start with the most basic – what makes a product manager successful?

How to pick the winners?

I’ve met and worked with hundreds of product-oriented leaders over the last 20 years.  I’ve met them in the early stage, mid stage and late stages of their careers.  Some have rolled over from other disciplines, some of have set out to be product managers as at least the current focus of their career path and some, well, some were just told to be product managers because somebody thought that they could or should be.  And some were asked to become one: typically crossing over from commercial roles, because commercial leaders tend to trust one of their own more than those of the product management tribe.

There’s a ton of literature and other materials out there that speak to the science of effective product management.  Instead I offer a view of a single question and answer that I consider to be a powerful indicator to long term success when looking at your product teams in review, in hiring or in their professional development.  In my experience the key is that product management is both an art and science. The science is very well documented, the art less well understood but perhaps much more important.  In my view the key is to figure out what the artistic instincts of your current and future product leaders are.

Art vs Science

Some product managers are technically oriented, some are marketing focused and some have a deep appreciation of the commercial imperative.

There are hundreds of books, thousands of courses and qualifications and tens of thousands of articles and posts (like this) about how to be great as a product manager. 

In more recent years I’ve come across increasingly idealistic cohorts of qualified, newly minted product managers.  In each case they are familiar with the practice and theory of product management and they are deeply passionate about building solutions for customers.  Encountering more and more of these qualified, certified and very motivated group and having first-hand experience of watching their varying capabilities and successes as product leaders, I’ve developed my own belief that the difference between those who are good enough as opposed to those who have the potential to be great is closely correlated to their answer to the following question:

“What is the primary responsibility of a product manager”?

I’ve asked this question hundreds of times in interviews, one on one meetings, performance reviews and informal discussions.  It’s become one of my favourite questions to ask product managers and leaders because I’ve found it does more to reveal the artistic leaning of a product manager versus their scientific training.  And it’s the artistic leaning of a product manager that I’ve found offers one of the best indicators of long-term success in a product role.

The answer to this question will typically come in 4 different flavours.

1.     I want to be the CEO of my product

2.     I want to build great solutions for my customers

3.     I’m really interested in building software to solve interesting problems

4.     I’m really committed to being at the centre of how stuff gets done

Here’s why each of those 4 answers is the wrong answer (or at best incomplete) in my experience.

“I want to be the CEO of my product”                  “

So, I’m going to confess, I have a deep bias against this statement.  I find it a particularly pernicious and meaningless throwaway that has done more damage to the cause of effective product management than any other single phrase.  The reason for this is that it creates an inflated sense of the Product Managers role and contribution,  provides an abstracted glamorization which kills off real discussion about what product leaders are there to do and draws in a whole cohort of up and coming talent that is sold an unrealistic and unhelpful headline about what their role and contribution is expected to be. 

Product Managers are not the CEO of their product.  Yes, there are characteristics in common such as being accountable for many things you don’t directly control, having ultimate accountability for success or failure.  But in truth I’ve found this overstates the product role and frankly hides the sheer grind and grunt work that product managers should expect and be accustomed to.

“I want to build great solutions for my customers”

We’re getting warmer now.  At least in this phrase we’re now talking about the real business of producing a solution and for a target audience.  It’s great that someone wants to build something great.  And even better that they’ve mentioned end customers.  But what does ‘great’ really mean and how do you know if you’re building the very best solution possible.  We’re still missing reference to resources, capital, return on investment, market share – but at least we’re getting somewhere now

“I’m really interested in building software to solve interesting problems”

Part of me really likes this answer, but it’s also something of a potential red flag.  It illustrates curiosity and an innate instinct to create value for someone – but not necessarily the right someone in this instance.  We all want to work on interesting problems and I do believe that being obsessed with the problem is a core attribute of success in a product role.

“I’m really committed to being at the centre of how stuff gets done”

Very few people answer the question this way in my experience, but those who do are illustrating a recognition of and appetite for the core purpose of product function which is to command and control, without direct authority, how the various functions of a company line up to solve a clear and well articulate problem for a well understand set of target customers.

The answer I’m most interested in however is not the 4 most common types I’ve listed above; it is in fact a fifth answer that very few offer on the first go.

The product manager role is primarily responsible for generating the maximum possible return for the deployment of capital (human, financial and technical)

The Primary Responsibility for Return

To be honest no-one has ever answered the question exactly like this.  But I’ve worked with enough commercial leaders and business owners to know at this stage, that this is ultimately their litmus test of a great product function and a great product leader. To break this down:

“primarily responsible” – everyone knows that product managers are not ‘in charge’ in the classic organisational sense.  However, they should be seen nonetheless as the person primarily responsible for success.  In the absence of a direct line authority this means that one of the core internal bias that you want in your product leaders is an instinct to deeply internalise ‘primary responsibility’. 

“maximum possible return for…” – for me this is important because one of the central tenets of product leadership is the ability to understand in aggregate the resources being consumed in pursuit of a market leading product.  The phrase can be seen as equally applying to holding the most complete view of the value being created for your target customers as well as the most complete view of long-term value being created for your company

“the deployment of capital” – capital exists in financial, human, intellectual and other forms.  Essentially the effort to fund, create, design, imagine, market, sell and deploy a solution represents the deployment of capital in all its forms.  Typically, this is most often measured primarily in financial terms, but product leaders are uniquely placed to view this.  A key indicator of success in a product role is the degree to which someone internalises and recognises implicitly their accountability for this outcome.

I haven’t often encountered any version of this  phrase very often in my interactions with product teams and leaders, but my experience both direct and indirect has taught me that above all else, the most effective product leaders internalise and then clearly demonstrate this commitment in every action and decision they take.

The reason this is a powerful indicator of success is that it reflects those attributes of the role that matter most (but are rarely articulated)

1)    It calls out that the purpose is not in and of itself the building of software or product, it is generating a return of value

2)    It invites challenge – is this really the best way to generate that return, can we, should we be doing something else?

3)    Deployment of capital – more than any other single role, product managers have to care deeply about how the resources they are overseeing are deployed AND need to have a deep sense that the deployment of capital is a cost for which the primary measure of success is a return

I’ve deliberately left out mention of profit, revenue or other financial metrics because ultimately value based on deployed capital may be measured in ways other than strictly financial – but realistically in most companies this is one of the key measures of value creation.  In another blog post I’ll touch on why this framing has strong halo effects on building communication and trust with wider stakeholder groups across commercial, technology, sales, marketing and finance.

Building a successful product group and cultivating product leaders within your organisation is a complicated commitment and the answer to a single question is not a universally proven means to indicate the propensity for success or failure. It does however provide both the organisation and its various stakeholder groups a better framework for committing to the implicit and explicit rationale for an effective product function and offers a non-traditional set of guide rails for what you should expect from your product teams and leaders over the short, medium and long term.

With a means to use a guiding principle to look for and foster talent in your product management teams in your organisation, one of the most interesting challenges then is to look at the question of alignment.  Or as many organisations end up debating it, who’s in charge?

In my next blog I’ll share some thinking on this ‘who’s in charge question’ and provide some observations on why this question needs to change in many companies and how that can contribute to building a more successful enterprise for the long term.

idealog #1: 10 years of blockchain in 2 days

Last week I attended the Artificial Intelligence and Blockchain Summit in Malta. While blockchain as a concept is something I’ve looked briefly at before, this was my first immersion into the space, with the AIBC Summit offering a wide spectrum of experiences and ventures in blockchain.

What I found was a unique experience and fusion of energy, commitment, ideology, commercialisation and conviction all thrown together in a heady mix of technology futurism. I attended this conference to understand more as to 4 main questions I had about blockchain technologies.

1. Are we there yet - is it done?

2. Why is blockchain so important

3. Is blockchain enterprise ready?

4. What are the key challenges ahead

Are we there yet?

With blockchain being in the news for a number of years, my first question was are we there yet? Listening to discussions on the exhibition floor and the various presentations and panel discussions, it became clear that after 10 years the answer was that things were only just getting started. There was a clear note of sobriety in many of the panel discussions, in which speakers referenced that the early years of focus on cryptocurrency and the inevitable speculative crypto bubbles had distracted people from the wider and much more important longer term implications of blockchain. Several speakers said that they considered the last few years to have been a process of seeing these types of speculative being flushed out so that the industry and community can now pay attention to the work of building real sustained value models based on blockchain technologies. So the short answer was that we aren’t there yet, and in many respects it felt there’d been something of an initial gold rush, but now the real business of business building was only now beginning.

Wny is blockchain so important?

So, like most of you I’ve read the papers, the books, the articles about blockchain and its potential, but mostly I wanted to hear directly from those immersed and committed to the blockchain community as to why blockchain was so important. For this, I would say that my favourite summary comes from Brendan McKittrick & David Galea, co-founders of Aeroband. Aeroband was the keynote address at the AIBC Summit as well as winning the Fintech Startup Award at the event. A new platform focused on the aviation sector, both David and Brendan believe strongly that the impact of blockchain capabilities on the aviation industry via the Aerobloc blockchain is not just in how it changes the way the aviation industry does business, stating “its going to change the way we think”.

This theme of a radical rethinking of how things work or should work, based on the permissionless and trustless paradigms of blockchain architectures was a consistent theme throughout. For commitment and community on full display, I can only say that this blockchain event won’t be my last.

Is Blockchain Enterprise Ready?

Having listened and engaged in a number of conversations over the 2 days, it became apparent that this question was both relevant and wrong.

On the face of it, the answer is clearly yes, it is more than enterprise ready with a recent PWC study being cited by at least one panel in which something like 95% of their clients said they were planning to implement some kind of blockchain project or initiative. Furthermore 58% of investors, 50% of consumers surveyed are positive about blockchain and optimistic about its potential for positive impacts.

There was a clear sense and expectation from those attending that the next few years will see an acceleration in the adoption of and deployment of blockchain initiatives. China’s recent publicly stated commitment to blockchain is likely to kick start this acceleration. There are already 500 projects listed with China’s Cyberspace Administrations and its expected that many more will emerge in the coming months and years ahead.

What are the key challenges ahead?

One thing that is apparent is that blockchain and the wider category of Distributed Ledger Technologies remain at the very earliest stages of value creation. Across the many presentations and pitches that I saw, there was often a sense of a technology seeking an application versus a business problem being addressed with a radical technology solution. When all you have is a hammer, everything looks like a nail!

Clearly where blockchain becomes transformational is its ability to support value exchange where no 3rd party or institution is required to authenticate or legitmate that transaction. There are enterprise applications across finance, supply chain, logistics all of which are of great value in lowering transactional processing costs - and this is evidenced by the list of very large companies in finance and other sectors committing to their own usually private or semi-private blockchain implementations.

There will be a growing demand for technology skills but these will need to be complemented by more product and commercial skill sets, particularly those that can help build the bridge between the inefficiences of legacy architectures and systems to plot sustained value models and architectures based on Distributed Ledger Technologies.

My final takeaway was that the challenges of product and business scaling remain the same - deeply understanding the problem you are looking to solve and ensuring that the appropriate technologies and designs are applied with users pains and gains in mind. To a large extent even with blockchain and DLT, the challenges remains the same. Hiowever it is clear that Distributed Ledger Technologies create the opportunity for entirely new ways of thinking which means that future enterprises looking at DLT and blockchain should ensure that they bring design led thinking to the very forefront of their initiatives.

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