Most successful tech startups fit this description: A visionary, motivated and (usually) cross functional team has been able to iterate quickly, and use what they learned to solve a customer problem in a new and innovative way. A key factor to their success is how they collectively think: They’ve developed a shared mindset that places customers and their needs at the center of all decisions related to what they build and how they build it.
It’s product mindset — a powerful way to work together on complex problem solving. If you're oriented towards iteration and learning, it may come naturally to you in the beginning. But to succeed Big Time you need to hang on to it in expansion: You need it to find the best, often unique, growth strategies, that help you go fast while at the same time using only the people and resources you need, while keeping complexity and technical debt at reasonable levels.
A product mindset grows strong in companies that have a long term commitment to risk taking, experimentation and learning, and who have a widespread culture for curiosity, creativity and cross functional collaboration. Challenges we face in scaling, however, often steal so much focus from the product being scaled that our product mindset starts to deteriorate. As a consequence, we prematurely start to operate like established companies — before our product has become an established market winner. We loose momentum and stagnate. Here's how it goes:
An early version of our product hits the spot: we’re solving an important problem in a new and refreshing way that saves customers time and money. Now, they want more, competitors are around the corner and stakeholders are want to see traction towards exponential growth and beyond. To scale up our product, we have to scale up our organization. We need more capacity in product, design, development, customer success, marketing, sales, and so on. More customers, more features and more people, all at the same time. We probably need a bigger office space too.
And now we start to get into trouble.
We start receiving conflicting customer feedback. A few bigger customers start making special demands for product capabilities (it’s hard to say no, but it’s a path to outsourcing product strategy). It's hard to prioritise. Meanwhile, increased complexity in tech and product slows down speed of development. Back-logs are building up. Conflicts are on the rise between product, design, tech and business development. People are getting frustrated, confused or both. Out of this grows a strong push across the company to establish focus, so that each and every function gets to do more of their things: Sales and key account managers take over customer contact from product and design. Coders code, and stop engaging in product strategy and design work. Marketing runs campaigns by themselves. Customer support handles customer feedback. And everybody tells HR to hire the most experienced candidates, because nobody has time to train new hires.
Getting things done becomes more important than understanding whether things actually need to be done. Doing my part becomes more important than making all the parts go well together. Delivering becomes more important than iterating. In the silos that emerge, a conservative expertise-based thinking starts to take over from collaboration and learning.
We start missing out on key insights: What features that customers scream for are really needed, and which could we reject? What new features that nobody has asked for should we prioritize building right away? Are there new, big and shiny customers in the pipeline that we don’t want, or shouldn’t prioritize? What customer segments could get us to fully automated, product-led growth? Are new capabilities in competing products necessary in our product? Do we need more or less publicity? And much more.
In his book “Blitzscaling”, Ried Hoffman, the founder of LinkedIn, outlines the challenges and opportunities of rapid growth. He argues that speed is often more important than efficiency in the most expansive growth stages of a company, especially in fast-moving industries where competition is fierce. While his particular method isn’t necessarily relevant for every growth company, his thinking is: If you want to grow fast, you have to be careful with efficiency measures. Efficiency is about optimising the parts. If you do that without understanding the whole, it may look like you’re going faster, but that increased speed takes you in the wrong direction. Over time, a high level of efficiency has but one outcome: It solidifies the organisation, the operation and the thinking. Hoffman argues that by valuing speed over efficiency you retain fast decision making, rapid propagation of new learnings, and the agility you need to truly beat the competition.
So what do you do if you’ve already started to loose your product mindset? In The Hard Thing about Hard Things, Ben Horowizt has an inspiring story about how he solved a long running conflict between two departments: At his company Loudcloud, Sales and professional services had spun into bad dynamics, with sales always promising features that professional services couldn’t deliver, and professional services blaming sales for selling features that didn’t exist yet. Horowitz realized that the problem was with lack of perspectives of what the other department was doing, all the way up to the managers of each department. So he decided to swap them: Overnight, the manager of sales was made manager of professional services, and vice versa. The move was instantly effective in breaking down the silos between the departments and it enabled more collaboration, feedback and cross company learning.
His story illustrates what it takes to make people focus back on the product: It’s not about my function or my role: It’s about value creation for customers. Get stuck in one role for too long, and you stop seeing that bigger picture. (Or as they say: The first thing you need to do when your down in a hole, is to stop digging.)
It’s cross-functional work, where people value combined perspectives and new ideas as much as they value experience and deep expertise. It’s overlapping territories, where professionals are both allowed and expected to do work in each others fields. It’s aligned and motivated product and innovation teams.
It’s culture building. And it needs fuel in the form of fast feedback loops, rapidly flowing learnings and a diversity of perspectives.
In companies who want to strengthen their product mindset, I first look at how people energise: When people spontaneously come together in high energy conversations or discussions — are they talking about internal affairs (organisational changes, compensation, processes, tools, etc) or are they talking about the outside world (customers, markets, new opportunities)? Here, strong product organisations tend to be more “extroverted”: They care more about how they impact the outside world.
And speaking of backlogs: Long product backlogs is usually a sign that the product mindset is in distress. They are a symptom of an organisation that spends too much time making promises and speculating about the future. With precision insights on customer outcomes, backlogs tend to shrink, because what becomes the next feature is based on data on how the previous feature performed.
Below is a non-exhaustive list of other recommendations and suggestions on how to retain and strengthen your product mindset:
- Continually align on the vision: Remind people why we're building this product, by emphasising how we are trying to impact our customers. Define strategies not in terms of vision, values and goals, but rather in terms of what obstacles we need to overcome, and how we can make our combined actions coherent and focused. Put people who normally don’t talk to users and customers in front of them, by running rapid, online user interviews, spending time at customer service, representing your product at events and so on. Run sprints, like the GV Sprint, on new feature sets and make sure to include all functions in the company on the team. New team for every sprint.
- Always evaluate: Speed or efficiency? Make this a steadily recurring discussion in management meetings and other arenas where priorities are made and expectations are set. Why are we prioritizing one or the other? What’s the balance between short term benefits over long term consequences? Start the discussion by aligning on where you're doing well.
- Build organization, not territories: Beware of expertise thinking. Embrace the beginners’ mind and curiosity in other people’s fields. Build a rotation program. Always hire a mix of junior and senior people. Name contrian changes in management positions. Postpone individual incentives as long as possible. Keep people in explore mode, even if it means starting up new products and initiatives. And follow the handovers: What happens from discovering a customer need until it has been implemented? How many functions are involved, how much waiting time is involved, and how does each involved function learn how their work impacted customers? And watch the backlogs.
Many founders say they prefer working in startups, and don’t enjoy the later phases of a company as much. Scale up in the wrong way, and you’ll easily arrive at this conclusion. But if you can scale up without loosing sight of your product, I think most naturally born innovators could thrive in any phase. Ultimately what they want is to work on value creation, and in strong product companies this happens in all phases.
Over the next decade, I think we will see fundamental changes in how we organise and operate tech companies. We will see more and more examples of learning organisations with strong product focus and drive to innovate in all stages. That in turn could have a fundamental impact on how societes evolve, with more people being allowed to build systems and products that are better, more adaptable and more sustainable.
Founders and leaders who scale up their companies in the right way are at the frontiers of this development. They lead the way and show the rest of us that it’s indeed possible to go big and stay innovative at the same time.
Thx, Christian Møller, Ian Stendera.
Based on learnings from my work at Iterate: An innovation ecosystem helping companies in any phase develop digital products, brands and strategies.