Becoming a product-led company

November 19, 2020

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Escaping the Build Trap by Melissa Perri

Successful product companies prioritize outcomes over outputs. A strong product management role, product strategy, process, and organization are required to break free of measuring value solely by features released and becoming a product-led company.

Escaping the Build Trap: How Effective Product Management Creates Real Value by Melissa Perri

Melissa Perri begins “Escaping the Build Trap” with a personal product management story that features her realization about her work when “a much-needed dose of reality was thrown in my face when we began measuring the success of our products. I soon learned my products were crap, and no one was using them.” She learned that she was caught in what she calls the build trap and “was so focused on shipping features and developing as many cool ideas (but mostly my own ideas) as I could that I didn’t even think about the outcome of those features.” This diagnosis is the fundamental principle behind the book: moving from output-oriented work to outcome-oriented work. Perri says this is at the center of becoming a product-led organization.

The book starts with a vivid description of a fictitious company which has a large product management team but is struggling to effectively achieve its business and customer goals. Everyone in the company is pointing out various issues from various points of view and the product team is at the center of the issues. The product team is struggling to support the business but is unable to deliver results.

The story of the fictitious company continues throughout the book. Perri helps the leadership team identify their lack of a product strategy, experienced product managers, and a process to support being product-led.

Measure success by outcomes, not outputs

The build trap occurs when companies measure success by outputs (features shipped) rather than outcomes (business and customer value). To escape the build trap, companies must create an effective product management role, invest in developing a clear product strategy, support a hypothesis/experimentation product development process, and design the product organization and its processes to support a outcome-based mindset.

Key ingredients for making this organizational transformation are strong management support for outcome-based success measurement, autonomous teams, the right incentives for learning, and an organization-wide cadence of communication and strategy development.

Shipping features doesn’t equate to customer value

Instead of associating value with the outcomes they want to create for their businesses and customers, they measure value by the number of things they produce.

Companies frequently measure success incorrectly. When product teams are focused on feature delivery, also known as a “feature factory”, they are not focused on their customers, spend all their time in the solution space, and don’t learn to make product decisions based on a product strategy framework.

Companies which are not product-led have a fundamental mis-undestanding of value. Value lies in helping your customers achieve their desired outcomes. A customer realizes value when product or service you provide meets their needs. This mis-understanding also drives an emphasis on full backlogs and speed of delivery (not taking into account whether the right thing is being delivered). Perri says “solving big problems for customers creates big value for businesses.”

The four keys to becoming a product-led company

To make the switch from being an output- to outcome-based product organization, there are four key areas that need to be in place:

Role: Creating a product manager role with the right responsibilities and structure

Strategy: Enabling those product managers with strategy that provides good decision making

Process: Understanding the process of determining what product to build, through experimentation and optimization

Organization: Supporting everyone with the right organizational policies, culture, and rewards to allow product management to thrive

The Product Manager’s Role

There are many product management role anti-patterns including “the mini-CEO”, “the waiter”, and “the former project manager” which get in the way of being a product-led organization. In these cases, the product manager is either focused on simply delivering what is requested of them or is focused exclusively on execution.

Great product managers always start with “why?”. Perri says “too often, product managers dive into creating solutions without thinking through the associated risks.” If a product manager doesn’t understand the business and customer outcomes, they cannot effectively lead a team to find the solution

A good product manager is taught how to prioritize work against clear, outcome-oriented goals, to define and discover real customer and business value, and to determine what processes are needed to reduce the uncertainty about the product’s success in the market.

Organizations undermine the product-led capability by not giving product teams “the necessary time to do product vision and research work.” Instead, “they would rather hold them responsible for a steady stream of outputs and measure success based on stacking backlogs and writing stories.” Perri illustrates this in a story about a product manager who starts by spending sufficient time in the problem space so that her feature delivery produces the right outcome for her company and customers.

The keys to product management success are, “a good strategy framework …and ruthless prioritization around a few key goals” which allows the product manager to “effectively talk to customers, understand their problems, and help to define the solutions with the team.” This concept of the empowered product team is also advocated by Marty Cagan in several articles and YouTube presentations.

Perri recommends organizing product teams around value streams because “keeping the strategy and the value execution together is key.” Perri says that “product managers need room to manage toward an entire outcome-oriented goal” rather than myopically working on a single feature or component. More product managers are required if they are assigned to individual components because that typically also indicates a lack of strategy and minimal set of goals.

Perri also includes a career ladder for product managers beginning with Associate Product Manager and ending with Chief Product Officer.

Product Strategy

A good strategy is not a plan; it’s a framework that helps you make decisions. Product strategy connects the vision and economic outcomes of the company back to product portfolio, individual product initiatives, and solution options for the teams.

Product strategy both supports and is supported by an outcome-based product development methodology. When a company keeps score based on features shipped, there is no place for product strategy. Similarly, without a product strategy, product teams fall back into a feature-factory mode.

Perri recommends a “strategy deployment” model which includes: 1) vision; 2) strategic intents; 3) product initiatives; and 4) options. Strategic intents define the business challenges that stand in the way of reaching the vision. Product initiatives identify problems that can be addressed to tackle the challenges from a product perspective. Options are the different ways the goal can be reached.

Product teams need the freedom to explore solutions and to adjust their actions according to the data they receive. As long as they are aligned with the overall strategic intents and vision for the company, management should feel comfortable granting the necessary autonomy to capable teams

Perri is a proponent of autonomous teams. She writes that “leading by authority is a relic of industrial-age methodologies…In the world of software, we don’t work this way.” The benefit of a strong strategic framework is that “if you’re aligned coherently and you have a good strategic framework, you can then allow people to make decisions without a lot of management oversight.” This is another facet of product management where product strategy helps: with a strategy in place, product teams have more ownership, accountability and learning opportunities. A product strategy provides the constraints which enable teams to exercise customer discovery and creativity.

The unconstrained team is the most frightened and scared to act in the organization. They feel like they cannot make a decision because there are too many options. Appropriately constrained teams, ones who have a direction set to the right level for them, feel safe to make decisions because they can see how their stories align to the goals and structure of the organization.

—Jabe Bloom

Strategy is also important because “that is how you scale an organization–by enabling action through autonomous teams.” The inverse of autonomous teams is “when teams are not aligned with a clear direction and goals, they cannot effectively make decisions.”

Product Management Process

Perri’s Product Kata product management process begins by understanding the company’s strategic intents and using those to identify product initiatives. Product initiatives are hypotheses about business outcomes with associated options to explore. Rather than telling teams which features to solve, this method focuses on explicitly identifying the desired outcome and providing teams with guidance on alternatives to investigate. The phases of the Product Kata correspond to these elements: 1) understand the direction; 2) Problem exploration; 3) Solution exploration; and 4) solution optimization.

The example in the book is a team with a strategic intent of increasing revenue from users. They initially identify three choices: 1) acquire more individual users; 2) retain existing individual users better; and 3) create new revenue streams for existing individual users. After gathering customer data, they identify two initiatives: increasing content on their site and adding a way for their users to reach their goals more effectively. For each initiative, they identified features and product improvements as options to explore. To reach this stage, the team went through understanding the goal and future state, determining what users are doing today, and setting an initial goal. Next, they can begin user research and product experiments.

Although some teams are able to define the problem they are solving, they typically guess at possible solutions. Perri says there is a better way: identify experiments and ask “why?” until you arrive at the root cause. From there, possible solutions have a higher chance of achieving the objective.

The Product Organization

If there is one main reason I have seen companies fail to make a transition, it’s the lack of leadership buy-in to move to an outcome-oriented company. Leaders will say that they want to achieve results, but, at the end of the day, they still measure success by features shipped.

Perri suggests three key meetings to reinforce the focus on outcomes: 1) quarterly business reviews; 2) product initiative reviews; and 3) release reviews. Quarterly business reviews highlight financial outcomes and progress towards strategic intents. New strategic intents are introduced at the quarterly business reviews. Product initiative reviews is where product managers “talk about the results of preliminary experimentation, research, or first releases, as they relate to overall goals.” New product initiatives are introduced at this meeting along with funding requests to build first versions or optimize existing solutions. Release reviews are when product teams showcase their work and discuss success metrics.

In the context of these meetings, Perri tackles the reality of “roadmaps.” She recommends “instead of thinking of roadmaps as a Gantt chart, you should view them as an exploration of strategy and the current stage of your product. This combines the strategic goals with the themes of work and the emerging product deliverables from it.” Since product roadmaps are not one-size-fits-all, Perri mentions Product Roadmaps Relaunched as a good resource for determining the right format for your product. Perri suggests including a theme, hypothesis, goals/success metrics, stage of development, and important milestones in roadmaps.

If you are a leader at a company, it’s time to reevaluate how you are incentivizing people. You should be rewarding people for moving the business forward–achieve outcomes, learning about your users, and finding the right business opportunities.