Layoffs: Has the Product Management Industry Failed Us?
If we were truly lean and agile, shouldn’t we be way below the 153,000 layoffs mark?
2022 was a dark year for the technology industry. Back in May, I wrote about the layoff trend for 2022, but I honestly didn’t expect the situation to get this bleak.
When I wrote that piece, we were around 25,000 impacted. Fast forward to December of the same year, we were more then 153,000 people chopped according to layoffs.fyi.
Meta (Facebook’s holder) has made the biggest cut so far — 11,000 people. Amazon comes in second, with a 10,000 severance. Twitter let go of 50% of its workforce and Stripe, 14%. All of that in November alone.
When role model companies have their structures shaken by what appears to be poor management, it’s inevitable to think that they are not that different from your “under digital transformation” every-day business.
If an alleged strong Product culture is not enough to separate the prosperous from the feeble in times of hardship, than what is it good for?
The Limit Of Product
Product as a whole was built on top of two solid foundations: Agile and Lean. Both of these paradigms rely heavily on highly qualified people organized around tight teams working obsessively towards a goal to deliver scalable results.
Thanks to scalability, relatively cheap businesses can deliver impressive results. A traditional business could never deliver 80%, 100% growth year-over-year. Product led companies can.
The thing is that the more you grow, the more your investors expect you to keep on growing. Eventually, a big enough business must diversify and reach for other markets where it can keep growing into. “Obsession towards a goal” gets harder and harder to pinpoint the bigger you are.
Think of Amazon. A team of five could see Amazon’s online book marketplace value proposition as a whole and prioritize based on it. The discovery and delivery process took into consideration the entire user experience.
As scope grew, this team of five didn’t have the bandwidth to prioritize accordingly anymore. Between marketplace, cloud, hardware, streaming and much else, they had to narrow down their vision of value delivery and specialize.
Specialization calls for more specialization. Where once you had a single team tackling multiple problems, now you’ll need several specialized teams to deal with the same subjects. The cost to operate the business grows and scale becomes harder to achieve.
The graph above shows quite clearly that Amazon’s business scalability has fallen since 2013 and never quite recovered. Nonetheless, they are regarded as one of the most Product centered companies to this day.
Lean and Agile mindsets are amazing for small, nimble business, trying to disrupt and discover new ways of delivering value. Are they unable to work as intended when you are too big, though?
Is the limitation of Product efficacy scale itself?
Is Scale Really The Limit?
Saying that something is broken when you use it wrong is unfair. If a fish was judged by it’s ability to fly instead of swim, it would be broken beyond repair. Amazon might be a strong case to advocate that Product can only go so far when it comes to value at scale, but is it the case with other companies as well?
Despite being the top 3 most profitable companies inside tech, Microsoft, Alphabet (Google) and Apple are out of the top five employers. Funny enough, none of the three have announced layoffs (so far) with the exception of Microsoft, that let go around 1000 employees on October. A small 0,4% cut, all things considered.
All three companies are also regarded as highly mature product led companies… If Product fails at scope, it most definitely should have failed those three, right? But it didn’t. Why?
It sure seems that our friend Jeff Bezos cranked up those expanses around 2016. While Microsoft, Google and Apple have far more controlled expense increases (with hires, among others), Amazon clearly spent money in order to gain money.
The problem is not scale then, it’s how you scale.
Growth, the Real Villain
Of course growth has always been a thing, but “Growth” (capital g) is far newer. The concept gained traction on the follow-up of ludicrous valuation such as WeWork’s and Uber’s.
Supported by this corrupted understanding of Lean, the motto “move fast and break things” from Mark Zuckerberg is the face of this movement. It doesn’t matter the cost, it’s all worth it if “Growth” is achieved. I say corrupted because lean thinking has never been about Growth. It has always been about learning. Quoting Eric Ries, from “the lean startup”:
“The only way to win is to learn faster than anyone else”
You test and iterate to learn the best way to do business in a way “that our customers love and yet work for our business”, as Marty Cagan would say. The idea is not to do whatever it takes. On the contrary, braking the rules will never “work for our business”.
Growth might be the reason why founders and bankers get rich, but it has never been the mark of any really successful business. Up until now, we had no evidence to back such a bold statement, but 2022 is over and the results are in — clear for everyone.
Companies that rely on Growth alone are usually inflated, have no backup plan for when things go south and their business survival is almost solely dependent on investors good will. If no one is there to write your next check, you wither and sometimes die.
For all intents and purposes, we failed Product.
Product Will Help Us Rebuild
Growth is dead, it will probably come back when things get better, but until then, we have only Product to help us navigate through the storm.
The values of “people before process” or “be passionate about the problem, not the solution” were born in the wake of another market disaster. These values were core to many of the business that outlast the aftermath of the Dotcom crisis, including Amazon!
This 1999 interview with Jeff Bezos shows that the underlying values of Amazon (which are also part of Apple, Microsoft and Google) are the solid cornerstones of what we call Product today: focus on the user and a group of people trying their best to deliver a great experience.
Amazon laid-off 15% of its workforce in 2001. It has laid-off only 3% this time around. Even if someone was to say that Amazon failed Product, we need to recognize that they’ve learned their lesson at least in part.
2023 will, most likely, be a tough year. 2009 was not easy after the 2008 crash, but we all lived through it in one piece. Companies, weather tech or not, will need to recover their focus and rationalize their expenses based on ROI.
Google, Microsoft, Apple and many other less famous companies that do Product the right way will survive, just like they did back in 2000. Your average NFT, Metaverse, growth hacking business will not, though.
Can’t say I’m sad for them, in all honesty.
Special thanks to Tremis Skeete, Executive Editor at Product Coalition for the valuable input which contributed to the editing of this article.
