Startups will beat you if you do not change

It seems like everyone wants to be more like a tech startup these days. All kinds of customers come to us looking for the secret sauce to technology product innovation. Today, even the biggest players need to keep one eye on the rearview mirror for the next up and comer looking to eat their lunch.

More often than not, the general anxiety and hand-wringing clients feel is directed into workshopping efforts and other focused work to ; for example, what can we do to be more startup-like?

Too many feel their existing efforts are not sufficient to maintain a long-term competitive advantage and because of that, they look externally for operational solutions that enable them to remain fast and competitive. While frameworks, methodologies, and general job training are always beneficial, they will never unilaterally drive the solution. 

This can seem to some to be an output problem: 

  • We aren’t making enough fast enough. 
  • We aren’t executing on the ideas our sales pipeline is recommending.
  • Our engineering organization is understaffed. 

While each of these issues can pop up within a business, time and time again, root cause analysis has shown that these businesses start to break down because they are not organized to simultaneously move quickly AND execute on amazing product ideas. Far too often, businesses incur significant risk in operating this way, giving executives heartburn and a fear for the future. 

In this column, you will learn why startups are successful at what they do. You’ll discover ways to drive product success in your business by mimicking their structure of product centricity through parallel tracks of discovery and delivery. 

Note: you’ll see the term “product people” but should be aware that it  is not synonymous with the term Product Manager; that is a type of product person, but not all product people are product managers.

How Startups Form: Three Questions

When people think of thriving startups, they often think of a squad of young hipsters you might bump into at the WeWork down the block. These teams eat, sleep, and breathe “hustle™”  and seem to spend as much time sipping local cold brew, Instagramming, and playing air hockey tournaments as they do pitching their next big thing to angel investors.

There is something to be said about tech start-up culture, the types of talent it attracts, and the benefits of thinking differently (and “hustle™”). But what this view of a startup neglects to recognize is that this is just one variation of a startup; it’s a company in its growth phase. To really unpack the key to startup success culture, you have to start at the beginning. 

In my experience, every successful start up begins with a small group of cash and time-strapped individuals who put out a hypothesis about an observed problem in the world and try to answer three key questions: 

  1. Is this something that people want and would use?
  2. Is this something that we are capable of doing?
  3. Is this something people will pay us for?

In unpacking these questions, you come back to the classic triad of Consumer Desirability, Economic Viability, and Technical Feasibility. At the core of any technology startup, you have a team working to answer these questions.

So why do time and monetary constraints matter? Because successful startups not only realize the need to address these questions, but to solve them in the smallest increments possible. Value is only good to me as a consumer if it’s delivered to me right now and does not have any additional bloat.

What is the result of some of these small increments with well defined viability, feasibility and desirability? 

Well, in some cases it’s an avid following and financial success. Consumers begin clamoring over themselves for the solution because it solves a need they were never fully able to formulate themselves. The flood gates open as improvements are suggested, funding is raised, and a side project becomes a business. I would even go so far as to say that every successful business started by answering these questions well (whether intentionally or otherwise).

So why then, if so many great product ideas answer these three questions well and despite so many businesses forming in this way, do so many businesses fall prey to being disrupted by the next up-and-comer? 

Why is it that CEOs stay up at night worrying over the next crew of hungry young dreamers with a chip on their shoulder when they have unfathomable resources at their disposal?


How Businesses Fail: The Vertical Wall

The answer to the why posed above is rarely a lack of drive, resourcing, or even bad luck. In my experience, most businesses are held back  by their own institutional complacency. It does not form overnight, but comes as an abstraction of increasingly steep vertical barriers within the business and the distancing of those who are responsible for doing from those making decisions.

As businesses grow and scale, organizations tend to break apart into distinct functional verticals with the intent of keeping operations streamlined. This is not an inherently bad thing, as companies need to find ways to remain organized and functional. A 200 person organization cannot consist of 200 individuals acting of their own accord and making decisions collectively. It’s simply untenable.

Where this does become a problem, however, is when these verticals begin to be used as a means of separating the decision making (discovery) process from the creation of the product (delivery). More often than not, when verticals are established what was once a unified team with a collective vision begins to fragment; communication lines break down, and hierarchies begin to supersede consensus. 

For product companies in particular, this is a slow march towards becoming an output machine. The diagram above (while overly simplistic in many ways) shows the original startup organization that has begun to break apart into operational verticals. Where once a team of people tested a product hypothesis concurrently, a stepwise process arose where Desirability was assessed first by the business, followed by Viability and then finally Feasibility. The three-pronged process of successfully determining product market fit became an exercise of “what can we sell?”

This is a remarkably expensive and time-consuming way to execute on product work. More often than not, it ends up with overly-featured and bloated “projects” that consumers do not love (and in many cases, downright loathe). 

Companies that operate like this have incredibly high turnover rates downstream from the business and experience difficulty attracting bright, young talent despite deep pockets. This is almost always because quality talent rarely wants to work in a system that operates as an output engine at the individual contributor level.

Businesses that work this way tend to look from one sale to the next, one campaign to the next, one project to the next, as a means to an end. They view their historic business success as the key indicator for their continued success. These companies place far too much credence in the success of individuals, even over the success of the team. 

Companies that operate in this way are often the first to be overtaken and disrupted by the next innovators to come along with a bit of grit and a dream. These businesses more often than not have become so enraptured with their own status, politics, and self-sufficiency that they lose sight of the original purpose of serving user need.

So what is the secret sauce? How can a large and growing organization continue to innovate and disrupt themselves so they aren’t externally upended?


The Great Reckoning: Getting to Product Centricity Within Your Business

The best way to beat startups at their own game is to create one within your business. There’s no denying that the startup system of small scale organization and decision-making aligns perfectly with the fast-paced and low stakes world of software development.

Start with a cross-functional product team whose sole purpose is to continue to answer the same questions related to Viability, Desirability and Feasibility as before. But add this additional question: Can our existing business support this solution? 

This team should consist of a dedicated product manager, designer, and technology lead at minimum. While each of these people will still report through the organizational verticals of the business they would typically align to, their success and growth should always be measured against the individual product they serve rather than their organization at large.

In much the same way as a startup, this team should eat, sleep and breathe your customers’ problems. Ultimately, they are attached to the problem a customer is facing rather than to a particular solution. 

Your business can consist of anywhere from one to several hundred of these product teams working on products across the business, but it should always be clear where the responsibilities of one team ends and another starts. These teams can be pressed to petition for resources to build their visions but should be given a reasonable level of autonomy. They are most successful when granted the autonomy to make their own decisions, address the problems they want to attack, and stay as close to the users as humanly possible. 

This is true product centricity.

Product Centricity in Practice

Ready to install a dedicated product team? That’s a truly great step in the right direction, but startups go one step further. 

The lean nature of a startup (and the fact that it’s often a side project for the contributors) lends itself to a laser focus on need rather than the demands of the business. The questions of viability, feasibility and desirability are asked concurrently at a startup, so how do you give your team the autonomy to do these things?

While many businesses have a “product program,” this tends to become the output engine highlighted above. A truly product centric product program operates without the constraints of defined features and concrete delivery deadlines. When done correctly, this simultaneously erases the hand-wringing associated with the potential success of a new product launch and also keeps the C-suite happy by virtue of continually exceeding quarterly goals (provided those goals are reasonable, of course).

Many executives will hear this message and scoff. You may be thinking to yourself, “How can we be successful without clear strategic direction and a feature based roadmap?” 

I challenge you to take on the effort of assessing how many of the features you delivered in the last year actually panned out. 

How many were utilized as anticipated? 

How many were categorical flops? How many were decided upon due to a potential sale, or a particularly noisy client rather than an observed need? 

And how many years of your life have you lost worrying over the potential success of an untested feature that made it onto your roadmap?

Truly product-centric organizations focus not on features and things (output) but the goals they want to achieve (outcomes). This is accomplished by a product team that is truly excellent at assessing strategic value and direction, and skilled in determining what is best to bring to the marketplace.

So what could this look like in practice? Imagine you work at a SaaS business that teaches exam prep to students preparing for college. 

In a traditional “product” organization, a sales executive might hear from a college prep counselor (the traditional buyer) that they would like to have a live tutor available to students. In a traditional organization, the product program would ingest this information, prioritize it, come up with a project plan, and report back to the business when it’s done. 

In many instances, this product will be brought to market. And while sales might initially jump a little, you would find over time that students perhaps aren’t using the tutor at all. You incurred considerable cost to design, build, and maintain this solution, with ultimately negligible return.

Imagine a parallel world where the C-suite decided that a better goal for the business was to boost user retention on the site by 20%. 

A savvy product team might learn through some initial research that one of the greatest dropout points in product experience arose when a student ran into a wall during their prep and decided to search for a solution on the web, taking them to a competitor website. 

With the need determined and a hypothesis formed, the team might test several small product ideas with users via wireframe: a live tutor feature via web conference, a robotutor that enabled students to chat in a chat box, and a simple get help function. The team could test these ideas for viability, feasibility, desirability, and the ability of the business to support the solution, and weigh each against the goal of boosting retention by 20%. Then and only then would the team put the specific feature on the road map for development. 

In the diagrams above, it’s clear why this is useful. Startups are successful when they connect the thread of demand in the marketplace to a useful solution (many, many startups fail if this is all that they do, though). Traditional businesses have strategic goals they are often on the hook for, but tend to make leaping assumptions about what those might be. This can lead to considerable bloat and failed product launches. Product-centric businesses install cross-functional teams with an ear to both the business and its users, creating two synergistic feedback loops leading to success and forcing self-disruption before being disrupted by someone else.

I hope you’ve taken value from this exploration of the journey of this hypothetical product company’s journey. Many start off on the right foot but over-index on the things that made them successful in the past. Through operational blunders, they may unintentionally put themselves in position to be disrupted. 

If you take only one thing away from this article, let it be this: Giving your product team goals to execute against rather than features to build can get you started down the path of righting the ship and becoming a successful, product-centric organization.