The Product Leader’s Book of Problems — Problem IV: Scaling Without Imploding
Problem IV: Scaling Without Imploding
The primary problem facing a growth-stage company is one of scale. Product Leaders need to choose a mission-centric product approach that aligns the organization, sets up guardrails, and guides autonomous teams in order to grow exponentially and drive innovation without imploding.
Welcome to the fourth chapter of the Product Leader’s Book of Problems.
For those new to the series, each week I walk you through your next big problem as a Product Leader.
Based on over a decade of experience managing and leading product teams, I start with the big universal problems that exist at every organization to the more nuanced and stage-specific problems that rear their ugly heads as a company evolves from startup to enterprise. I walk you through a snapshot — a crystal ball of sorts — of the problems your future-self will be dealing with as a Product Leader while you pursue your product vision, navigating treacherous waters, slaying dragons, evoking awe, disbelief, respect and glory from developers to CEOs alike…
As discussed in last week’s post, the single most important thing to consider when determining what type of product approach your organization needs is the stage of the organization.
This is because you need to solve very different problems as a company evolves. The type of product management and leadership needed for early-stage companies looks a lot different from what is needed for later-stage companies. For example, startups require a product approach that fosters learning and discovery and helps solve the problem of uncertainty by validating product-market-fit as quickly as possible.
This week we are looking at how to choose a product approach as the startup evolves into a growth-stage company and faces its next big problem: achieving scale. Or more specifically, how to achieve scale without imploding.
Problem: Scaling Without Imploding
After a startup finds product-market-fit, the main problem facing the organization shifts from one of uncertainty to one of scale. The company has crossed the chasm. It understands the customer problem. It has validated that customers are eager to pay for a solution. And it is confident that there is a viable and sustainable business model.
The organization is now ready to start spending serious dollars on demand-creation to scale the business. However, this means it will be dramatically increasing its cash burn rate and speeding down a very real and finite runway.
As a Product Leader, you are faced with a daunting task. You need to figure out how to successfully scale without imploding. Behaviours and habits that worked in the startup situation start to develop cracks when the product team and company begin to scale.
A looser product approach and more chaotic product environment might have worked to get the company off the ground, but there’s a real threat it could start to undermine the success that has been achieved.
There’s an even bigger threat it could derail a growth stage company as it tries to scale. The growth-stage company might still have the spirit of an early-stage venture, but the systems and processes that worked at the beginning probably won’t translate. Your job as Product Leader is to help preserve the startup spirit while helping the team and organization mature in its approach.
At the same time, many startups have been sunk by going too far in the opposite direction. This usually happens when founders, investors, boards, and/or Product Leaders assume achieving scale and success means transitioning to an overly rigid product approach, complete with all the trappings of a large-company organization and culture: a hierarchical, command-driven management style, process-driven decision-making, an HR-driven employee handbook, and an “execution” mindset.
This usually stems from the belief that imposing order and certainty on a disorderly organization will result in predictable and repeatable success.
As the Product Leader, to succeed and help the organization achieve the scale it’s looking for, an agile product approach falling somewhere in the middle is needed. The key components of this product approach include transforming the company to become mission-centric and building autonomous teams guided by strategic guardrails to achieve scale and drive innovation — all without imploding.
A Mission-Centric Transformation
As product teams transition to the growth-stage of a company’s development, the challenges they face will change. There’s a tricky balance between achieving growth and maintaining the startup ‘keep it lean’ mentality.
The first step to evolve your product approach to deal with this new challenge is to make the team and organization mission-centric.
Your startup must remain an agile company, one that can still respond with entrepreneurial speed, but do so with a much larger group of people. Creating that agility requires a written and widely understood product mission that drives day-to-day activities of the team and ensures everyone is aligned as things start to scale and get more hectic.
This corporate mission statement should be developed in collaboration with the other department heads as it helps to ensure that, not only your product team, but all the other parts of the organization that touch the product are aligned and in sync.
This is critical because the product is not simply a set of features; the product is the way you talk about the product, it’s the way you acquire customers, it’s the way you close a customer, it’s the way you support a customer, it’s the full experience someone goes through.
That’s all part of the product, at least in the customer’s mind. So it’s important that everyone from marketing to customer support is on the same mission.
The product mission statement should be internally focused and is for use inside the company (not for customers). It should be action-oriented and should provide daily guidance for all teams. For that reason, it should be focused on execution and what the team is trying to achieve. If done right, your product mission statement will help employees decide and act locally while being guided by an understanding of the big picture.
The key components of a well-crafted mission statement are:
A) why your employees come to work
B) how they will know they have succeeded
C) your revenue and profit goals
Ask yourself: can a new hire read the product mission statement and understand the company, their job, and what they need to do to succeed. If the answer is yes, then you can move onto the next step.
Setting up Guardrails
Small, autonomous cross-functional teams that are close to the customer with the independence to execute their own strategy and tactics are by far the best way to achieve scale, drive innovation, and build products people love.
However, the word autonomous evokes visions of chaos to many executives, investors, or founders who have more limited experience successfully setting up this kind of team structure. With limited cash flow at this stage, a very real runway, and an increased burn rate on the horizon as demand-creation ramps up, their anxiety is understandable.
For these reasons, it’s important to set up guardrails to guide autonomous teams about to enter the growth stage.
This gives them the freedom to execute as needed while assuring the executive team that there is a strategy in place to manage what they may consider madness.
So what do I mean when I say guardrails? Let’s start with what guardrails are NOT. Guardrails are not top-down management practices, bureaucratic organizational structures, or over-reliance on stifling processes — all built for compliance and predictability. This runs contrary to most traditional management approaches.
That’s okay. In addition to the product mission-statement that you created above, your guardrails include a guiding set of Product Leadership Principles, a crystal clear Product Vision, well-defined Strategic Goals, and a framework for defining and tracking objectives and outcomes like OKRs. Together these guardrails help ensure the train stays on the tracks.
Product Leadership Principles
Product Principles align the team, support autonomous decision making, and set the team (and company) up for success as it scales. Amazon uses principles when discussing ideas for new projects or deciding on the best approach to solving a problem. Principles can guide minute decision making. They help make sure everyone is drinking the same kool-aid.
For example, whether you are an individual contributor or the manager of a team at Amazon, you are guided by its fourteen principles. “Customer Obsession” is at the top of Amazon’s list of principles (and should be at the top of yours too). It states: “Leaders start with the customer and work backwards.
They work vigorously to earn and keep customer trust. Although Amazon leaders pay attention to competitors, they obsess over customers.” It’s clear that the customer is paramount at Amazon thanks to this principle and every decision becomes weighted with it in mind. Leadership Principles allow Amazon teams to make micro and macro decisions without having to run everything up the ladder.
If you haven’t already, you should craft your own set of Product Leadership Principles with your team and wider organization to ensure teams have a shared set of values when prioritizing or when they need to make autonomous decisions quickly. In this way, Product Leadership Principles not only guide the team but become a competitive advantage in fast-moving, high-growth markets.
The next guardrail is your Product Vision. As you are probably aware, Product Vision is the north star that guides all product development work. It’s purpose is to rally a group of people around a common goal. Establish a clear vision for the team and communicate it frequently. Not only does a solid Product Vision have the ability to anchor everything the team does, it creates transparency, understanding, and encompasses the why behind the work.
Done correctly, the Product Vision becomes one of the most important tools you have to motivate teams. It helps the team feel they are a part of something bigger and helps establish goal-driven commitments. Ensure that your Product Vision is inspiring, strategically sound, documented, and — most importantly — communicated.
A good Product Vision becomes much more memorable when it is both practical and emotional; when your audience can imagine themselves doing something (practical) and when it tugs on their heart-strings (emotional). Further, your vision needs to make it crystal clear who the target customer segment is and what your top value proposition is.
This means you need to make some tough decisions but this is absolutely critical. A vague, uninspiring Product Vision will translate into vague, uninspiring results from your team. If you do it well, your Product Vision can not only guide and align teams, it can become a rallying cry and a reason to come to work in the morning.
A Clear Set of Strategic Goals
A Product Mission Statement, Product Leadership Principles, and Product Vision are all important guardrails for guiding small, autonomous teams. However, Strategic Goals are where the rubber meets the road and where expectations become solidified. Defining a clear set of Strategic Goals introduces accountability and gives the Product Leader and executive team something to measure against.
As the Product Leader, you should get buy-in from key stakeholders for the four of five strategic goals that are going to be accomplished during the year. These are the strategic goals that will move you closer to the Product Vision.
It’s really important for Product Leaders to work closely with stakeholders (investors, founders, board members, key employees, core customers, and partners) to understand their priorities and get buy-in from them on the things the team is going to accomplish this period. This early collaboration will be far more productive than operating in a vacuum and trying to define things by yourself.
Next, you should work with stakeholders to define the initiatives that will help achieve those Strategic Goals. Strategic Goals will obviously vary by company and industry but will inevitably include some combination of achieving user growth, market share, revenue, and profitability. That said, it’s important to balance performance-oriented goals with customer-satisfaction goals like Net Promoter Score (NPS). If customers buy your product, that’s validation number one.
But if you get a positive NPS, that’s validation number two. In other words, the team should be equally focused on customer satisfaction to ensure your product isn’t overpromising and under-delivering. Too many growth-stage companies, blow the budget on marketing only to have low retention rates sink the ship.
A Framework for Tracking Performance
Once you have your Strategic Goals defined, you can now work on developing performance metrics for the overall product team(s) and individual team members. For decades, leading tech companies have been using OKRs (Objective Key Results) as a management methodology, not only to survive but also to stay ahead of their competition. OKR’s have enabled companies like Google and Amazon to scale and out-perform their rivals over time. OKRs should be aligned with the Strategic Goals, guide what the team is working toward, and contribute to the greater good of the team/company.
For example, using a lens like OKRs will help the team decide which things on the draft roadmap are worth executing. Work with individual team members to make clear connections between the bigger strategic goals, team goals and individual OKRs.
With your Mission Statement and Guardrails in place, the Product Team should now have the guidance it needs to get to work. But not so fast. There’s still the small task of setting up an autonomous team structure.
Building Autonomous Teams
As discussed, small, autonomous cross-functional teams that are close to the customer with the independence to execute their own strategy and tactics are the best way to achieve scale, drive innovation, and build products people love.
But what exactly does it mean to be an autonomous team? Autonomous means that teams are free to solve problems and make decisions without having to run everything up the ladder. With clearly defined guardrails to guide them, teams have the freedom to self-organize and choose how to best achieve their goals.
That said, it is important to note that being autonomous does not mean being free of accountability or working alone in a silo closed off from the rest of the organization. In fact, it means the opposite. Autonomous teams are actually more accountable since they are not just simply following orders handed down from above.
They are now the masters of their own destiny and their fate ultimately depends on how well they work together to achieve the strategic goals they have been entrusted with. Furthermore, autonomous does not mean walling off from the rest of the company. It does not mean avoiding others. On the contrary, they should be highly interdependent with the rest of the organization, seeking out others in the company for input and knowledge as needed.
Why are autonomous teams important for high-growth companies? Because autonomous teams are the way to achieve innovation at scale. There’s nothing more likely to drive innovation than fostering an entrepreneurial approach within your organization and this is largely achieved through guided autonomy with guardrails.
On the flip side, there’s nothing more likely to hinder innovation than constrictive top-down management. It demotivates the team and yields less effective results since decisions are being made by the people furthest away from the customer problem.
The way to foster an entrepreneurial spirit is by introducing a level of autonomy within your company. In other words, you need to take the executive’s hands off the reins.
There’s a myth in the corporate world that people do what you tell them to do, but in reality, they only do what they want to do. As you enter the growth stage, you have to build a culture that influences those decisions in the right direction. Things are about to ramp up dramatically and a top-down, command-driven approach simply won’t work.
Not only will it stifle innovation, but it will slow the company down dramatically. In traditional companies, decisions get made in line with the accountability structure, from shareholders through the CEO down to product teams. Because the accountability and the decision-making sit at the top, the feedback loop to the actual customer is far too long.
This creates top-down plans, little or no accountability at the team level, and ultimately, unhappy customers (and employees). It also means that things move slowly and bottlenecks are unavoidable. While you are waiting for “approvals”, your competitors will be launching product, learning, iterating, and gaining market share.
Autonomy motivates teams better than the carrot-and-stick model. They are empowered to discover what their customers need and to execute the delivery of that product in whatever way they see fit. These teams have very clear goals and guardrails but are otherwise totally free to set their roadmap and achieve their goals in the most effective manner they see fit.
The autonomous team structure also scales much better and moves much faster than the top-down model. In fast-moving markets, your team has more knowledge about the customer problem and the specific product area they’re working on than anyone else so they are best suited to drive their priorities. Traditional management is great if you want compliance and repeatable processes, but if you want engaged employees driving innovation, then autonomy is key.
The idea of small, autonomous, cross-functional, co-located teams that can get close to the customer is an increasingly important factor in great product leadership. This can evoke anxiety within organizations and among leaders with limited experience implementing this kind of team structure so it is your job as a Product Leader to educate your organization on the importance of this approach, to describe exactly how it will be rolled out and manged, and to ultimately secure buy-in.
As your organization evolves from a startup to a growth-stage company, the primary problem you are solving evolves from one of uncertainty to one of scale. Initially, as Product Leader at a startup, you were focused on removing uncertainty by implementing a product approach that helped you find product-market-fit as quickly as possible. But now, as Product Leader at a growth-stage company, your product approach needs to evolve. Behaviours and habits that worked in the startup situation start to develop cracks when the product team and company begin to scale. It’s your responsibility to choose an approach that allows your organization to achieve scale without imploding.
At the same time, many startups have been sunk by implementing overly hierarchical and process-driven approaches that stifle innovation and buckle under the weight of exponential-growth. The right product approach to help growth-stage companies achieve scale lies somewhere in the middle. A goldilocks solution of sorts. Somewhere between the controlled chaos of early-stage startups focused on learning and discovery and the process-driven rigidity required by enterprises focused on predictability and compliance.
The right solution is a mission-centric product approach with strong guardrails to guide autonomous teams. One that prioritizes speed, agility, and scale while getting as close to the customer as possible. With this revised approach in place, your growth-stage organization will be well-positioned to achieve the scale you desire, drive innovation, and build products people love.
Problem I: You Have No Authority
Problem II: One Product Approach Does Not Fit All
Problem III: The Uncertain World of Startups
Problem IV: Scaling Without Imploding
Problem V: The Complacent World of Enterprise
This article was originally published by Curtis savage on medium.
Product Leader based in Toronto, Canada https://firstname.lastname@example.org https://twitter.com/CurtisSavage https://linkedin.com/in/curtissavage