TL;DR: The primary problem facing an enterprise company is one of complacency. Product Leaders need to choose a “high-freedom” product approach that gives teams lattitude while keeping them user-focused, scrappy, communicative and entrepreneurial with the power to make big bets. This minimizes complacency, drives innovation and reduces the risk of disruption.

Welcome to the fifth 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 previously discussed, one product approach does not fit all situations so you must treat your organization as you would a customer and spend time discovering its unique problems and needs before selecting an appropriate approach.

And arguably, the single most important thing to consider is the stage of your organization. In fact, the type of product management and leadership needed for early-stage companies looks a lot different than what is needed for later-stage companies. This is because you need to solve very different problems as a company evolves.

For example, the primary problem facing a startup is uncertainty. As a result, startup Product Leaders need to choose a product approach that emphasizes learning and discovery and helps validate product-market-fit as quickly as possible. As the startup evolves into a growth-stage company, the problem also evolves. The primary problem facing a growth-stage company is scale.

As a result, growth-stage Product leaders need to choose a product approach that is mission-centric and supports small autonomous teams in order to grow exponentially without imploding.

This week we are looking at how to choose a product approach as the organization evolves into a large established company and faces its next big problem: complacency.

Problem: The Complacent World of Enterprise

After a startup has found product-market-fit, achieved scale, and established itself as an entrenched market leader it now finds itself in enterprise territory. In a fast-moving, highly competitive world, the company’s survival depends on its ability to innovate, build great products, and disrupt itself before competitors do.

However, the biggest threat to an enterprise is actually itself. Internal complacency has the potential to undermine its progress, position and existence in the market. In fact, the average lifespan of a company on the S&P 500 is only 15 years. The threat is real. Let’s examine why.

The saga usually unfolds like this. As a company scales and transitions into a mainstream enterprise, it needs to evolve its corporate management style, structure, and culture by creating functional departments with an emphasis on predictability and stability. This is because an operation of enterprise-scale demands predictability and stability — as do shareholders.

As a result, the enterprise becomes process-driven. Process is how large organizations achieve predictability and stability and grow larger. Process allows them to set measurable goals and implement repeatable procedures that don’t require experts or superstars to execute. It’s how they can scale departments. It’s how they can hire thousands of employees who can follow the rules, check the boxes, and ensure everything is operating according to plan.

This text-book type of process-driven approach works great for certain kinds of industries. Manufacturing, for instance, where predictability, stability, and repeatability are all key. But this same approach falls short in high innovation industries as it stifles creativity and breeds complacency.

When you’re trying to produce innovative technological solutions — as opposed to hubcaps — and trying to stay one step ahead of young, hungry competitors in a space where trends and markets are constantly shifting beneath your feet, this kind of process-driven approach simply doesn't work.

The intentions are good. And absolutely, some process is needed, but it looks very different from the traditional top-down, hierarchical, command-and-control style implemented at many enterprise organizations.

As the enterprise evolves, more departments are formed and more VPs, Directors, and Managers are hired. The “improved” structure often comes at a cost. Sadly, all too often, bureaucracy, red tape, silos, fiefdoms, and power struggles soon follow. Things start to slow down. Decisions need to move up more rungs on the corporate ladder.

Executives far away from the end-user and customer make disconnected decisions in opposition to what the Product Team thinks best. People become frustrated. Top talent leaves. Mediocre talent stays. People start to develop a “punch-clock” mentality. You start hearing phrases like, “ …but what do I know, I’m just a coder…” or “…I just do what I’m told…”

This may sound extreme but it happens time and time again. Add to this the pressure of meeting quarterly earnings reports and “the beat and raise” mentality of many public companies and it’s not hard to see how teams may begin to feel stifled. Roadmaps and go-to-market strategy can be co-opted by short-term revenue wins that undermine the longer-term vision and/or strategic positioning. Egos can start to threaten customer-centricity. Big bets can become discouraged.

While your team is busy making minor tweaks to the product or A/B testing whether a highly politicized feature request from another department is worthwhile, your competitor is out talking to customers.

They’re discovering new problems you haven’t addressed. They’re responding to new trends, bracing for game-changing technologies, building new solutions, iterating and launching the product that may disrupt your entire business one day.

True, the best tech companies like Google do a great job at keeping teams invigorated and avoiding the complacency and subsequent disruption described above. However, many others do not. They devolve into “cog-in-the-wheel” organizations. This is especially true when the executive team takes a traditional top-down approach to management. This song is played all too often. And that’s what really hurts…

But, chin up. As with all things, there’s a silver lining. And that is the fact that a new organizational model is emerging at leading companies like Google and Spotify; one that avoids the situation described above. Let’s look at how to choose the right product approach to avoid complacency at your enterprise organization. Do it right and your team can remain invigorated, your product innovative, and your competitors at bay.

Solution:

As a Product Leader, to succeed and help your enterprise avoid the threat of complacency and disruption, you need to implement a product approach that allows for agility, one that allows teams to respond with entrepreneurial speed and latitude, but with a much larger group of people. This may sound challenging. That’s because it is.

But it can be done. You can start by choosing a “high-freedom” product approach that gives teams latitude while keeping them user-focused, scrappy, communicative and entrepreneurial with the power to make big bets. This minimizes complacency, drives innovation and reduces the risk of disruption. Let’s explore each of these in turn.

Choose a “High-Freedom” Product Approach

As mentioned above, a new organizational model is emerging that realigns the accountability structure around small, autonomous, cross-functional teams. This offers them full autonomy to discover what their customers need and to execute the delivery of that product in whatever way they see fit.

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. I refer to this as “Free-Range” Product Management. It exists in stark contrast to the “Factory Farmed” approach. Trust teams to solve problems. Make them accountable. Give them goals and guardrails and set them free. You’ll be amazed at what they accomplish.

Laszlo Bock, the innovative Head of Google’s People Operations refers to this new organizational model as “high-freedom” in his book, Work Rules, which offers insights from inside Google. The high-freedom approach used by Google gives employees great latitude. Some argue it is the way of the future and believe the top-down, low-freedom model of management will soon fade away.

As Bock illuminates:

“Command-oriented, low-freedom management is common because it’s profitable, it requires less effort, and most managers are terrified of the alternative. It’s easy to run a team that does what they are told. But to have to explain to them why they’re doing something? And then debate whether it’s the right thing to do? What if they disagree with me? What if my team doesn’t want to do what I tell them to? And won’t I look like an idiot if I’m wrong? It’s faster and more efficient to just tell them what to do and then make sure they deliver. Right? Wrong…”

As Bock goes on to elaborate, a low-freedom approach will breed frustration and the best talent will leave. The mediocre and complacent will remain. In a connected world, the most talented people are increasingly discoverable by recruiters and leaders who build the right kind of environments will become magnets for the most talented people on the planet.

Simulate a Bootstrapped Environment to Keep Teams Hungry

One of the biggest limiters of innovation at large enterprise organizations is being flush with cash. Yes, you read that correctly. Think about startups for a moment. Hungry, scrappy, purpose-driven founders and teams whose livelihoods depend on making the product vision a success.

This is what drives innovation at startups. Failure isn’t an option. They’re bound, bent, and determined. They do whatever it takes to find product-market-fit, nail the product and get it out the door before the music stops and the runway ends.

Now contrast that with enterprise teams. The sense of urgency, the shared sense of purpose, the mission-critical motivation is often lacking. If a product solution isn’t working, they have vast runway to tinker when perhaps they need to be cutting loose and pivoting. With lots of money in the bank, it’s hard to know when to stop throwing dollars at a problem and when to pivot or stop altogether.

So what is the solution? Breaking teams down into smaller autonomous units helps simulate a bootstrapped environment. It introduces constraints to make teams scrappy and avoids bloated processes and complacent teams — both byproducts of overabundance. This type of approach can be valuable to companies of almost all sizes. For example, Amazon has a “two-pizza” rule meaning that two pizzas should completely feed a team.

Having small product teams forces you to make tough decisions about what you can and can’t do which is an important part of product management. If a product team is growing past the two-pizza rule, then perhaps you need to reorganize.

A good way to do this is by organizing product folks around the way your product is used by customers or end-users. For example, for a marketplace platform, one Product Team could be responsible for the buyer experience and another Product Team responsible for the seller experience. That way each team owns a single kind of user and end-to-end user experience rather than segmenting teams by mobile vs. desktop which is less customer-centric.

Create an Entrepreneurial Culture Using Autonomy

As discussed last week, small, cross-functional autonomous teams that are close to the customer with the independence to execute their own strategy and tactics are the best way to create an entrepreneurial spirit, drive innovation, and build products people love. 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.

Spotify is a great example of a company that embraces an entrepreneurial approach and empowers teams the right way. They start with squads (independent teams that sit together and have all the skills and tools needed to design, develop, test, and release their part of the product to production).

Each squad self-organizes and decides its own way of working. Some use Scrum sprints, some use Kanban, others use a mix. Squads are grouped into tribes that work on related areas of the product. Chapters/guilds exist across teams to share best practices. In this way, Spotify has created a supportive culture of autonomy and empowerment and designed modular teams who can stay focused on the user without becoming bloating.

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.

Always Stay Focused on the User and Never Stop Learning

As an organization matures and becomes more multi-layered, there is a tendency for it to become walled-off and less in touch with customers. Product feature requests can start piling in from all directions.

This is normal and expected. As a Product Leader, it’s your job to understand how to prioritize each feature request. However, it’s important to ensure that egos, politics, and conjecture don’t risk the team losing track of what users really want. All of these things can start to wear down teams and breed complacency because they start to feel like their opinions and insights don’t matter since everything can just be vetoed on an executive whim or hunch.

At the same time, managers may start increasingly relying on data or reports — of which there is no shortage. Enterprise organizations are usually swimming in data.

Data is important, but don’t forget, that the real insights still come from face-to-face communication with real customers. Compounding matters, senior people who have been at the company for a long time have a tendency to falsely assume they understand what the product needs better than anyone — even customers. This is dangerous.

The best way to remedy all of this is to get out of the walled-garden and go talk to customers. Immediately. Do user research, usability testing, customer interviews, etc. Understand what each customer’s top priority issues are. This is what your potential disruptors are doing so you better be doing it too if you want to stay relevant with users and ahead of the pack.

Try to build a culture that encourages talking to real customers regularly. Make it a regularly scheduled product management ritual and expectation. Recruit users, bring them in, watch them use the product, and ask them questions about what they’re thinking as they’re using it.

This kind of real-time feedback is priceless and reveals things that quantitative data alone cannot. Hearing from customers and understanding what their problems are will help your teams think strategically and fill in gaps on the roadmap. Deep understanding and insight will begin to replace assumptions and conjecture.

Discovery and human-centred research and design are a Product Leader’s best friend. Use these tools to gather insights and guide product direction when waters become murky or highly politicized. Use these tools to gather data and generate insights that reinforce what the customer segment really wants. Understand what customers are actually willing to pay for.

This helps secure a path forward for future releases and innovations, helping you circumvent low-impact feature requests while staying focused on what matters most.

Most importantly, allowing Product Teams to stay focused on the user and empowering them to determine the best path forward will keep them feeling invigorated and motivated to put in their best work and drive innovation.

Make Big Bets to Disrupt Yourself (Before Others Do)

As discussed, staying user-focused with a commitment to learning and discovery is important. Even more important is translating what you have learned about your user into innovative solutions. And this is largely achieved by making big bets based on your understanding of the customer problem, user and technology trends, and/or changes in the market.

Big bets are based on rigorous research and creative insight. They allow you to stay ahead of the curve, ahead of your competitors, and ahead of disruption (and complacency).

As a product matures and its position in the market stabilizes, there is a tendency for enterprise organizations and Product Teams to focus on optimizing the product with small, iterative and incremental changes. This is a fairly natural approach. After all, it’s what Product Teams are trained to do. Minor tweaks, optimization, and small bets are all good and necessary things to do but it is important to allow your team to make big bets.

In addition to keeping your product innovative and ahead of disruption, big bets are what invigorate your team members and get them fired up to come to work in the morning. Big bets rally teams around a shared vision and mission. Big bets help retain top talent. In short, big bets cure complacency.

From an execution point of view, it’s important to ensure that your Product Roadmap contains a strong mix of both big and small bets. It’s still very important to be optimizing existing, mature products. But the key takeaway here is to be careful of focusing solely on small bets and optimization. You may find the local maximum of your existing product but at the cost of missing out on the global maximum by not taking bigger bets and exploring solutions things beyond the scope of mere optimization.

Make big bets and you will be building a culture of engagement and innovation; the antibodies to complacency and disruption.

Break Down Silos with Strategic Communication and Collaboration

Communication across the organization can suffer as a company grows and departments become more siloed. As a Product Leader, it’s important to recognize this tendency and proactively put strong communication channels in place for you and your team to be connected with the wider organization.

It’s important to remember that the product is not just a set of features on your roadmap. At least, not from the customer’s perspective. From the customer’s perspective, the product goes well beyond a set of features and encompasses the holistic end-to-end experience.

The product is everything from how you talk about the product to how you acquire customers to how you close those customers to how you support those customer. As such, you need to get Sales, Marketing, Ops, and Finance teams all aligned, jazzed-up about your vision, and eager to support you.

In particular, strong communication with Sales and Marketing teams is very important. It’s almost always beneficial to set up a recurring weekly meeting with each department to stay aligned. These meetings are a great way to facilitate two-way communication: 1) To keep Sales/Marketing in the loop on discovery and delivery updates 2)

To gather customer feedback from Sales/Marketing teams working on the front-lines. Of course, conversations can happen in between, but having a recurring meeting helps promote transparency, build trust, reduce tensions, and maintain healthy relationships between departments which may be strained from time-to-time due to internal politics and agendas that invariably exist at enterprise organizations.

All that said, communication overhead can become a real problem at enterprise organizations as more layers and stakeholders are added. Large companies are slow because they suffer from communication overhead. If you’re responsible for working with a group of more than five to eight people, at least 80 percent of your job will inevitably be communicating effectively with the people you work with. Objectives, plans, and ideas are worthless unless everyone involved understands them well enough to take action.

The solution lies in developing a strategic communication plan. As the Product Leader, it’s important to understand what communication channels and activities your team needs to be involved with and which ones only you need to be involved with.

By shielding your team from some of the non-essential communication channels and activities you enable them to focus on the important product work, filtering information back to them as needed. This will help everyone stay connected and aligned without demotivating your team because they feel like they’re in never-ending meetings or flooded with emails when they need to be coding or designing product.

Final Thoughts

In a fast-moving, highly competitive world, an enterprise organization’s survival depends on its ability to innovate, build great products, and disrupt itself before competitors do. However, the biggest threat to an enterprise is actually itself. Internal complacency has the potential to undermine its progress, position and existence in the market.

As a Product Leader, to succeed and help your enterprise avoid the threat of complacency and disruption, you need to implement a product approach that allows for agility, one that allows teams to respond with entrepreneurial speed and latitude, but with a much larger group of people.

To accomplish this, Product Leaders need to choose a “high-freedom” product approach that gives teams latitude to operate freely. They need to keep teams user-focused, scrappy, communicative and entrepreneurial with the power to make big bets. This minimizes complacency, drives innovation and reduces the risk of disruption.

As Google’s Laszlo Bock puts it: “All it takes is a belief that people are fundamentally good — and enough courage to treat your people like owners instead of machines. Machines do their jobs; owners do whatever is needed to make their companies and teams successful.”

Done well, this kind of product approach has the ability to transform a culture of complacency into one of engagement and innovation, allowing enterprise organizations to avoid disruption and maintain their positions as market leaders for years to come.

Further Reading

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.