The Best New Years Resolution: Agile Product Management
Agile Product Management is grounded in the Jobs to be done theory and Lean startup principles. In my book “The Product Samurai” I described how you can effectively apply these techniques to be a better Product Manager, but what I didn’t’ cover was why not everybody is doing this already?
Making up for that, and unveiling the seed conditions for the next level of Product Management, I am pleased to give you the best new years resolution: Agile Product Management
I always grin when (Product) Managers say Agile or Lean does not apply to their situation. In its core Lean (Startup) is about finding customers and if you don’t get customers for you product, it can be the best thing since sliced bread but it doesn’t matter.
Agile vs. traditional Product Management
In its core Agile is so different from traditional product management in the way that it embraces and almost celebrates mistakes. Typically, in big corporations it is custom to try to burry your mistakes and run as far from them as you can since they severely impact your career perspective. In Agile Product Management, it’s the other way around.
In a way, the enterprise world focuses primarily on execution, limiting the risk. Whereas in the startup world we see a very high tolerance for mistakes since we know it’s the only way to get it right. There is no way you can learn judo by avoiding risk. Instead you will find yourself in the situation where you will say: “this will never work, let’s try something else.” Avoiding risk is not a strategy; it’s the surest way to defeat since you assume the opponent has no skill at all. Rest assured that both in business and in Judo, he (or she) will.
It’s about trying repeatedly, until you get the right mix of value proposition, customer segmenting, marketing, and promotion to start the business of the product. It was never about the product.
Learning vs. execution
Why should enterprises care? Isn’t Agile something that applies to startups? Why not optimize execution? Can’t we talk regular process improvement and do this continuously?
[pullquote]“Electric light is not the result of the continuous improvement of candles” – Unknown[/pullquote]
The core struggle for all enterprises out there currently is growth. There is hardly any growth in existing business. The companies that grow incrementally do this largely by acquisition of more popular: cost cutting. It has started to give Agile transitions a bad taste since it’s often not applied to create new business but to reduce the cost of the existing one. Creating the illusion of growth.
True growth comes from taking risk, but whereas this is normal and accepted in the startup scene it is avoided in corporations. It’s like the entire organism is trained to repel and root out threats to the safe and efficient execution of the business so rigorously that it strangles the opportunity to learn.
But Chris, are you saying that large enterprises do not learn? Of course, they do. They already have customers, history, last year’s figures, wins and losses, competitor SWOTs, and they will base the annual forecast on date from this years.
In the startup scene, there are no customers, no history, no insight on competitors, most of the time not even a product, just a concept. This creates a natural hunger for knowledge, as opposed to execution mode. In learning mode, it is important to realize that:
- Customers have no clue what they want
(at best they will tell you if you got it wrong when you put the product in their hands)
- Developers don’t know how to build it
(it’s the first time they build this, it’s trial and error)
- Everything changes
(we live in an era in which there is an unprecedented rate of change)
Enterprises need to embrace the uncertainty that comes with new product development. With learning and failing, rather than optimizing and execution.
Measuring vs. failing
This implies it will be hard to measure. Execution is all about measuring: Performance, churn, attrition, ROI, customer acquisition targets, revenue etc. Stuff you can put in a spreadsheet and present at meetings. Your new product has none of those things. It’s like planting a sapling in the shadow of a big apple tree and measure the circumference to predict how much fruit it will bear. It’s more likely that you will snap it than do it justice. No, you shield your sapling and make sure that the rulebook does not apply.
Allow the team to fail while they discover the value proposition, customer segments, distribution channels, revenue model etc. This will allow the enterprise to grow by creating a new business rather than cost cutting the existing one. (The other thing that you can do to grow, without going Lean are mergers)
The Generals Orders
One of the cool things in early Samurai warfare is the autonomy of the squads. When in enemy terrain the objective may be clear, how to achieve it is a different matter. When execution driven enterprises however it often happens “planned.” The board has approved the development of the new product. The target market, KPI’s, technology and staffing has been locked in place.
The general now retreats behind the lines and expects results. However, with everything locked down and the whole board behind it, who will stand up? and say: “Actually, the data or our interviews show that nobody is waiting for this product.” It’s corporate suicide.
Startups have taught us that at least 3 out of 4 products never succeed. Those who do need at least 5 iterations to get them right. If you must execute orders instead of experiment, changes are very likely that you will build a product nobody is waiting for.
Managing corporate innovation is much like a VC manages a startup portfolio. Kleiner Perkins Caufield & Byers ran a investment fund labeled “number 9.” Nobody remembers how many failed startups were in fund number 9 (it’s 96%.) We only remember Google was in fund 9.
Special Snowflake Syndrome
So why not applying Agile Product Management? Many enterprises we talk to start out that Agile doesn’t work in their business; that they are somehow special which is why it could not possibly work in their case.
“We have strict process, we don’t fail, why would we take the risk?” And even better: this opportunity only represents peanuts compared to our regular business. Why go there at all? It’s not apples and oranges; it’s a single sampling versus an entire vineyard. What they forget is that the new vineyard starts with a single sapling.
What happens is that employees are encouraged to innovate yet will be punished if the product doesn’t take off within the next 5 sprints. The Agile Product Manager may reply with: “it’s done when it’s done. Did Edison stop after 5 sprints when creating the light bulb?” He may try, but will it be accepted? Will he take the career risk? What is the reward?
Staffing the team
Who will you put on the innovation team? Smart enterprises understand the value of growing the business by creating new business and will put their best people in the Product Management roles (indifferent if you call it Product Owner, Product Manager or Intrepreneur.)
Those with too much emphasis will use people that are between jobs, new hires, or are “available” by accident. Without wanting to point fingers; but it’s the B-team. The A-team is reserved to maintain the execution; the B-team can try to grow the business.
Even with frameworks like Scrum or approaches like the Design Sprint, the B-team suffers a severe setback in experience. They don’t know the business, the market, the technology or perhaps how to perform customer interviews. What incentives do we have to make the team hyper performing?
I do believe that we can make people great, but I also believe in putting the right people on the bus. It takes courage to step on the mat and do a match of Judo or Jujutsu, some people just love playing Bridge. It’s the same when it comes to talking to customers and finding out where their needs and problems lie.
It’s the number one hurdle after you tackled the special snowflake syndrome.
The Incubator Bubble
Ultimately I believe that enterprises should shed part of their execution drive in favor for a continuous innovation DNA. Hence the subtitle of the Product Samurai: A Product Manager’s Guide to Continuous Innovation. But the road to get there is travelled easier with an intermediary stop. After all, it’s okay to strive for Bruce Lee skills, but you may need some steps in between to reach that level.
The Incubator Bubble is safe environment where new product development and innovation is shielded from corporate anti-bodies. Separated from the company rules and regulations, room to bend or even break some of them. Without of course endangering the existence of the enterprise.
For example: one team I worked with had completely bypassed the local IT department. They had their own Internet connection, own workstations, servers ran by AWS etc. Of course, they would need to get back in the fold eventually. But the momentum they got from the empowerment was liberating and allowed them to come up with ideas at an exponentially faster rate.
[pullquote]Pro tip: Make sure you get at least two high level executives backing the team. If one of them gets a different job or stops loving the project the team still has a chance for survival. – Chris Lukassen[/pullquote]
Make sure success is shared and well known. Success can also be: thank god we invalided this product concept before we have built the new plant. The team just prevented the scenario we had with product XYZ but at a fraction of the cost. Knowing that your product is never going to fly is just as valuable as knowing it will. This is the kind of cost savings that beats downsizing every day.
The Product Samurai
People that drive innovation teams are strong communicators, but perhaps even more so: strong willed. Inevitably they will lead their team beyond the bubble and that is where the corporate anti-bodies need to be face head-on.
It takes a brave person face the governance and grow a product beyond its inception into something that becomes a substantial business. It is particularly hard if the new product potentially can hurt the sales of the existing product lines.
The market leading company in on-line automated tax advice, created a product for people with a life-changing event: divorce, death of a spouse etc. The type of thing you don’t trust computers with to do the right thing (even though it might work perfectly.) After building a successful platform in their bubble that mediated between tax advisors and clients it got shot down.
Too much of a risk for their core product, the company decided it would rather fight competitors than create their own disruption.
We mentioned the dangers of taking up such a role, what is there to gain for an interpreneur? Where is the stock equity? The fame? What is the benefit? Why would I take the risk? There are however four reasons why this is the best job in the world:
- You will be in the spotlight of the board like never before. The senior manager of the existing product line will be squeezed for performance. Where as you get permission to fail (controlled and whilst learning towards a new business.)
- It is often the staging ground for new management material. About 1/2 of these innovators end up running the new business. The other half typically gets more autonomy and runway on their next innovation.
- Growing an existing product organically is in very difficult in a saturated market. As Product Manager to make an impact on your career it is great to try and grow a new product and organically build a new business.
- This is a pervasive problem and there the ratio of product managers that have actually done new product creation in an Agile way vs those that can watch over the store are much in your favor.
Finally: how to get the board to try?
What typically works is an analogy of a company that changed to an Agile form of Product Management and changed the rules of the game. For example, Intuit, who created many successful products after failure after failure on new innovations. The growth they have established would be unthinkable in their original portfolio.
So what should be your first Agile Product?
- Are we passionate about the problem this product solves?
(Can we rally the people behind it for a long time?)
- Something your customer base associates you with.
(McDonalds making cars is leap of faith for your clientele)
- Does it leverage assets, expertise, data or systems we already have.
(Do we have a low barrier to entry?)
- Is there an innovative way to solve the problem?
(Build something 10x better or people won’t switch)
- Do we have the resources? And does it fit our portfolio?
(Looking for synergy)
- What is our unfair advantage?
When do you walk away?
On the streets? Any time you can. But in sport e.g. Judo you only tap out if you are convinced that you have no chance left to win. The story started with customers and it should end with customers.
The first object of the team is to see if you can get people to pay for the product. Preferably with money, but in B2B a letter of intent also counts. There is a difference between what people say that they do and that they will actually do.
The mission is to find a problem that is urgent, pervasive but most of all where people are willing to pay for.