5 Product Team Must Dos – the New (Old) Approach to Product
Want to create great products? The path to success in this endeavor has more to do about how you think about value creation, think about your customers and organize your team than it does having brilliant ideas. And here’s the kicker – while many of us think some of these concepts are brand new (including the founders of AKF who contributed to the primary research on the topic), the fact is that great companies have known these secrets for quite some time. Here are 5 “Must Dos” for product teams to create great products:
1) Focus on customer value creation first!
In Peter Drucker’s “The Practice of Management” (1954) he wrote that “There is only one valid definition of a business purpose: to create a customer.” In later works he expanded on that notion by saying businesses must create AND keep customers and that profit was a necessity to stay in business, but not the sole purpose of a business.
Profit and shareholder value maximization are of course important to businesses. Without profits, you can’t stay in business long. Without creating shareholder value, you will be locked out of equity markets. But by and large these are dependent variables outside of a firm’s control. While we can control costs directly to effect profits, doing so may constrain our future growth.
If we instead focus on delighting the customer with the products we create, we can create internal and external enthusiasm for the product. In doing so we grow revenues (part of profits) and excitement within the company.
2) Eliminate the “IT Mindset” and develop as a Product team
In the first edition of The Art of Scalability (2009), we cautioned teams away from the “IT Mindset”. The IT Mindset is cost and efficiency focused versus the Product Mindset which is customer, market, product and revenue focused (in that order). The IT Mindset envisions product development as a manufacturing plant, rather than the creative and innovative process it must be to be successful. The IT Mindset has a purpose – to serve the needs of employee efficiencies – but should come with a “Do Not Use with Products” warning label. This IT Mindset stifles innovation and kills product team morale. Marty Cagan, one of the greatest product minds and consultants alive, and a longtime colleague and business partner, has more to say about this debilitating phenomenon here.
3) Organize around the objective – not functions.
While performing academic research on why some teams in the same industry seem to have higher levels of innovation than others, we stumbled upon some interesting veins of tangential research. All of them pointed to multi-disciplinary teams comprised of all the skills necessary to complete an objective and organizing around outcomes having higher levels of innovation and success than teams organized around functional boundaries (e.g. product management, software engineering, QA, operations, infrastructure, etc). While we contributed to this research, we found out we weren’t the first to identify this phenomenon! In fact, this Harvard Business Review article (1986) hints at the same philosophy.
4) Don’t listen to what customers WANT – watch them and identify what they NEED
We’ve all heard Jobs’ famous saying that customers don’t know what they want until you show them. Developing a customer “want” is costly and can greatly miss the greater market opportunity. As we point out in this post, product teams need to focus on the hypothesis for a market need, start small (MVP) and iterate their way to success to maximize the potential of a product to meet the true need.
5) Eliminate the concept of insular innovation
Forget the concept of a single great innovator running a company and generating great product idea after great product idea. That concept is a myth perpetuated by marketing teams and egotistical executives. The existing research on this topic is clear: The teams with the highest levels of innovation source innovation from a diverse network of individuals inside and outside the company. See slide 10 on network diversity in our scalable organizations presentation. But don’t just take our word on it, Walter Isaacson comes to the same conclusion in his NY Times Bestseller “The Innovators”. And yes, he debunks the notion that Jobs was the sole reason for Apple’s product success as well.