Bruce McCarthy has sensed a movement in Product Companies – a movement away from ‘how do we sell more of what we’ve already built?’ and towards ‘what new value can we provide?’. He calls this movement ‘Product Culture’. In this talk, Bruce argues that this more entrepreneurial approach walks all over a more corporate ‘Execution Culture’, and outlines the 4 key aspects of a Product Culture:
- Lead with a vision of Human Awesomeness
- Build small diverse teams
- Trust people to manage their work
- Learn and improve continuously
Bruce will also be speaking and leading a workshop at BoS USA 2018 (1-3 October, Boston MA). Find out more here.
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Bruce McCarthy: I’m going to talk a little bit about, um, about a movement that I’m seeing in the world toward product culture. Everybody is thinking about how do I hire a product manager or how do I become a product manager? Um, and although it’s not just about product managers, it’s about, um, really the whole complex of related functions in a good product team. The product managers are at the center of it. Um, there’s this movement movement going on and my job today will be to try to describe it to you a little bit. This is a work in progress and I hope that, um, you guys will help contribute to it. I’d love your feedback. I’d love your comments and your questions at the end. I’m going to hope we have some good amount of time for discussion at the end. Um, I’m going to talk about product culture a little bit personally as well as using some examples of big companies.
And the personal part starts with why I quit my job. Um, I’ve, I realized in retrospect that I kind of joined the product culture movement. Um, a number of years ago when I quit my job when I was working for a big company, now I’m really not a big company person. I’ve worked mostly for smaller companies and startups and I was working for a startup in the software business some time ago and we got bought by a much bigger company and I decided to stick it out and see what’s that like and can I figure out how it works. Um, and I did figure out why it works, but there were some things that were bothering me along the way. You, a lot of things that you’d expect – bureaucracy, slow decision making. Um, the slow drain of it resources that we’re gradually being outsourced. But the thing that crystallized for me, what the mismatch between the way I think and the way that company thought was one day when I was having a meeting with my boss’s boss’s boss, um, in, in, in my old little company when we decided we wanted to do something, um, I would, I would put together a proposal. It would be just a short deck and I would get together with the right few people and um, we would make a decision fairly quickly. I’m on what we were going to do and then we’ll slowly get everybody on board. And that had worked for us pretty well. In fact, um, a couple of times I had put together proposals for new product ideas that it turned into multimillion dollar things. So great. So I’m in the new company. I’m going to do the same thing, right? Not so much. Um, I put together a proposal, I socialized it with a few people that I thought would have good feedback on it and then I send it up the chain and I heard nothing. I heard nothing. Weeks went by and finally I got into that meeting with, um, with that executive and she said something to me that I will never forget. She said, you have to understand bruce, we’re just not trying to be entrepreneurial here. And I thought, Oh, I’m thanks for clearing that up. Uh, uh, I, I didn’t realize that it, it, it just all of a sudden crystallized for me that I was in the wrong company that, um, that, that the culture of this company and my culture just did not match that I thought that I was there as a product manager to create new value, to deliver things of value to customers and make the company money in return when in fact it seemed like the job was really more of an execution job. It was about, um, how can we sell more of what we’ve already built rather than what new value could we provide. So that was my first clue. I’m sorry, I left that company to, uh, to join or what I called a real software company. And as you can see, I’ve joined a lot of real software companies since then either as an employee or as a coach and consultant, which is my current business and I’ve done it in lots of different areas. I’m in ecommerce in, um, in the data business in, um, in a transportation education energy, lots of different places. Um, telecom as well. And today, as mark mentioned, I’m the president of the Boston Product Management Association, the largest regional association of product managers anywhere. Um, one word for this phenomenon might be renaissance man, another one might possibly be dilettantes. Um, uh, but along the way I have seen a lot of different cultures, have a lot of different companies and I’ve played a lot of different roles. Everything from product guy to engineering managers, scrum master, business development, Ux, you name it. I have had to either officially do it or fill in when it wasn’t, when it wasn’t getting done at one company or another. Um, and if this looks familiar from your gift bag, this is a book I wrote with a few other gentlemen, was published by O’reilly last fall on product roadmaps.
Um, this, this book is very much a, how to. It’s very much a, um, a, almost a step by step. What are the components? How do you approach a roadmap, how do you develop it, how do you change it? This talk is not like that. Not at all. This talk is more about what are the underlying principles. Um, there’s been a lot of discussion of values over the last couple of days. What is the difference in mindset in ways of thinking in assumptions about why we’re all here that, um, that a good product organization has and less about process or tools or a org charts you can find process and tools in here. So in order to, in order to communicate to you what is a good product culture, I thought we ought to define our terms and I don’t mean to spend too much time on it, but first let’s talk about what is a product and then let’s talk about, well, what do I even mean by culture? So, um, what is it product, I think actually bears thinking about, I think the definition can sometimes be a bit elusive. Those of us bordering between, um, a packaged software and SAS are grappling with this every day. So that my definition of a product really is something that enhances human ability. Something that makes us better versions of ourselves or more capable. Um, this is, um, this is a bunch of racing porsches. Um, and I’m going to, as you’ll see from my clothing here, I’m kind of enthusiastic about sports cars, um, and I’m going to use a lot of porsche examples throughout my talk. I’m in addition to this being a bunch of fast cars that help us go faster. Um, you’ll notice all of the Pirelli yellow and red stickers on the front bumpers have all these cars. The idea of course is that if you want to go fast, you need a certain kind of tire as well as a certain kind of car. Um, so while, while I’m saying that the idea that the real essence of a product is something that helps us go faster or retire or do better, of course a commercial product also has to be something that you can sell and it goes back to arguably one of the oldest inventions, the wheel. It’s got to be something that, um, that you get, that you give in exchange for value. Um, and today, of course, you’ve got to be able to do that at scale. It’s something you’ve got to be able to sell repeatedly. So in my mind, those are the three things, something that actually enhances human ability that you can sell and that you can sell repeatedly. This is, um, this repeatedly part is the difference between, in my mind up product and a service its um, its product ization. I’m the extreme of this build. Once sell many times phenomenon is software as especially today’s social media apps. We need look no further than instagram that was sold for a billion dollars back in 2012 to facebook with only 13 employees. That is a, an extreme example of um, leverage and, um, you know, to illustrate the point about what isn’t, isn’t uh, isn’t a product before we even get into the, the culture behind it. Um, I was talking to the bar last night and I made the controversial statement that in some cases enterprise software may not actually be a product. Now, what do I mean by that? Um, I work with a lot of software companies and um, a lot of them, a lot of enterprise software companies in particular break this rule about build once, sell many times they end up building custom solutions for a small number of huge clients. I see my bar made from last night listening carefully to this part. They, they try to reuse components. They try to build and improve a platform that can be customized and integrated into, um, but over and over again they find themselves selling deals that were the real value. And the real expense is Ian the customization. It’s in the layer that gets in the bits that get built after the sale rather than, uh, rather than before. And this can make for big checks. I’m not saying it’s a bad business model, but it does also make for a thinner margins and slower growth than something with that is I’m fully standardized that you really can sell many times. I’ll give you a concrete example. I’m Huawei. The big Chinese telecom equipment manufacturer realized that, um, although they have a roughly $2,000,000,000 enterprise software business, that it wasn’t a product business because their customers told them. So how did that happen?
Um, they, um, they examined their software business. They realized that they were going down exactly the road that I described that almost every deal was a custom set of integrations and workflows. They had some common components, but most of the work was in the customization and the, in the final product. And mostly it was unique in each case. And they said, you know what? This isn’t profitable. We’re not, we can’t scale this way. We’re not, we’re not making a good enough margin on this. We’re going to stop. And so a couple of their larger clients who bought tons of hardware from them, sent rfps and ask them to bid on projects that looked exactly like this kind of phenomenon and why we got to give them credit. They said, no, we were not even going to bid because this is not our kind of thing anymore. We want to have products. And the customers came back to them and said, you do not understand the reason we buy your hardware is because you do this custom stuff because you will make it work and you’re the only ones who can, you will bid and you will win. Uh, and they said, okay, I’m glad you were clear about that with us. And they’ve rethought their strategy on that. So if, if Huawei attitude, billion dollar run rate in software can be thinking, maybe we’re not a product business, I would encourage you to think, is this a product business or is this a service business? Um, if, if it’s a product business, um, well then I would encourage you not to think about individual customers, but to think about markets, groups of customers, segments who have common needs. So you really can build something standardized, um, and configurable for those markets. If you really don’t have a product, you can go have coffee because the rest of this isn’t gonna make any sense to you. Um, well, okay. So if that’s a product, what is culture? And again, I thought, well, this bares a little bit of thinking about. So I looked up the word and I learned a couple of interesting things. Um, philosopher Edward Casey wrote that the very word culture in middle English meant place tilled, um, and uh, that it originally came from two different Latin words and I thought this was very interesting corollary to inhabit care for till or worship and Cultus occult, especially a religious one. Um, and actually that really resonated with me because I thought when I thought about it, I realized I’m both sides of this resonate. It’s a place that I work hard to invest myself in and improve and it’s a group that I feel like I’m part of that, that culture phenomenon. Um, and how many people know about the Netflix culture deck? Does anybody know about that? And a whole bunch of you? Yeah. So they have this whole deck gets up on slideshare and they have a new version of it that they’ve written up that’s also publicly available. Um, this definition of culture also really resonated with me in their mind in Netflix is mine. Culture is what gives them the best chance of continuing success for multiple generations. It’s not, we have a great product right now, it’s, we have a culture that helps us have great products over time and helps us continually improve them. So in my mind, that’s the real definition of culture is what is it that’s going to support your ongoing success as a team, as an organization? Um, and you notice they mentioned people in here, it’s the last word. Um, uh, they mentioned technology, but they mentioned people. Obviously culture is made up out of people and it’s the sort of the glue that binds people together. So, um, I think the fundamental question of culture then is I’m asking, always asking yourself the question, how can we make our people more awesome? And by people, I mean your employees, your customers, your shareholders and, and the community as well. All right, so let’s, let’s get into the meat of it. What is product culture? Um, if we put these two concepts together, what do we get ’em? I’m gonna, as I said, this is a work in progress and I appreciate your, um, your, your help here. I’m going to illustrate this by starting with the mistakes that I see a lot of software companies make. Um, I’ve made them, I’ve helped companies try to recover from them, but this is, this is sort of my short list of mistakes not to make. I see them often making mistakes, not because everything they do is completely wrongheaded, but because it’s a matter of focusing on the wrong things. Um, if you, if there’s a, a, um, a slider that you could slide left or right toward one thing or another. They’re often slid to one side when they should probably be slid to the other and, um, office that often there’s a focus on features rather than what those features do for people. There’s a focus on managing people and work and, and um, and schedules and budgets rather than on leading toward outcomes of focus on job functions and resources rather than on teams and a focus on efficiency in execution rather than on learning as an organization. Um, so I want to talk then based on these mistakes, on what I think the positive side of all of this is. What are the four principles in my mind, a product culture, um, one is to start, is to start by leading with a vision of human awesomeness and aspiration and effectiveness. Um, I think that works internally and externally, and I’m gonna start with an example from Porsche that hopefully at least for the car people in the room, um, is, uh, is meaningful. Also build small diverse teams, um, to do the actual work. Trust those people on those teams to manage their own work. Having given them the right, uh, pointed them in the right direction with your leadership. Um, and then, uh, be a learning organization, learn and improve things continuously. Now this might all sound like motherhood and Apple Pie. It might sound like, oh, agile manifesto and lean startup and all these great things, but these are the things that I see that companies as they grow tend to forget. And so I want to make sure that we don’t forget them. Uh, they’re the things that, that many startups do naturally. Um, but then as they’ve been around for five years or 10 years and they’ve gone from five people in a room to 20, 40, 100, 200 and so on, these things somehow get lost. So let’s think of this as a, as a reminder.
I’m going to walk through each one of these. Let’s start with leadership. I want to tell I’m a porsche story to kick this off. I’m back in 1981. Porsche was coming off of a four straight years of sales declines and they had their first unprofitable year in the company’s history since, um, since the war and things were not looking good. Um, they brought on a new CEO in American who’d actually been born in Germany and whose family had fled after the war named Peter shoots. And he led the company for seven years through 1987. Um, and the first thing he did before flying to Germany to take the helm of the company was he happened to hear about a race Daytona in this in the states where portia was raising some cars. And he thought, well, I’ll go to that and it’ll help me get, um, get a get started. And he came away really energized and excited because portia had won the race and um, he was thinking he was a truck diesel truck guy and he was thinking it’s just another transportation automobile company I’m joining. But he got really energized by the racing thing. So when he got to Germany, he brought together the racing team. He said, you know, everybody who involved in racing come, we’re going to have a meeting, I want to hear what’s exciting and racing these days. So we asked the question, what’s, what’s, what’s coming up in racing? And they said, well, uh, the biggest race of the year is 24 hours at the mall is in six weeks. And he’s like, great, what’s our plan? And they said, after a little bit of hesitation, well actually we are entering the race with a couple of our regular production cars that have been modified to run for 24 hours. Um, but, uh, they’re probably, and they’ll, you know, they’ll do well, but they’re probably not really competitive. There’s really no chance at all that we can win the overall event with these cars. And after a minute of thinking, he said, let me make something perfectly clear as long as I am in charge at this company, we will never enter a race without the intention of winning. Now he didn’t say you must win, but he said the intention of winning. And that’s an important distinction. He was laying out the goals. He was laying out the objective. He was leading by saying this is, this is what we should be shooting for. And actually he got the reaction he was hoping for. The team got really excited. They’d been kind of like phoning it in. There was a morale problem in the company based on all of the downturn that they had seen and they were reenergized by this. Um, and they went away and they came back with a plan and it was kind of a harebrained scheme actually. They said, well, we’re going to take a couple of chassy’s that we had mothballed from previous races. They were winners, but the engines are obsolete. So we’re going to replace them with a laboratory experiment racing engine we’ve been working on that’s never been tried anywhere in the world. I’m on a real race track. Um, but it’s our best shot. We’ve got six weeks. Um, and he said, great, do it. And the team got really energized. They pulled together, they, uh, they, they got the race cars ready and word got out and he started getting phone calls from race car drivers who wanted in famous people. Um, and so he thought, all right, that we’re helping out this morale situation. Well, long story short, they won. I’m against all expectations. Um, and not only did they win that year, but they won every year that he was ceo seven years in a row beating Ferrari’s record of having one Lamar six times they ran this ad after 1980 three’s raised where they, um, they won nine out of the top 10 slots in, in position. Um, I thought that was, that was fun, right? Um, now, uh, why does this matter? Why does it matter that they won all of these races? It wasn’t just a publicity stunt. It had a huge effect on the morale of the team and on the image of the company and it had an effect on sales every year that Peter was ceo sales went up in the US, even though us people have probably never heard of limo until the stock market crashed in the US in 1987. And then there was a downturn and of course at that point as corporation sometimes do, um, the board of Porsche fired Peter and put in charge a finance guy and you can see what happened over the next few years while he was in charge. Um, they’ve come back since then and they’re doing quite well with what I think is a really great product culture. I read the biography autobiography of Peter’s shuts and I read it because I’m a car guy and I thought it would be interesting, but I really, really dug the story about, um, about a product culture and about leading by, um, by a vision of what can be accomplished as people when we focus as a team. And Porsche seems like a, a good, um, a good analogy of a product that helps make people awesome to win at the track. You can buy cars that are very similar and engineered by the same team for yourself. Does this apply to high tech? Does this apply to the business of software? I think so. Some of the most successful companies in the software business also tend to think different about what is the purpose of our product and what is the, of our work. Um, they tend to think about empowerment of, um, of the individual, of the user, of the customer. And they, um, use examples of admirable famous people who arguably are pretty awesome people and they’re saying you can, you can be like them. Um, the guys that I’m onboarding blog said something really smart, um, user onboarding. People don’t buy products, they buy better versions of themselves and that’s really what you’re selling is you’re selling a power up, if you will. Um, I’ll give you another example. Um, this looks like a very cool product MP, three player. It’s got a fun colors and stripes on it and it looks like, um, it looks like they did a terrific job with the design. It’s a, it’s probably a great product, but who’s cool in this picture? It’s the guy, the product is way over, like almost in the corner, but we all, we all know what the product is, but it’s more about how cool is it to have a thousand songs in your pocket than it is about the product being cool. So I mean the iphone does, I mean the Ipod does that. It makes us cool by giving us a thousand songs in your pocket. Evernote allows us to remember everything. I’m. Linkedin helps us be great at what we do in a product culture, at success with people. I’m a successful product is successful by making customers more awesome. Somebody needs to work on better sticky tape. I think it’s blue tack room so we can actually sleep well. It’s useful for one thing in any way. So Jason, free to base camp. One of my favorite success stories of a small software company said in a tweet years ago, here’s what our product can do versus here’s what you can do with our product. They sound similar, but they’re very different. There’s a huge difference in meaning in culture, in why we’re here. Are we focused on features and specs? Are we focused on revenue or we focused on making people awesome. That’s, that’s the first question. And product culture, um, in my mind based camp, everybody knows the story. They started off as a consulting company, as a service company. They built this tool for themselves and their clients base camp a as a project management tool and it’s soon took off and became, they renamed the company after it. They stopped doing consulting and they are still in terms of numbers of people, but they are hugely, hugely profitable because they have millions of users all around the world. And Jeff Bezos invested in the company in 2006.
So that’s, that’s, that’s leading with a vision of human awesomeness. What about the building of small diverse teams side? Well, this is where the link with agile practice comes in. I hate to say it. I’m an agile, agile, um, advocate. I, I work with companies on their agile practice all the time, but it feels like the movement that started for agile has become a process, has become a set of rules. And I want to get back to basics here about what’s really important about agile. And I think it’s the teams. I think it’s the small cross functional teams that are about getting shit done. Um, and for me the analogy is the pit crew. I’m in racing. The pit crew is a small group of people with specialized skills that have to apply them in essentially an emergency situation that comes up every few laps. They don’t know what the car is going to need when it comes in. It might need tires or fuel or a new driver or something might be broken. Um, but they’ve got to respond and they’ve got to respond quickly. And they, uh, they practice that work and they practice and drill and they keep the team together over time. And Peter Ships tells a story about his first time actually being in the pits while this was happening. He could see all the activity and the excitement and he thought, this is great. I’m going to get in on the action, and he shows up in his suit and tie. And the first thing that happens when the car comes in is that the pit boss says to him, you go get that tire. And of course that it’s a big racing tyrants covered grease. But Peter follows orders and he, uh, and he went and he brings the tire over and he had to throw away the suit in the end. But, um, but that illustrates the rank doesn’t matter. Hierarchy doesn’t matter. Role doesn’t matter. What matters is the team and the team’s objectives. And right at that moment it’s all about seconds ticking while they try to get the car back on the road. Um, now I’ll, um, I think that’s a great analogy for agile teams. And I’ll tell another peter story about that in 1982, the second year that they went back to the mall, um, they wanted to do better than they had the year before. And so they be purpose built some new cars from the ground up, chassis engine, the whole deal. And um, they did pretty well. In fact, um, they, during the last three laps, they were so far ahead of the pack that they have these cars drive information numbers one, two, and three, and that’s how they crossed the finish line. And, uh, the press surrounded Peter and the team afterwards and said, how’d you do this? Completely new cars, untried had never been racing before. And he said, you guys are seeing this all wrong. Sure, the cars are new, but the team is the same team that won last year. And that’s the point. That’s the point. It’s, it’s about, it’s about the team that should be your atomic unit in, um, in, uh, growing software company is not the individuals, not the people, but not the products, but the teams. Um, my advice in summary on teams is, um, a few, a few key points. Number one, start with that leading with a vision of human awesomeness. Be Clear and consistent about what is this team’s mission? In what way are we making people awesome on this team, I’m hire for diversity skills and points of view teams that are subject to groupthink or because that’s all a bunch of engineers. So you want cross functional in terms of role have the Ux people in the testers and the product people and, and everybody on the team, but also in terms of mindset and point of view, have somebody on the team who is the questioner like who says, wait, wait, why are we doing this? What is the, what is the point of this? Have the, uh, the, the oddball. I’m on the team and keep teams together over time. A lot of this is where I see the stumbling block most often is people think, oh, we’ve got a new project. All right, we need to reform the team to be perfectly, uh, designed for this project with exactly the right expertise technically or market wise. And of course then they get into the optimization trap of, well actually we also need that expertise on this other team so we can have that person split their time, right. Um, or maybe they could split it four ways or eight ways or something like that. Um, so I say no, keep the teams together over time. Um, research has shown that the, that um, that the real problem with teams is not that they get stale or are subject to think the real problem with teams is that they just don’t have time to get practiced together enough as a team to get really good to get really fast to develop those muscles for working together with those particular individuals like a pit crew. Um, so if you have new projects, which we all do, we have new products, whatever, bring the work to them, establish a team, let them practice and change what it is they’re working on rather than reform the teams also. Um, and this is important, split the teams before they get big. It turns out, who’s heard of the Amazon two pizza rule? Yeah. A lot of people, right? So how many, how many people can you feed onto pizzas? It’s, it’s like, um, yeah, it depends on how hungry they are, right? Um, but it’s, it’s a maximum of six I think and that, and that’s if they’re not that hungry. Um, and there’s, uh, there’s a reason for that. Um, the, uh, the, of course everybody knows the number of communication nodes in any system increase exponentially with the number of nodes in the system. So as soon as you start to get above seven or eight people, you start to just explode the number of people you need to coordinate with and it just creates a lot of communication overhead. Mythical man month wrote about that back in the seventies. Um, but also there’s this phenomenon of social loafing where people actually don’t pull as hard on the rope. There’s was an experiment on that if they know that they’ve got a bunch of other people pulling on the rope as well. Um, and there’s, um, a feeling sometimes of isolation in the crowd. But I’m, I’m all about hard data. I’m the why is interesting. But give me the actual facts. And there’s these guys from this company called flow, which is a project management tool, and they can actually track the number of tasks done not per individual, but by the team as a whole, as an output of work based on the size of the team, based on their entire user base. So in this graph is, is sobering as you approach five people, the addition of an additional person to the team adds nothing in terms of the team’s output. Nothing. You might as well just start a new team with person number six or seven because you’re not gonna get anything out of them if what you’re after is actual things getting, uh, getting done. So there’s, there’s, there’s real, real science or data behind that.
Let’s talk about, okay, you’ve established these teams, you’ve given them a mission trust. Yesterday I asked him barker, who’s attempts a session yesterday afternoon? Most people. Yeah, terrific session. I, the question I asked him was, how did you trust your people to, um, to know what to do to do the right thing when you had an emergency situation, you had a, a hard immovable deadline and really difficult task. Um, and he said, you know what, we were all in this together. Um, we had total transparency. Um, the, the goal was absolutely clear. So he was, um, he was a leading with a vision of where we needed to be. He was, he built the team intentionally with the right culture. He let the people who maybe had terrific skills but didn’t have the right mindset go and he trusted them to get the work done because he knew they all had that context. So, um, I’ll go back to Peter Schultz, the CEO of Porsche again, and the harebrained scheme that they came back to him with for how to win that first race at mall after he set them the goal. And he saw the grins around the room. He said, I don’t know how to do this. I don’t know to win this race. I was in trucking before this. You guys know how to do this, so you go off and think about it and come back and tell me what your plan is. He wasn’t involved in coming up with a plan. They came back to them and told them what the plan was. We’re going to take these old things and these new things. We’re going to smash them together and we’re gonna hope for the best. And he said, great, do it. He trusted them. Having made it clear what the goal was, he trusted them to, uh, to run with it. That right there is an important essence of how you get engagement from your team. I often work with ceos who complain that they don’t get full engagement from the team, that the team is just sort of showing up to work and looking at their to do list and getting things done. They’re not focused on the common goal. The, uh, they’re focused on specific outputs rather than on the outcome. And I think the trick to avoiding that problem, he is not telling them what the outputs are. Just telling them what the outcome that you’re looking for is that trust that they will figure out the best way to do it is, is where it’s at, and this may be one of the hardest things I think for entrepreneurs who started their own thing and have had to survive by their own wits and their own hard work. Now they’ve got to trust other people to do that stuff. I’m a year here at the barbecue in last fall, um, uh, I sat through a, a talk by Leah Hickman of um, silicon valley product group, a colleague and Marty Kagan’s. And um, she said at this event, mind the product. Thank you very much Martin. Um, that the most critical shift in thinking toward a proper product, a company’s culture is this thinking of switching from tasks to goals and switching from outputs to outcomes. Outputs would be things like, we got to finish this such and such redesign where we got to build this feature. Outcome is why are we doing that? What is the reason? What is the goal we hope will be accomplished if we deliver that? Well, let’s concentrate on that. Maybe there’s a faster, easier way, or maybe if we have to make some compromises along the way, we’ll know which compromises we can make and which ones we can’t because we’re constantly focused on the outcome rather than just getting to done on the output. Dan Pink, um, one of my favorite authors wrote this book drive, which is all about how, um, what motivates us said that control leads to compliance, whereas autonomy on methods, uh, leads to engagement. People invest in reaching your goal. If you’re clear about what that goal is and you give them the freedom to figure out how to do it. Again, I want to give you some data. I don’t to just make these claims. Um, Deloitte did a study and they asked a whole bunch of questions and they divided up the respondents into two camps. Those that worked in companies with a lot of flexibility in terms of work hours and location. Companies like Wade’s company, uh, that we heard from this morning, Zapier versus companies where they didn’t have that freedom where they were told where and when to get their job done. And it turns out that there is a huge, like three times difference, um, in how invested those people are in the reputation of the company because the company trusts them, they invest in the, uh, in the company.
And I also want to give you some, some examples. Um, one of my favorite examples, um, uh, Aaron scunnered, CEO of plural site, um, who just went public last week, um, they have a very open, very, I’m, I’m trusting culture. He said the first rule, you said, we only have really two rules at plural site. We don’t have a lot of policy manuals and procedures and rules. We really just have to, uh, the first rule is be kind, courteous and respectful for those you engage with. And that’s customers as well as employees and partners and everyone. Um, the second rule is to do what’s right for the company and for the customer. And if you keep those two rules in mind, I don’t need to give you more rules than that. I trust you to use your judgment. Um, uh, we don’t need a lot of command and control in that situation as long as we’ve provided you some clear guidelines. And a real practical example, this is probably my favorite company ever. Does anybody know supercell, the guys that make a boom beach and clash of clans? Yeah, tiny little company, um, or at least they started that way. Um, their CEO ILC up Pinata. Pannanen calls himself the weakest CEO in the world because all of their products are managed by small four to five person teams. The entire business named after suit is named after this concept. The entire company is, um, is built of these cells of small autonomous teams. He doesn’t give them orders about what to do or how to do it. He basically says, you guys come up with a game, figure out how to build it, figure out how to market it, figuring out how to make money on it. He gives them that control and the result has been just explosive growth. They’re making two and a half million dollars every day and they’ve been described as the fastest growing company ever. Now you can see that it’s not like they don’t share anything. You can see from this photo that they have a lot of feedback sessions internally. Um, they, there is a strong culture there tying them together, but the culture is about who we are, why we’re here. It’s not about these are the procedures to follow. Uh, the Netflix deck again is really, um, my favorite quote from it is you want to provide as leaders context rather than control. So let’s talk about the last principal learning and improving continuously. Got To have a porsche example. Um, see the duck tape on the fender here. That’s important it a couple of years into their fabulous run at the mall. I’m Mclaren, uh, of, of um, formula one fame approached them and said, could you build engines for our cars, will provide the chassis, you, you, um, you build the engine. So they had this partnership going for a few years. Their first race together did not go well. The car was overheating badly and as a result it wasn’t, um, wasn’t looking competitive. Um, so the Porsche engineer on site said, okay, I want you to cut a hole in the body right here and we’re going to rig up an air scoop from cardboard and duct tape. And um, the, the um, Mclaren guy was unfortunately their chief chassis designer and he freaked out on him. He said, you want to cut a hole where and make, make us air scoop out of what you’re not touching my car. And of course they didn’t do well, they, they didn’t, they didn’t cut the hole they lost. But this just illustrates the difference between an organization that’s focused on making everything perfect versus an organization that’s willing to learn on the fly that’s willing to experiment. What Peter said about that, um, was that, um, the sooner you get something on the road or the track, the sooner you’ll know where the challenges are. It’s about, it’s about testing. It’s about not worrying about being perfect. It’s about continuous development and innovation. And again, if you, if you’re a devotee of the lean startup, this will just sound like of, well of course, but this is the sort of thing that a lot of companies, they, they, uh, they start off strong, they do a lot of learning and pivoting, but once they hit on something that’s halfway successful, they’re thinking, okay, we’ve got the formula. No more of that. We just need to execute. We just need to be more efficient in delivery and building more of these widgets. But constantly focusing on how do we raise the game, how do we improve things, how do we, how do we continue to, to make people even more awesome our people and our customers is where longterm success comes from. And I’m a quote from ferry Porsche, the son of the founder. I’m struck me in this, in this way. When asked a reporter what was his favorite Porsche of all time, he said, we haven’t built it yet. We’re constantly raising the bar. It’s not about looking backward toward our successes. It’s about what, how much better can we do in the software business? Of course, the, I’m the poster child for iterative testing is facebook. They a note, no two people that are experiencing the same facebook because they’re constantly ab testing and customizing and trying different things to see if they can move the needle in engagement to keep us looking at our phones. Um, and um, there’s a little bit of science behind that. They actually, they use this tool called gatekeeper, which I only learned the details about recently and it allows them, if they’ve got some change that they want to try out or some new feature to control how many people see it and who sees it and how much interaction they have with it so that they can measure, is this helping or is this hurting? This is making things more or less. Um, awesome. Um, now you might be saying, well, that’s great if you’re facebook or porsche and you can have a huge budget and you can do all of these great things. But what about, what about my company? And I’ll, I’ll tell you a personal story around that. Um, after my little software startup was acquired by the big company, um, we had a little bit of a honeymoon period of about a year where we still got to operate kind of the way we had before. And I had another idea for a product that we were able to put into, into practice. Um, we, um, we built what are called custom data portals. They are complete. They were completely custom ground up implementations of essentially a vending machine for sales leads for your sales force. That person could log in and get access to only their territory and only their target market. So great. We built six of them and we were losing money every day on them because they were completely custom. Everyone had its own stack. Um, and there were constant change requests and things were breaking here and there and we just, we hadn’t figured out how to charge correctly for it until I started interviewing the customers and the leads in the pipeline. And I realized that actually I’m 80 percent of their needs were the same. We’d been building them as purpose built tools. But if we were to look at the core use cases, they were all kind of the same. So we set aside, we stopped selling it for the time being, set aside those six and built a standardized product that did most of what they wanted and started selling that instead. And instead of an unprofitable one or $2,000,000 business, we started selling a lot of these very quickly and implementing them like that. Uh, and we had a $9,000,000 business in just a matter of a few months. So was that first attempt of failure? No, I don’t think so. That first attempt was essentially a prototype. We learned from it, we learned what was necessary and we figured out how we could serve that need and the more productized fashion. So I, I, I think we need to judge everything that we’re doing in a learning organization by not whether every individual attempt at anything was successful, but by whether we’re learning, um, the path, are we discovering the way to get to our ultimate vision? Are we closer than we were before? Because now we know where we need to go. So this is, this is my summary Chart, these are the four, four main principles I would, I would want to leave you with, um, and I want to give you an example of, of all four of them coming together, um, because I do think they reinforce each other. Um, and, and picking and choosing among them I or prioritizing and among them I don’t think really works. This is a screenshot, little blurry of a, um, of a conversion funnel report that I devised. Oh, approximately a thousand years ago. Um, I worked for an enterprise software company and um, we had no reporting mechanism. People had to sort of build their own, um, uh, for ecommerce sites. It was an ecommerce platform and um, you could build a store with our tools but you are on your own in terms of knowing anything about what was going on in your, in your business. So I’m the, it turned out our customers didn’t have a good solution for that. So the vision for what we needed to do to fix that situation was very clear. Our customers needed to watch their businesses grow, they needed to see them grow in close to real time. So we had a vision. We built a small cross functional team. It was me as the product guy, one engineer, one ux person, just the three of us to start. Um, we had full autonomy on methods. Our original approach was going to be to build something internally, um, purpose built. But actually I started having conversations with business intelligence solutions with robust oem programs and it turned out that we could build our own data warehouse but then put this bi tool on top of it and we could white label it under our own brand. And that was a much faster path to market. I demoed reports on week two, um, to my, uh, to my boss and he, and he was convinced like that because I was getting to the goal of making, um, making things visible rather than sticking to while we have to build this. Of course, that’s, that’s our job as a product development organization. And the first reports that we built were wrong. But we learned from that. We kept showing them the customers and they kept giving us feedback and we kept refining them. We kept, we kept the I’m moving the bar up on how much value we were providing and how, how we were able to let the people in charge of the ecommerce or a operation show off the success of their business. We were helping make them awesome. Um, and we got top marks from customers and analysts over time for being the experts in the ecommerce business, not just in the software. And we were acquired by Oracle a few years later for a billion dollars because we kept that number one ranking with customers, with analysts by continuously pushing the envelope. So the, the thought I really want to leave you with is, I think I’ve come down to my definition of product culture, is that it’s a growth medium. It’s, it’s what we call the necessary conditions, a label for the necessary conditions for sustained commercial innovation. It’s the, you know, the Petri dish, the culture in which things grow good things, not fungus. Um, but you might be asking yourself, well, if I don’t have that, what do I do is change even possible. And, um, I think that’s a reasonable question. I would first, I would point to the example of Peter Shirts, that’s him, um, with, um, with the Porsche nine slash 11 cabriolet from, uh, the mid 19 eighties when, when all the survey data they got from customers was your cars are too expensive and too unreliable. He decided to build a convertible instead because he didn’t want to make people more reliable or cheaper. He wanted to make them more awesome and that worked, um, the, that became a staple in their portfolio, um, thereafter. But I want to give you an software example as well. Um, I know the guys at Vista print in the US very well and, um, they were a small shop, a, they do it. Does anybody know vista print? They do business cards. Yeah. Um, there were a small shop initially and they’ve grown really fast and really enormously. They have thousands of employees. They’re headquartered in Waltham, Massachusetts. Um, and they had grown into a bunch of separate silos that really didn’t work together effectively. They had an enormous engineering team and they had a comparatively small product management team. That’s these guys right here trying to figure out how to work with them. Um, and they were really not making any progress. There were projects that were just languishing that seemed like they ought to be straightforward, but we’re really not making any progress. After struggling for a couple of years. They finally got the formula right. It took a bunch of elbowing and putting together the right cross functional teams based on these product guys. Um, and I, and Ux people and I’m full stack developers instead of most of the it team was built in layers for different parts of the stack. But once they kinda got the rhythm, once they got the right cultural norms into place and they got permission to um, uh, gave themselves permission to do it right, they started really. I’m really delivering. They wanted, they’d been wanting to redo their site search capability there, cross catalog search for about 18 months and had just not really been able to get any traction on it, but once this team hit its stride and they took, they decided to take that project on. They got it done in three weeks.
So there’s a huge amount of productivity when you bring these principles together. So, um, I think sometimes it’s good to illustrate positive points with negatives. So I’m going to tell you if you’re thinking that you’re suffering from poor product culture or that you’ve lost something, there are some things I want you to stop doing. I want you to quit focusing on features or revenue. Those things will take care of themselves if you focus on making people awesome, your people, customers, shareholders, the entire community. Um, and if you quit managing, telling people what to do and start leading, telling them where you want them to get to, what you want them to accomplish, and quit hiring resources, build the right kind of teams. Teams are more effective than the sum of the people on them if they are correctly constituted and adding more people to a highly effective team actually usually slows them down and quit focusing on making sure everything you do is successful and instead focus on what do we learn from that that we could do better or different next time because that will eliminate the path and make our overall operation and more, um, more successful. In the end. If we go back to. I’m an agile principle again, Mike Rother, author of Toyota Kata, it says, I’m the competitive advantage of an organization is not so much in their products. It’s in the ability of the organization to understand the conditions and create fitting smart solutions. That reminds me very much of Tim Barker’s presentation yesterday where he, he had a product, it was a great product. Unfortunately the partner he was depending on for the data for that product went away and he needed to rethink. So the first thing he did was let’s get the team right and let’s focus the team on the right culture and make sure that we can, uh, we have the right people to be fixing this situation because it is about the people. And I’d say, I always say that the hardest thing about the technology businesses, people.
So summary slide lead with a vision of human awesomeness. Build small, diverse teams. Trust those teams to manage their work and learn and improve continuously. I’ll pause for people who want to take pictures. And um, then, um, if this has made any sense to you, um, for some sense, but not everything. I really do want your thoughts and your comments. As I mentioned, this is a work in progress. I’m trying to describe what I think is a movement, um, in, in the industry, um, and I’m sure that I don’t have it complete or correct or that I don’t have all the, the right examples. So I’d invite you to join in on the work at my website, [inaudible] dot org. And I have a nano letter. Newsletters are too long and boring that you can subscribe to called one thing on product culture. It’s once a week and it’s meant to fit all above the screen. One concept and I’m on that website after everything that I write, I invite people to say, well, you got it wrong this way, or here’s my example, or here’s my counter example, or you forgot and that’s what I’m looking for from you guys. So that’s all I have. I’m happy to take. Um, take questions.
Mark Littlewood: Questions. Laura, you can have the Peldi mic.
Audience Member: Hi. Okay. Um, so our product is going through a lot of changes this year and this weird thing has happened where sometimes it can become a de motivator where people are so focused on what it’s going to look like a year from now. They, I keep hearing this, like this mindset of people waiting, which is not cool. We got to sell what we have now. And after listening to your presentation, I feel like what we’re doing wrong is like the focusing on the features instead of the people outcome. But I’m not sure how to put that into practice.
Bruce McCarthy: Yeah, I think there’s two pieces actually. He might be right about focusing on the features. What does the product look like when it’s fully featured? Featured out, right? Um, there’s a great human temptation to think you know, the answer to think, you know, what it should be like in a year and when you’re thinking a year out or more, I would be thinking about not what does the product look like, but what does the customer look like when they are happy and successful. And then I would encourage you to be thinking just a very short term in terms of what does the product look like in terms of what’s the first most important problem we need to solve? If we’re going to make the customer grin like that, if we’re going to make them feel really awesome, let’s solve them one at a time. You probably do have a list. That’s okay, but make it a list of problems to solve for that customer. Not a list of features because you’re probably going to discover after you put out the first feature that solves the first problem that let’s suppose that you are totally right actually about that and your first attempt solves the problem. Well chances are actually often against that, but let’s suppose what you’re going to get for feedback from that is what we really need. Next is, and it’s probably not the second thing on your list. It might be number seven or it might be something you totally didn’t even think of. So designing your future state is actually often wasteful because you, you, you’re assuming you know things that you don’t really know. Does that make sense? That’s the testing aspect of it to learn as you go. Thank you.
Audience Member: First of all, thinking of covering make people awesome and we’re in the business of making doctors or some in what we do, but it’s a conservative business, so any advice and like, okay, you, you kind of some level doing the awesome thing and then you’re into the people in the company who say, yeah, but no one will pay for it and it doesn’t feed a product line for the classic like adoption curve, like choosing the right, right. Any advice how to promote that culture in the company or how to nurture the product despite a little bit conservative culture?
Bruce McCarthy: Yeah. So you’re saying the customers are conservative by nature. Doctors,
Audience Member: Both the market and… we’re a large company,
Bruce McCarthy: And you’re a large company so it’s people who have a conservative mindset there too. So I would do a couple of things. One is can you find some, um, some example, doctors who have achieved or are excited about the possibilities of achieving a level of awesomeness that other doctors might aspire to. There’s nothing like seeing that somebody else has done it to make people feel not that it would be awesome because they probably would believe that to a. They would probably believe that anyway, but that it is possible. I see this internally with engineering and product teams as well. Once, uh, once one team tries a new technique, the other teams say, oh, that looks good. Maybe maybe we could try that. You know, that seems. That seems. That seems successful, but not until then if you just tell them, you should try this. When I’m skeptical. I think real world examples of an awesome customer can be inspiring internally and externally. There’s nothing like when someone says, I don’t think, I believe that’s a real phenomenon. It’s nothing like showing them a real example. Right. That’s where I would start,
Mark Littlewood: That was a pretty easy question. Thanks.
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