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Driving Inside-Out Product Innovation
Introducing: The Experimenter
A challenge of the digital age1 is that enormous amounts of information are available to us. With so much knowledge and information at our fingertips, it is harder than ever to make the right decisions. What information should we use? What insights are useful? What insights are true? How do we separate the facts from assumptions and opinions? The overload of information isn’t the only challenge, though. We must research, talk to, and empathize with customers; we must learn as much as we can to guide us toward the right steps and approach with our products. However, we can’t be sure of taking the right steps if we base those steps solely on research and conversation. We must conduct experiments and validate our results.
1. The digital age is also referred to as industry 4.0, information age, or the age of software.
Product Owners are frequently confronted by strong-minded stakeholders who might face a similar dilemma. Conversations between Product Owners and stakeholders regularly result in a battle of wills. One party tries to convince the other it is right only to be overthrown with facts, figures, big customer name dropping, or otherwise. Most Product Owners do not aspire to battles of will. Thus, they need ways to work around these situations. The Experimenter stance might be a way out. Taking this stance as a Product Owner helps you to acknowledge that you don’t know everything but that you might know enough to define the right hypothesis, do experiments, and learn more.
Experimentation can be done in many ways, with various sources, approaches, tools, techniques, and results. In this chapter, you learn about various sources of innovation. How does innovation typically work in organizations? Experimenters are market data-driven, but where do you find that information? What conclusions might be drawn from that research? How can innovation be done around the business model? How should assumptions and hypotheses be tested? These are some of the questions we explore in this part of the book.
An unusual aspect of the Experimenter stance concerns scaling. Most people don’t think about scaling and experimentation as a good combination. Most organizations take a process-driven approach to scaling. They tend to focus on the mechanics of making product teams work at a larger scale. They tend to focus on implementing a framework rather than learning about what works and what doesn’t work. Scaling a product or scaling an organization introduces many new variables, such as dependencies in people, knowledge, skills, technology, order of things, and others. Rather than talking about scaling the process2 via so-called scaling frameworks, this book focuses on how you might scale the product.
2. The book: The Nexus Framework for Scaling Scrum is a great resource for that.
Following are some characteristics of great Experimenters:
Great innovators are brilliantly lazy. It’s like Bill Gates once said: “I choose a lazy person to do a hard job. Because a lazy person will find an easy way to do it.” Gates could substitute “a lazy person” with “an innovative person” because great innovators will find the best and easiest way to get a project done. Many great innovators live by the saying, “Work smarter, not harder.”
They pursue multiple options. Elon Musk has Tesla, SpaceX, and SolarCity. Marcus Lemonis is chairman and CEO of Camping World, Good Sam Enterprises, Gander Outdoors, and The House Boardshop as well as an investor and shareholder in dozens of companies. What we can learn from their examples is that various interests overlap and feed off each other. Having multiple projects breaks the psychological bottleneck and pressure of succeeding in one single venture. It also expands your breadth of knowledge and overall business acumen.
They embrace paradoxical thinking and keep themselves updated. A good experimenter never stops learning. And a great one would never remain uninformed about the discoveries and advances. Great innovators do not see the world in black and white. While many people come to either/or conclusions, they strive to see both/and. F. Scott Fitzgerald, a great American novelist, said it best: “The test of a first-rate intelligence is the ability to hold two opposing ideas in mind at the same time and still retain the ability to function.”
Here are some positive outcomes and benefits that we observe when Product Owners take the Experimenter stance:
Improved productivity and reduced costs: In many organizations, process innovation is about reducing costs. This might be achieved by improving the capacity and/or flexibility of the business to enable it to exploit economies of scale.
Better product and service quality: By definition, high-quality products and services are more likely to meet customer and user needs. Assuming that these products and services are effectively marketed and sold, this should result in increased sales and high profits for the organization.
Building a larger product and services range: A business with a single product or limited product range would almost certainly benefit from innovation. Having a broader range of products and services provides an opportunity for increased sales and bigger profits and reduces the risk for shareholders.
Innovation contributes to handling legal and environmental issues: Innovation might enable the business to reduce its carbon emissions, produce less waste, or perhaps comply with changing product legislation. Changes in laws often force businesses to innovate when they might not otherwise do so.
More added value: Effective innovation is a great way to establish a unique selling proposition (USP) for a product—something for which the customer is prepared to pay more and that helps a business differentiate itself from competitors.
Improved staff retention, motivation, and easier recruitment: These improvements are not an obvious benefit, but they are often significant. Potential good-quality recruits are often drawn to a business with a reputation for innovation. Innovative businesses have a reputation for being inspiring places in which to work.
Increased chances of discovering the Next Big Thing: When pursuing multiple options, running tons of experiments, and taking every stakeholder request as an assumption and hypothesis, we see that our chances of building the Next Big Thing increase.
Although there may be other benefits as well, regularly taking an Experimenter stance as a Product Owner will hopefully lead to improved time to market, time to learn, ability to innovate, and new ground-breaking products that boost revenues and have an amazing customer satisfaction score.
Inside-Out Innovation Sources
Most organizations recognize the need for innovation. However, when looking at the actual time spent on innovation, it seems like it doesn’t get much priority. It’s easy to say that innovation is important. It’s easy to say that you need to work on innovation. However, it’s just as easy to get lost in day-to-day activities. Trying to keep the product running smoothly can easily take up more time than you have available. Product Owners must set time apart for innovation. Time needs to be reserved for the growth and evolution of the product. If you don’t prioritize innovation, stakeholders will assume that role and start steering the product for you.
There are two types of innovation: inside-out and outside-in. Both have their merits and drawbacks. Most organizations apply an inside-out approach that typically leads to sustaining innovation rather than radical innovation. So, where do you get your innovative ideas from when applying inside-out innovation? What are typical sources of innovation? In this chapter, we explore inside-out innovation and discuss various sources of ideas being sales, customer support, account management, R&D, executives, and the market.
Sales
Salespeople can be a great source of innovative ideas. After all, they talk to customers all the time. Salespeople are usually aware of some of the latest developments in their customer segment or market, and they are often the first people to be confronted with changes in the competitive landscape. The sales team knows what customers ask for and can quickly learn if the offered quotes and proposals seem to match their needs.
It typically pays off to engage with sales early on in your role as a Product Owner. It also pays off to train and inform your sales colleagues about the product. What is the product vision? What are the goals and objectives? What is the high-level roadmap, the plan to deviate from? Also talk about the product’s capabilities: What is it capable of, and what can it not do or be used for? A tool we’ve used for sales teams in the past is competitive battle cards. They are simple to use and make sales teams’ lives easier while focusing the message on the direction you have in mind.
Salespeople have a front-row position regarding talking to customers. It’s usual for salespeople to come up to a Product Owner with a special request such as, “Can we develop feature X for customer Y? All my big customers are telling me the competition performs better in Z. If we just develop this one feature for X, Y, Z, that will help us to do more business.” Such ideas driven by sales are not necessarily bad ideas, but they tend to be fluid. Because salespeople are typically focused on closing a deal, they tend to skip over the long-term effects of a certain innovation or the impact of not doing something else. Great ideas can be derived from sales, but always consider the long-term impact on the product, its value, total cost of ownership, technical debt, and potential future maintenance.
Customer Support
Customer support is another department that usually has short communication lines with Product Owners. It’s unfortunate, though, that very few customers call customer support to congratulate the company on the amazing product that was delivered. Customers call more often to ask questions about the product, how to change something, how something works, and so forth. They’re even more likely to call when something happens that they didn’t expect or didn’t like. With all these questions and complaints coming in, customer support is a great place for any Product Owner to spend a couple of days, especially when they are new to the product or new to the job. Listening in on customer support calls can be a very cleansing experience because you can learn what customers experience while using the product. Some calls may be about obvious mistakes on the company’s part. Others might be more obscure or corner cases, but they remain your company’s—and thereby, in some cases, your—responsibility to handle well.
Thus, collaborating closely with customer support is very helpful. However, you don’t want to focus on the current version of the product only. Just fixing bugs, responding to questions, and solving complaints isn’t maximization of value for the product, per se. It would lead to a very single-sided approach to “innovation.” Customer support may suggest innovations such as this: “These are the top ten things customers hate about our product. When will we fix theme?” “Every time they do this, that thing happens.” “Yeah, they call about that issue all the time—they just don’t get it.” “I’ve given up on reporting that issue in the system—that bug has been around for ages.” Such questions and comments touch on the quality aspect of your product. Some of them may be about technical quality (does it work the way it was designed?), and some may be about product quality (does the customer appreciate the way it was designed?). Generally speaking, quality should not be compromised. Compromising on quality often has serious long-term impacts. Not compromising quality doesn’t mean creating gold-plated solutions, though. The quality of the product (technical or functional) should be good enough. Voltaire said it well: “The best is the enemy of the good.”3
3. Robert Watson-Watt, who developed early warning radar in Britain to counter the rapid growth of the Luftwaffe, propounded a “cult of the imperfect,” which he stated as, “Give them the third best to go on with; the second best comes too late, the best never comes.”
Account Management
Account management is typically found in business-to-business (B2B) companies. In contrast to business-to-consumer (B2C) companies, not all customers are equal in a B2B company. It is quite common in B2B companies that 80% or more of the revenue is generated by three to five key customers. Losing such a customer or a souring relationship with such a customer can have a direct impact on the cash flow and liquidity of the organization.
Account managers are aware of this. They know that their big clients are important to the company and its financial future. They are usually not afraid to wield that power within the organization. You may have been confronted with statements like the following yourself: “I know we have other customers, but this one is simply more important” or “That is not a direction that our top customers want to take.” This is a difficult situation to deal with for many people. You don’t want to be the person who might screw up the deal with this big customer, right? But you also don’t want to be the person changing the product based on one customer’s needs! It’s a tough spot to be in, and an important choice must be made here: What kind of company does your company want to be? And how does that affect its products and services?
One option is to be a company that delivers generic products or services to customers. This setup means that every product is essentially the same. Perhaps there are some options to choose from or settings to adjust, but the base product is identical. An example of such a product is Trello. It’s a simple tool for creating lists, such as a Product Backlog or Sprint Backlog. The tool allows you to adjust some settings or options, but Trello accounts and boards are (except for the contents) very similar. Designing, developing, and shipping standard, generic products make a lot of things simpler.
Another option is to tailor the product or service implementation to customer needs. Such products often come with a product implementation phase. Examples of such products include Jira, ProductBoard, and Aha! These tools are standard solutions but offer a huge range of options and possibilities in the implementation to tailor to customer needs. In essence, the software is the same, though.
The final option we discuss here is custom work. In this case, a customer usually pays for the development of a feature, functionality, or capability. This is a custom feature, solely for this one client. Such developments always seem nice up front. A big customer willing to pay big bucks for a feature often seems like easy money, especially for startups and scaleups. The effect of these choices, though, is that companies are often forced to maintain different versions of the product. This results in maintenance in multiple locations, bug fixing in multiple locations, reduced focus, not being able to sell the feature to other clients, and so on. Although it is a business model that allows for some quick cash in the short term, it’s often harmful to products, time to market, and ability to innovate in the longer term.
Research and Development
It seems like innovation is done more often and faster than ever. A huge number of innovations have come in the past 20 years. From the early days of the Internet to all the possibilities of today, innovation has swept through our lives at an incredible pace! Technology especially is evolving at a high pace, forming problems and challenges. Ask any front-end developer what development framework they favor, and their answer may vary before and after lunch. Okay, maybe that is an exaggeration, but the average lifecycle of a JavaScript framework, for example, is less than two years from peak adoption to decline. It means that there is always another way to solve the problem.
Combine these high-pace technology changes with the dynamics that occur when a product starts to take off. A fast-growing product often imposes scaling challenges, sometimes on architectures that weren’t designed for such usage. The desire to rebuild or redesign a product often follows swiftly.
New technologies may offer new capabilities that allow the Product Owner to create a product to overtake the competition. Technology sometimes is a two-edged sword. That being said, new approaches, frameworks, technologies, hardware, software, models, data, and many other innovations are usually found in the R&D part of an organization. Building bridges and relationships with such teams may prove to be useful for a Product Owner. Learning about trends and new opportunities can be helpful if you want to boost your product’s innovation.
Executives
Board members are often found in different circles than Product Owners. Executives often have additional roles, positions, or interests in other parties. It’s not uncommon to be a board member of a company and chairman for a foundation, institution, or overarching industry initiative at the same time. Although these board members may be disconnected from the actual product development, they are often keen to know what is happening at the top of other companies. They often meet other board members in the industry and pick up on trends, innovations, and industry developments quickly. The result may be that a board member approaches Product Owners with a comment such as, “I hear company XYZ is moving their proposition to the cloud. We should do the same thing.” This also happens quite often regarding startup culture, for example: “We should be more like company XYZ. We need the spirit of XYZ.” Sometimes companies acquire startups to make the enterprise more innovative. Though the desire makes sense, it doesn’t necessarily lead to a very effective way of changing the culture, innovation rate, or people.
Market Analysts
Some firms specialize in market analysis, trend analysis, and reporting or publishing. They discover what the industry is doing by talking to many people about a certain topic, specialty, or domain. They seek to identify where general trends are heading and who might be thought leaders in a particular domain. Such firms often have access to a wide array of companies, allowing them to take a broad view. Getting informed by such companies may be helpful if you want to identify patterns and trends in your industry.
Unfortunately, the articles and reports of information and trends are available to everyone (sometimes at a price). Think of companies like Gartner, Forrester, and McKinsey, for example. Gathering insights about the industry is useful. It’s useful to know what your competitors are doing. However, perhaps moving in the same direction as everyone else isn’t the best place for your company to be.
Imagine the market being like a pasture with cattle, as Figure 14.1 illustrates. The cows represent the organizations in your market. Each cow is looking for some tasty grass to eat, just as the companies are looking for potential customers to attract. Cattle are usually found together, in a herd. Suppose now that one cow (an innovator) becomes detached from the rest of the herd. At first, it might think, “Shouldn’t I go where all the other cows are? Surely the grass must be greener there?” Well, it’s not. You can imagine what the grass looks like after a herd of cows has trampled over it. The grass surely isn’t better in a place where everyone else is, although it might look that way from a distance. Thus, a big mistake would be to engage in strategic herd behavior, following everyone else. This is a mistake, of course, only if your purpose is to be innovative.
Figure 14.1 A lovely view of the market