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Paul Hamshere

The Secret Ingredient to Building Successful Products

The secret ingredient to building successful products is the right approach.

The Secret Ingredient to Building Successful Products

I’ve spent a good part of my career in product management and product strategy. In recent years, I’ve seen a growing interest in my field and particularly the idea of the “product-led” organisation. It’s been the focus of numerous books and taken centre stage everywhere from startups to large organisations. The idea of being product-led has reached maturity and I’ve noticed a secret ingredient that seems to be a strong factor in whether product-led initiatives succeed or fail: Alignment.

For every 125 projects a firm undertakes, only one will be commercially successful. When I think about products I’ve seen fail in market, nearly all of them suffered from lack of alignment either horizontally (between senior stakeholders) or vertically (between the leadership team and the product delivery team). In the last few years, I’ve had the rare privilege of being able to work in a brilliant and creative team to develop a method to tackle this problem. We do this by ensuring that alignment is established early in the development of a product strategy or execution plan. Our system has transformed not only the way our clients work, but the feeling and enjoyment that comes with it.

Establishing a proven method of alignment within IE has been one of the biggest game-changers I’ve observed in my career and something I’m most proud of. The energy in governance sessions is more positive. Product delivery teams welcome feedback sessions. Lines of communication are clear and honest.

But perhaps most importantly, it leads to successful outcomes, because what the product team is working on is directly supporting the strategy and what the leadership team wants. This is only possible when the senior stakeholders take the time together to put on paper what they want to achieve and how it will be achieved, so nothing is lost in translation.

Before we look at what, exactly, we put on paper, let’s explore the background that highlights why the product-led approach emerged and the issues it addresses.

Why do some products fail in market?

To understand why some products fail in the market we must first understand what gave rise to the product-led approach.

Product strategy has changed significantly over the last 20 years. Using early telecommunications smartphones as an example, companies were able to focus their attention on one product and early adopters were fairly forgiving of technological limitations. There was less competition, profit margins were higher, and there were fewer competitors in each vertical.

If we fast forward to now, change is an understatement!

  • There are generally lower barriers to entry.
  • Many companies now sell multiple classes of product in completely different sectors, such as mobile phones and insurance products. An example of this is Telstra’s current product portfolio now including smartphones, broadband, mobile connectivity, insurance, smart home products, and cable television.
  • Competition is high and the sales-led approach of rallying behind the main product is no longer a successful strategy. If we look at the telecommunications market 40 years ago, there were two service providers. There are now dozens of service providers and new entrants all the time, such as traditional energy provider AGL most recently.
  • The technology systems that were new back in the day are often creaking at the seams.
  • With greater competition comes greater customer expectations. Customers now expect more for less and they have far more choice. Expectations of regular updates and iterative improvements have also replaced the spectacle of a “Big Bang” product launch in many sectors - especially software.

This new landscape has seen a lot of older companies struggling to support multiple new product lines and integrate disparate platforms that may have been built on top of legacy platforms. Often it’s not a result of underinvestment in technology capability, but rather misallocation of resources and not enough coordination between departments.

This has resulted in unnecessary “technology debt”, which acts like a headwind, making it slower and increasingly difficult to bring new products to market. This heightened competition has put a lot of pressure on profitability, leading some to focus primarily on cost reduction and optimisation, which can often be at a cost to the customer experience and balancing the strategic innovation growth.

In this brave new world, business leaders face a new set of challenges:

  • How do I stay competitive and maintain growth by selling lots of different products at the same time?
  • How do I translate strategy to execution quickly and maintain stakeholder alignment?
  • How do I build a culture in which teams thrive and feel empowered to deliver to a meaningful vision?

The product-led approach has addressed these and many other challenges. It has helped guide some leading companies like Google, Xero, and Atlassian to innovate faster and smarter than their competitors.

But it’s not just tech start-ups that have embraced this approach. As we dive deeper, we’ll explore how it has transformed large corporations and government organisations.

What is the product-led approach?

The product-led approach has a range of definitions and diverse schools of thought. However, most of its proponents agree it focuses on the product experience as the central element to attract, engage, and retain customers. It orientates all teams around delivering a delightful experience to customers systematically and repeatedly.

Developing a customer-centric product sounds good in theory, but many organisations struggle with putting it into practice. Through years of experience in industry, experimentation, and synthesis of data, we’ve converged upon two key elements that underpin a successful product-led initiative.

  1. Balanced mindset:
    The mindset is about balancing between desirability to the customer, viability to the business, and feasibility of the technology.
  2. The right approach:
    Ensure your product development is not only aligned to one overarching strategy, both horizontally and vertically, but also aligned to a robust go-to-market strategy to ensure the new product is successful in the market alongside the current core portfolio.

Balanced mindset: desirability, viability, feasibility

The balanced mindset is about balancing between three elements:

  • Desirability: Do customers want this? Does it solve a problem or address a job to be done?
  • Viability: Is this financially viable for the business? Is it the right thing to do for the business at the right time? Do we have the capabilities?
  • Feasibility: Is this solution technologically feasible? Can we successfully de-risk any technological uncertainty?

The most valuable outcomes are achieved when cross-functional teams adopt this balanced mindset. The sweet spot in the middle is a product that delights customers, generates profits, and brings together technology in such a way that it is hard for competitors to emulate.

Product-led approach: vertical and horizontal alignment

We often joke within IE that “alignment” is our word of the day, every day. Helping organisations achieve alignment is a burning passion of mine. It is really hard. And we are very proud of the approach we have developed and the amazing results we’ve seen it deliver.

We developed our approach to specifically address two common problems we saw in many teams.

Lack of horizontal alignment arises when senior stakeholders are:

  • Pulling in different directions based on their different incentives or goals; or
  • Developing a product strategy or implementation plan in isolation and trying to push agreement across the organisation.

Lack of vertical alignment occurs when the product delivery team’s goals fall out of step with the overarching goals of the business.

After experiencing many of these issues first-hand, I’ve seen how they create a domino effect. Team members begin to fear senior stakeholder governance sessions, and senior stakeholders get frustrated that what has been delivered doesn't meet their expectations. In order to get in and out of the sessions unscathed, I have seen teams hide and avoid facing into the main challenges, further compounding the issues around misalignment.

Without aligning all key stakeholders around a true north from the kick-off of a project, the gap in expectations grows, eroding morale and slowing progress. Alignment creates outcome clarity, risk mitigation, clear prioritisation, value-add governance, and team motivation.

T-shaped alignment

We’ve led alignment sessions for many of our clients, these workshops produce what we call “T-shaped alignment”. This comprises both horizontal and vertical alignment:

  • Horizontal alignment involves rallying all key senior stakeholders from across the organisation together from day one around a shared vision of a future state. They define the risks they want the core product delivery team to mitigate and most importantly what prioritisation principles they want the team to use as they make decisions. The key with this stage is to create something that is tangible and meaningful enough so all stakeholders see how it supports their strategies but also is detailed enough for the core product delivery teams to develop a feature roadmap. Like an architectural blueprint, it is the glue between the strategy and the doing. So what does this look like in practice? It involves co-creating around 20 outcome statements that act as the translation tool between the senior stakeholders and the core product delivery team.
  • Vertical alignment involves building systems within the core product delivery processes to ensure everything ladders up to the senior stakeholders’ outcomes, risks, and prioritisation principles. This ensures that both parties are on the same page and understand how every feature and decision maps to the strategy. Constructive discussions then take place at governance sessions in which all stakeholders work together to discuss gaps and adapt around any unforeseen challenges. This approach results in a far more honest, trusting, and supportive environment in which crucial information is widely shared.

What value does this deliver in practice?

Australia Post has been a fantastic example of unlocking rapid innovation through the product-led approach. Our team ran alignment workshops with Australia Post using our T-shaped alignment to ensure key stakeholders and the core product delivery team had a shared vision for success.

The solutions and experiences that we’re building on the back of this are extraordinary. We regularly marvel at the harmonious interplay of hardware and software that underpins one of Australia’s largest retail networks. Australia Post has crafted simple and intuitive experiences for both their post office staff and customers to make sending a package easier than ever.

When IE’s approach to alignment is combined with the product-led mindset, this delivers clarity. Clarity on outcomes. Clarity on risks to mitigate. Clarity on priorities. But most importantly, clarity on what everyone expects from each other. The result is a high-performing team that works together to build incredible products with the right technology to delight customers and drive growth.

If you want to discuss how IE can help your business, feel free to get in touch with us.

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