[00:00:00]
Sohrab: Hello, everyone, and welcome to our next episode of "Agile Insights Conversation". Today I'm hosting Nacho Bassino who I met at a conference a few months ago and he was introduced to me through a mutual friend, Tim Klein [SP]. Thank you, Tim, at this point. And Nacho and I will be speaking about product strategy, product direction, the book that he published, I think, about a year ago. But before we jump into that conversation, I'd like to hand over the stage to Nacho to introduce himself. Nacho, welcome to the show.
[00:00:33]
Nacho: Thanks for inviting me. I really get to have this conversation today. Yeah, I'm basically a product leader who has been doing products for over almost 20 years now. I started as a software engineer, then moved to product. Luckily, I got good mentors who helped me grow in my career, and I've been leading product teams in different companies, in different industries like telco, gaming, travel. And I grew in the career level and I became CPO of a company called Best Day, a travel company in Mexico. I'm originally from Argentina. And then I moved to Europe, to Barcelona, where I'm currently living. But I will say that I have kind of two careers. That's my kind of more company ladder or company career and then on the side I... almost years ago I started trying to share everything I know, everything I learn about products.
I've been writing a lot. I did some training courses with even some universities. I created some podcasts. As I said, that led eventually to me writing a book about product strategy, which was a topic that I was really passionate about, and I felt there were some gaps in the content we have available which eventually also led to me using this all expertise and all the time I have built this knowledge, content, or things I wanted to share to help more companies and more teams become excellent at product management which is actually what I'm really passionate about, helping more teams become high performing product teams.
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Sohrab: Yeah, that's cool. You are also one of those people who has been there, done that and now after many years of experiencing yourself...basically falling over every trap that's out there, you're coaching the organizations and teams, you're supporting them to not go down through the same mistakes and learn a bit about how to do product actually in a better way. And I assume...Nacho, you mentioned it earlier. You've worked in many industries. Your work is not only software specific. You've probably also...and correct me if I'm wrong. You've most likely also worked on some more tangible products out there. Is that correct?
[00:02:42]
Nacho: Yeah, that's correct. I wouldn't say that always my angle has been on the software side, but I have a few experiences. With some travel, we work with...I work in a company that have a destination management company which is getting passengers from one place to the other and you need to manage bands and things like that. There's a lot of the logistics aspect of it which...it's very flat. And also, for example in the gaming space we did some of kind of the basic gaming also as well. There are different angles than just websites, which is also very interesting.
[00:03:18]
Sohrab: Yeah. No, I agree. I've also had the luxury of taking a lot of the knowledge that I gained in the software field into other fields such as medical devices, automotive. And the truth is most of the principles, if we really stay on the principle level, are applicable. They're applicable anywhere. But that's maybe a conversation for later or another point.
Now, I mentioned at the beginning I want to use this conversation with you to speak about the book that you've written. And your book is titled product direction. Now, before I ask you to give us a brief summary of that book without spoiling anything, why did you decide to write that book? Because there are so many business books out there and I think every year several thousand new business books are being written. But you must have felt the need to write something. If I remember correctly, you yourself are a vivid reader so you know what's out there. Now what was your motivation?
[00:04:15]
Nacho: Yeah, certainly. I think that that's exactly the point. At some point, I felt that I have read every good book on strategy that is available because there are many great books like Roger Martin, [inaudible 00:04:25] about strategy or below ocean strategy and things like that. There are great books out there. But I felt that...especially when I was trying to implement product strategy or when I was asked advice about product strategy, I felt that we lacked this practical implementation aspect of it. What I try to cover is this gap between...okay, this is how...the thinking of strategy you need to have but this is how you actually put it down to Earth for product work.
And for example, if we compare it with Roger Martin, Roger Martin is more business oriented. He has good questions and good frameworks but then for product work there are some differences and that's what I'm attempting to focus my work on and that's the pain or problem I was trying to solve.
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Sohrab: Yeah. Now looking at specifically what you mentioned Roger, my favorite framework from Roger...and I was very lucky to interview him several times about his latest book, "A New Way to Think". What I use a lot is a thinking tool for myself, is where to play and how to win. And whenever I work with products and products that we build within our own company, I think this is applicable. But I can get the point that you mentioned. If you want to take it to one step...one level deeper, let's call it this way. There probably is a need for other things. Is that how you thought about this?
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Nacho: Exactly. If you think especially about how to win part of it, there are aspects that are kind of on the business side. For example, [inaudible 00:05:52] things like that. But then on the product side, you need to find a compelling value proposition inside your product that can be [inaudible 00:06:00] in a way what Roger Martin did was great but it was great directionally speaking. When you get to put it down to Earth, there are some gaps that are tricky to fill.
[00:06:10]
Sohrab: Yeah, okay, okay. And we'll explore more of that. Now before we jump into this conversation...of course we had a pre-conversation and you shared with me that you called it product direction because then direction fits really well with discovery and then with delivery. Obviously, this seems like a sequential process but you and I both agree nothing in product or in innovation is sequential. But initially you need some kind of direction. My assumption is, and correct me again if I'm wrong, that you are...or you're addressing primarily product leaders, people that are ultimately responsible for the product managers that then build the products. Is that correct?
[00:06:55]
Nacho: Yeah, that's correct. I think that maybe...and even if we refer to how Marty Cagan phrase it now is that it is the leader's responsibility to find these levels or these problems to solve that can really make a difference. This is primary target for product leaders. Of course, senior product people are trying to be more strategic and trying to climb the ladder so I think that there was some time value in the book as well. And all product work is rate so knowing more about how we do strategy is good at all levels. But primarily the implementation of the things I wrote about in the book is up to the product leader usually.
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Sohrab: Yeah, okay. Now let's dive into the book itself. If you look at your book and you already made some comparisons to existing or other strategy books which are mainly about business strategy, what is the main theme that goes through the book? What would be a few of the key takeaways, again, without spoiling too much, that people should take away from your book?
[00:07:54]
Nacho: That's a good question. I will split this into two. The first part is that the main thing of the book is making it practical. If you are coming to say, "Hey, how I will understand my customer and find the right levels?" The thing I'm trying to do is to give you tools to actually go do that. I go from strategy...and it's called direction because it covers strategy, road mapping and OKRs. I'm trying to make it practical for you to come up with the strategy, have tools to define those critical things that the strategy needs to cover and then connect them to the execution through roadmaps and OKRs. Basically, my message there...the takeaway there is that there is a way to connect all the things and when you do it properly like the...sorry, I'm collecting more frameworks but if you think about Marty on decision stack, there is a way to logically connect these decisions that makes your life easier.
For example, I have seen product leaders many times go crazy each quarter on deciding OKRs because they think that they need to cover all options. When you have a solid strategy and a solid roadmap, OKRs are almost done by themselves. This is the antipatterns I'm trying to fix.
And the second big takeaway. I think that there is...the first takeaway is practical and connected. The second big takeaway is that even though you may have different ways to implement it, the key theme that you need to keep in mind is that you need to uncover the opportunities and select the best opportunities which is a topic that goes across many product phases. For example, in this company you will actually be working with opportunities as well but this is kind of how you find the levers that will connect all the things that you will need to work on.
[00:09:43]
Sohrab: Yeah. Now in your book...and maybe that's then also one of the key differences to the book that Petra Wille wrote. You're not specifically talking about how a product leader would be enabling product managers. You're covering a completely different aspect of product leadership.
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Nacho: Absolutely, absolutely. I think that [inaudible 00:10:04] one thing I will say is that Petra's book is awesome so every product leader should read it. And [inaudible 00:10:10] yes. There is the responsibility of a product leader of coaching and developing their people and there is the responsibility for a product leader to leading with context. And in this leading in context there is a very specific chapter which is hey, how you come up with the direction for your teams and that's the topic I'm trying to cover.
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Sohrab: Yeah. No, I like this point. And I also like that you called it direction because I would assume...and maybe you put some thought into this. If you had called it product strategy, people might have looked at it the way that a lot of people look at traditional strategy which again from...both you and I know that the perspective on traditional strategy...none of the big strategy gurus shares that. Roger, I was fortunate to talk to him. He's very agile in his mind. Strategy is basically that star that northstar...and then we are very flexible on the details as Jeff Bezos puts it out there. But I could assume or imagine that if you would've called your book "Strategy", people would've fallen into that trap. Now with direction, it looks more like a compass. And actually, on your book cover, you have a compass. If you have the book, you can show it. Yeah. Absolutely. I like that.
Now you mentioned there's two things. Making it practical. The other is uncovering the opportunities. And both of them are ultimately leading with context for a product leader with their product managers. Now if you look at the organizations that you've worked at, my guess is that a lot of the topics that you emphasized in the book are based on lacks that you have observed in those organizations. And my question would be, A, is that correct and B, why do you think so many organizations lack to either have product leaders in the first place and/or the product leaders not knowing the stuff that you are trying to cover in your book and also Petra trying to cover in her book from a different angle.
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Nacho: Yeah. I love that, how you put it. I will say that actually the way I wrote the book is almost the opposite. It's trying to see what good leaders were doing and trying to distill that into an applicable framework. Actually, as a follow-up of the book, I created a podcast series in which I interview product leaders to see...to actually get real life experience on how people is doing the strategy. And you can see the patterns from the books that are kind of arising and coming up again and again. Even though with different tools, different contexts and different things, the pattern on how you build strategy is quite similar.
To the second question and on why those gaps or how this lack of strategy happens because it's also a good point. I remember that when Marty Cagan two years ago was writing about publishing power, one of the things he said in a keynote or an article was that remarkably most of organizations he met didn't have product strategy. It's not that there was a bad product strategy. It was inexistent at all. Going back to your second question, I think that the...actually I wrote about this in the book, the reason in the book. But there are these...there are [inaudible 00:13:26] forces diagram in which you have things that push you to get a new model and things that kind of prevent you or make friction to add up new things. I think that there are two...leaders have two fundamental problems. The first one is that they are constantly putting down fires. There's the time management issue and then product you can talk with Petra which is great. But then the second one was important, is that strategy is so ill defined not only from a conceptual point of view but also from who has to do it and how you actually do it and how good strategy looks like. That was the real problem I was trying to address.
Let's put it up there, let's make product leaders accountable and let's try to show them if they haven't done it before how it might be done even though of course...ask any book with a framework. It will need to be adapted to the reality of a leader.
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Sohrab: Yeah. Yeah, it's interesting, the point that you brought up about putting out fires. I was just running a workshop this morning for a group of 60 leaders at one of my most important clients. And we were talking about three different leadership styles, expert, achiever, capitalist. And when they were going through it, it kind of was like, "This sounds amazing. But who has time to lead like this?" And in that interview, they were talking about a two day off site and trying to get everyone on board." In my data, I don't have the time. And of course, whenever someone says, "I don't have the time," I tell them, "You make time." Nobody has time. We all make time. And then the question is what do we prioritize. If we prioritize creating alignment because we know down the road it will be much more effective and efficient, then we make the time for this alignment early on. But raising that awareness I think is one and then helping them implement it in their daily lives on a day-to-day basis, that's the second thing. That's where it becomes so difficult.
It's the same with exercise. We all know exercising and eating well is important but then you need to make the time, make the effort and all of that. Now Nacho, when you work with these leaders...and I think for many of them, going through your book is eye-opening and then they are like, "Okay, Nacho, now let's help us. Let's do this." How do you start?
[00:15:49]
Nacho: Yeah. The other thing I created recently is a sort of thinking about the maturity stage of product teams and product organizations. And so maybe making it more complete to answer your question, I usually try to figure out at what maturity stage they are. Because if you think of an empowered team that already has...kind of the outcomes there are and they are maybe mostly leaning to kind of group the topics they haven't heard. That's a completely different story from a team that is, "Nope, we are barely doing agile but we are a feature factory and just shipping what management told us to build." These different stages can change your approach. But usually, to make it a bit simpler, the answer, the key point is really focusing on gathering these opportunities. Most of the teams I see that are maybe too focused on solutions, on discussing solutions either with stakeholders or trying to prioritize solution with some sort of prioritization dashboard or whatever. And the thing...to build strategy, you need to go one higher level than that.
What I tell them to do is to start reverse engineering. You are deciding this priority because you are trying to tackle an opportunity that's solves a problem that has potentially a good level to achieve something greater in the future. By doing this reverse engineering and we do this for N items in the backlog so let's say 10 items, you start to see the pattern. Hey, these opportunities are the ones that kind of...these solutions are a mapping tool. And you start seeing, "Hey, let's assess these opportunities. Which one is a high priority? Which one has a higher potential for being a good lever to achieve our strategic outcomes?" And this reverse engineering helps them kind of start realizing, "Okay, the opportunity space that we have has these gaps or these things that we shouldn't be pursuing because they shouldn't be a priority."
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Sohrab: Yeah. If you hadn't mentioned that you started your career as a software engineer, I would now know that you started as a software engineer. You mentioned reverse engineering so many times. But jokes aside, I think this is a really good way to do this because what I could also imagine...they have a bunch of items in their backlog, they do this reverse engineering exercise that you just mentioned, they realize that they're addressing hundreds of different opportunities. They're like, "Oh, man. We don't have any direction. We should have a direction because that is the reason that makes it so hard for all of our product managers, product owners, whatever you want to call them to prioritize their backlog because the direction is completely lacking. And especially if you look at a product being built by multiple teams and multiple of those product managers making individual prioritization decisions and that's what I see all the time...running this reverse engineering exercise I can imagine being very, very valuable.
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Nacho: Yeah, yeah. [inaudible 00:18:44] to do because there is the analysis paralysis. Hey, let's find opportunities. [inaudible 00:18:51] In this way you unblock this mental gap on [inaudible 00:18:57] And the other thing, as you said, is what are we building because you may know that you're not having any direction but will start seeing, "Hey, these are the many problems that we are solving. And some of those problems doesn't make any sense." It's very eye-opening in terms of what we can do next.
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Sohrab: Yeah. And even if they all make sense, you would be able to then rank them against each other. And probably they realize that they can't work on all of them at the same time. There is a lot of these elements that suddenly become transparent to the people that they have to address things differently. Now I wanted to ask a question. Okay, so you run this reverse engineering. You realize the opportunities. My assumption is sometimes people do this reverse engineering and they realize that whatever they have in their backlog is not connected to any real business opportunity. Does it happen?
[00:19:54]
Nacho: There are two typical patterns. The first one is that, "Hey, we are solving this because at some point we felt it was a good idea. No one did a proper assessment of decisive opportunity. The opportunity is not very valuable." That's the easy part. I think the most conflicting part...I'm going back to what you were saying before about kind of the different sites is that there are many opportunities that make sense but are completely going in different directions. Let's use the most typical example. You have some efforts that are trying to grow the customer base or we are trying to do this to attract more customers and we are trying to do this to be more efficient and reduce our operating costs. Depending on the stage of the company...I mean, both are very valuable and if you look at the EBITDA or if you use the ROI prioritization, any method, both may be equally valuable. But depending on the situation in the company, depending on the bets the leaders want to make, one may be quite more important than the other. Those are the things that area very important to discern when doing this exercise.
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Sohrab: Yeah. Yeah. No, I can see that. I can absolutely see that. Now you run this exercise and they understand that they need direction. What's next?
[00:21:10]
Nacho: As I was saying before, what you see there, you start to see the opportunity map or the opportunity space or you want to...whatever tool, you want to use it. I usually actually...maybe referring to other product coaches, I usually use the [inaudible 00:21:22] very, very easy to use tool and then very kind of eye-opening in itself. You start mapping these opportunities to the set outcomes. And then you start seeing if those outcomes are relevant or not. The things that they usually see is that there are gaps on their understanding. There are for example places in which they don't have enough opportunities or places in which they want to invest more but they don't have the opportunities. When you show them the solutions, you will say, "Hey, this is the solution I find and we'll start building it." When you are forced to see the opportunities that you need to capture, that's a good trigger for, "Okay, what type of research do we need to do? What type of analysis we need to do on the market or wherever?"
This triggers what I call the insights phase which is to me the first phase on the strategy which is trying to gather, collect all these pieces of information in an organized way. I usually say that you need to end up with a wall full of insights but of course have some links or some mapping to each other to see what space is more relevant to you. Sorry, that's the first phase. And the second phase maybe [inaudible 00:22:27] is what I call the selection phase in which you need to pursue which are the most important ones.
I am going back to what I was referring before. You are not deciding based on ROI calculations. When you are making strategic decisions, you need to look at what position you want to make in the market, the how to win. How am I going to be better than competitors in this space for these particular customers in this particular way so they choose me over others. And this is a very different story than selecting a matrix or ROI calculation. Actually, the story I love, if I can share, is the story from very early Netflix that actually the story is in their book, "That Will Never Work", which is by...I can't remember the author now but it's the early founder of Netflix. [inaudible 00:23:17] that he...they were doing both selling DVDs and renting DVDs. And then Amazon approached. Also, very early on Amazon was only selling books and trying to expand and they were trying to acquire Netflix. Of course, the deal never happened but when the founders of Netflix walked out of that room, they understood that they will never be able to compete with Amazon in selling DVDs, so that they really need to double down in the renting DVDs which was their...kind of the place or the position in that they can build and sustain and maintain against other competitors and really win them a market.
The [inaudible 00:23:52] of the story is that when they made the decision, most of the revenues were coming from selling DVDs. That's why it's not an ROI calculation. It's more positioning and how to win sort of question.
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Sohrab: Yeah. No, I love the fact that you brought this up. And yes, feel free to share any stories that you have because these stories make it tangible. And at least for me, when I hear a story, I remember the things much, much easier. Now talking about this positioning piece, Nacho, I fully agree with you. I hate it when I see teams trying to make backlog prioritization based on ROI calculations or whatever other kind of metric they...weighted, shortest job first, whatever. I get mad at this because all of it is just thin air. Everybody can come up with all...this is going to be the return. But positioning, it doesn't have that many numbers. But around positioning, there is a logic and there are decisions associated with this.
Now when I think about this, if I talk about product positioning, it needs to be consistent with your business positioning. Let's say you are LVMH, Louis Vuitton Moet Hennessy and you're building a product. You can't go into discount because it's not consistent with your business positioning. And the reason I bring this up is when we want a product leader, and that's my understanding now, to make this positioning decision, they need to be aware of the overall business positioning, business strategy and probably also play a role in the creation of such. Is that correct?
[00:25:34]
Nacho: That is completely right. Let me start with the positive example. There are companies that have a strong business strategy and the product leader, as you said, probably needs to feed in the strategy, collaborating the definition. Hey, there are things that our product cannot do so we cannot push [inaudible 00:25:51] But then once that strategy is kind of defined, the product leader needs to define...and of course, they will collaborate with the other leaders in the organization to define the product strategy that will fit into it. And I have kind of one example that maybe it's a bit visual. I work for a travel company in Mexico called Best Day which is kind of a largest travel company in the country [inaudible 00:26:14] And we were competing with other travel companies like Expedia, Booking, you name it. But we have a very particular business strategy which was we were strong and we want to get stronger in the Caribbean.
We want to, for example, have the best prices available. We have a supply team that are different from Booking which is all over the world, was very focused and very connected to the hotels in the Caribbean, just to use a simple example. You have this supply strategy, you have a marketing strategy, you have a B2B strategy and different things. On the product side, it's quite different. The things you do in the product to be great at the Caribbean than for example to be Booking and be great worldwide or [inaudible 00:26:54] wide. Because for example showing an average hotel is quite different than showing these all-inclusive hotels in the Caribbean. You need to have a place to show all the amenities, the restaurants and things that the people decide why they want to stay in a particular hotel.
I'm not sure if this story makes sense but what I'm saying is that the product strategy and focusing on the things we need to solve for this particular market, for this particular strength we need to build are quite different or will be different from Expedia which is trying to solve for an [inaudible 00:27:24] than the thing with you.
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Sohrab: Yeah, so the product direction, to use your book's title, is of course informed by the business direction or the business strategy. Now once...or let's go in there. If we talk about business strategy...I've had this conversation with Roger several times and... I'm mainly in the agile space. This thing is called "Agile Insights Conversations". You're mainly in the product community. I believe ultimately, it's the same thing but not everyone looks at it this way. A lot of people in that space believe that you can't and maybe even you shouldn't have a strategy because that would be too far into the future and we cannot predict the future. I believe otherwise. How do you look at that? Especially given your subtitle about roadmaps and all of that which again goes into some kind of longer-term planning.
[00:28:29]
Nacho: Absolutely. Yeah. We started with this because why we need direction. We need direction because if not, teams are working towards optimizing too many different things that at the end is a little bit of improvement in each direction. And to be honest, I have been there. I have been there when I started my career, suddenly we didn't have a real strategy and I was working in one of those teams optimizing something that had very little impact. I actually...I can show some stories about that. But on the flipside, when you have a strategy, you are basically able to make that position that we just discussed. If you are not having a strategy, you are not deciding how to win and someone else is figuring out how to win. And eventually you will optimize the shiny things that you will see here and there. But eventually you will have competitors that are outcompeting you for certain issues, for certain things that the customers value.
That's why I think it's super, super, mega important to have a strategy. And eventually at the end of the day, the efforts you are making build on top of each other when you have a strategy rather than going in opposite directions.
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Sohrab: Yeah. I fully agree. And I think one of the misconceptions that a lot of people have is that agility or innovation is all about reacting. You see that something happened and then you have to react. If I look at the best companies, if I look at the best products, if I look at the best entrepreneurs, none of them have been reacting. They understand that there are certain trends. There is this great story of Jeff Bezos looking at the growth of the internet but then making a decision, "Okay, I'm going to build something that's going to benefit from that growth whether it's 2 years down the road or 10 years down the road." That's where the long-term thinking comes in. I don't know but I know that this growth can result in many new business opportunities. And then this gives them direction. It didn't tell them, "We're going to go into this category and this category and this category." Initially it was just books. But you need to make decisions. And decisions...I always tell to the teams that I work with. If a decision is completely based on data, you don't need a decision.
Decisions are always taken in uncertainty. They can be data informed, trend informed but decisions always mean you are positioning yourself. And the more consistent you are positioning yourself, doesn't matter how many years into the future, I think the better your outcomes can be.
[00:31:07]
Nacho: Exactly. Yeah, I think maybe going back to that, I think that the way to frame it is not actually these kind of...taking any shiny object you see out there. It's like you think big but smart small and learn. Because also can happen that your strategy is completely wrong. This is what you're saying. You are making a hypothesis, you are making a bet for the future and you may be wrong. You want to smart small, learn and see if you need to pivot but that doesn't mean that you don't have [inaudible 00:31:35] hypothesis.
[00:31:36]
Sohrab: Exactly. You still should have that longer term plan. Now we talked about the insights phase, about the selection phase which is ultimately about positioning yourself in that field. What are the steps after that that you usually run? And I guess you also do this in a coaching role with many of these organizations to find their product direction and then move from there into more informed discovery and delivery.
[00:32:06]
Nacho: Absolutely, yeah, yeah. The thing that...these two phases about collecting the insights and making the selection are the hardest one, so that hard strategy. Then what they are going to do is to put goals on assumptions which is exactly what they discuss. You need to make your hypothesis. You say, "Hey, I have this insight that this might be a good opportunity. There is some data backing it but also, we are making an assumption of the future. We select that this is a good opportunity given the position we want to create. Then we need to see how we measure success." We'll say, "Hey, given what we know, our hypothesis that this is how big this can get and these are the risks that we face." And this risk part is kind of a... of course is part of the hypothesis at the end of the day but it's quite important because, as you said, this is what we'll fit into discovery afterwards. If you as a leader are saying, "Hey, these are the assumptions." Imagine a team that may not be part of this decision. If you are being very clear and transparent on, "Hey, this is why I believe this is going to be big or this big, then they can act on that and they can do the discovery to prove this is right or wrong."
That's the third phase, constantly making these hypotheses and coming up with measures of success. And the final one is what I call synthesis which is you need to make sure that the strategy is actionable. Usually having this 50-page document is useful. It's useful for all the processes we discussed in the previous parts but now you need to be able to communicate it. And the way frame it is repeat it in three minutes in every OKR presentation or any all hands or whatever. You need to have a very clear synthesis that people who probably heard more about it can actually keep fresh in their minds and connect back to the whole thing. I usually use this...the Peter's model saying, "Hey, this is what I'm trying to achieve, this is the measure of success and this is why it's important." Very, very simple diagram expressing the strategy in one chart.
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Sohrab: Yeah. Now Nacho, initially you mentioned this is addressed to product leaders. Now when we get into beyond stage...phase one insights and then the selection phase, get into the assumptions, the mapping, the synthesis ultimately, my guess is it is some kind of a "handover" from the product lead to the product managers. To what extent would you recommend to your product leaders to involve the product managers in the insights and the selection phase?
[00:34:42]
Nacho: Yeah, so maybe answering more broadly your question, I have an article about it. I call it the bottom up versus top-down tension. And actually, I have diagram in this way. You have a triangle going down which is around your strategic work towards more and more execution and the one from more execution to strategic. And the influence from the team is greater of course on the OKRs versus execution and gets cleaner through strategy and of course for leaders it's the opposite. No one is not involved in any organization. For example, as a product leader, you want the OKRs work to be mostly team based because they have more concrete insights and they know how much they can move the levels and they are more committed if they created it but you need to have a say in that because you need to kind of direct them and get in with context.
On the strategy I will say maybe it's the opposite. You want to be informed, especially on the insights coming from the teams. You want to involve especially your more senior people or for example if you have different products there might be products that are on [inaudible 00:35:47] or that need to go a bit more. You want to collect the insights there. You want to involve this in this way. And then on the selection phase, you are more on the...kind of consulting them [inaudible 00:35:59] You have more deciding and sitting with them, "Hey, how does this feel?" And trying to make sure that they are committed to it and they are kind of behind it in a way.
And also, by the way the same is true for all the stakeholders because we're talking about the product team but the product leader is not creating the strategy in isolation. You need to work with your marketing peers, you need to work with your sales, your operations, whoever in the organization. And your strategy needs to consider their concerns and they need to buy in your strategy so the sooner you involve them, the better the outcome of this [inaudible 00:36:30] is.
[00:36:31]
Sohrab: Yeah. Probably also the technology lead.
[00:36:34]
Nacho: Yeah, absolutely, yeah. By the way, this is an important point because I usually say that the leadership trio is responsible for this direction. Usually, the product lead has a stronger need on...as for example...let's use an opposite example. You say, "Hey, we are all...we all need to contribute on the architecture of the system because we need to ensure growth for the future but the tech lead or the tech manager, whoever it is, should have a higher responsibility." On the strategy, it's the opposite. The product lead probably has more responsibility but he needs to have the buy in and a close collaboration with design and tech.
[00:37:08]
Sohrab: Yeah, it's usually that product trio. Design, tech and product. You mentioned your podcast and also the article top down and bottom up. We will make sure that we link both of them to the episode when we post it on YouTube and into our website so that people that are curious about it can easier find those things. Now Nacho, when we talk about this product direction, you move from there...and we talked about it. It's not sequential but still, by sequential, we don't mean that product direction is done once you hand it over to discovery. And discovery is not done once you hand it over to delivery. They're still going on. Now in which cycles do you recommend to product leaders or the trio to really revisit the direction that they have provided and maybe even cocreated with the teams? And based on which insights would you recommend a higher frequency in that refinement or in that review?
[00:38:13]
Nacho: That's a great point. That's a great point. First of all, depending on the maturity of...I was going to say the company but in some companies it's actually the product, so the maturity of a product because it can be a very new product in an older company. Depending on the maturity of a product, you can set longer or shorter cycles. The newer the product, the shorter the cycle starting on, "Hey, I don't have product market fit." Probably you are just iterating to get product market fit. Once you have product market fit, you probably can do a 6 months close stage and if you have a very kind of consolidated product, you can aim for 18 months or something like that.
That's from the strategy perspective. There is a very natural cycle which is the quarterly cycle, especially if you are doing OKRs. Not necessarily OKRs but any sort of short-term objectives. That's a natural cycle to say, "Hey, are we hitting our OKRs? Yes, or no? What does that mean or what do we learn that shall impact our roadmap and our strategy?" And one thing that you mentioned that I didn't say is that usually strategy is never done not because you are changing all the time but because you are refining it all the time. You are making it a bit more clear or the positioning or the results you have, you incorporate them. It's a refining process. This quarterly cycle is very natural to do so.
And the final thing...and I actually put this in the book as well. I have kind of several feedback loops, especially if you're putting out a new strategy. For example, you can have internal surveys to different groups when you do the communication of the strategy. Then you will have teams that are doing discovery on the topics of your strategy that you can have results as early as one month or whatever. Depending on the cycle and the speed you have in discovery, this can vary but one month can be a good result. And then the quarterly cycle is the one that's kind of...can carry over for longer.
[00:40:01]
Sohrab: Yeah. No, I think that quarterly cycle, no matter whether you're using OKRs or not, is a quite good one because...especially if you're looking at directional decisions, you wouldn't make them ad hoc. You need to have...this really needs to be informed not necessarily by a huge amount of data but maybe even a huge amount of anecdotes. You have to have had some conversations with customers. You have to have had...to see does it...where does it work, where does it lack to work etc.
You mentioned the term product market fit. And I fully agree. This is one of the first things that we need to make sure of. Problem solution fit, then product market fit. There are products where you get to product market fit which is building products that customers love but don't work for the business. And Marty always says...and I love this. You need to build products that customers love and work for the business. Where will you put this and work for the business in the creation of product direction and everything that we just talked about?
[00:41:09]
Nacho: That's a good question because I think that...I think that this is changing but [crosstalk 00:41:15] No, but I was going to say that we have a lot of free money available for so many years and that created these startups that are more focused on kind of user base growth than the monetization. We can discuss if it was possible or not possible. That's not what I'm trying to get into. But at the end of the day, they always have basis hypothesis behind it. Let's use Twitter as an ideal example, a very old one so we don't get into trouble. But they always had this, "Hey, we can monetize this audience through..." It can be should it be a subscription, should it be marketing [crosstalk 00:41:55] advertising machine. This sort of hypothesis has always been there. What I try to coach teams to do is to try to validate both sides of their policies. It's okay if you're prioritizing one to say, "Hey, we need to first find if there will be any user because if there is no user, there will not be any advertisement."
But as soon as you have the user, you need to test advertising [inaudible 00:42:19] hypothesis and the business model is not fully fledged, you still need to validate that the hypothesis is true. I think that's the way I...and actually, to be honest, I wouldn't call that there is product market fit until the product is working for the business. Again, that's maybe controversial with the past experiences with the startups growing a lot. But the way I see it is that, as you said, a product is a product when it works for the user and the business.
[00:42:47]
Sohrab: And I need to add to your point. Yes, I think in startups that was very common and now the ship is turning and they need to become profitable or at least show a path to profitability but I've also seen this in larger organizations where they have an innovation department which, because of the funding that they get, very similar to startups that get cheap money, is not at all focused on making it work for the business but is just thinking about the product market fit. Including that into product market fit I think is an excellent idea but it needs to be obvious to everyone out there.
Now out of curiosity, whose job is that in your world? Is it the product manager? Is it the product lead? Is it out of nowhere?
[00:43:33]
Nacho: You mentioned about finding product market fit or which shop?
[00:43:36]
Sohrab: Making it work for the business and in our definition now, part of product market fit.
[00:43:42]
Nacho: Perfect. Yeah, I think it's...let's imagine this. A new team working a new product, hopefully small enough so you don't scale before you find the product market fit. Usually there is one product hat. You can call it product manager or product lead. It's the same because probably it's irrelevant because they are making...they are mostly executing because at this stage, you are not doing kind of super big strategy decisions because as we said, until you have product market fit, it's hard to plan for six months. But when you are in this stage, you are making very bold decisions [inaudible 00:44:17] product lead but at the end of the day, it's a very execution role. That's my take.
[00:44:23]
Sohrab: Yeah. No, I like that. For me it's always similar to a startup CEO. You don't even consider yourself as some kind of a CEO because you're so deep into the trenches, rightfully so, until you make the product work and the company work. And then maybe you hire a few other people but until then, you're very, very deep into the trenches.
We've looked at this whole concept of product direction, product discovery, product delivery, how they then again inform each other. You mentioned the three months OKR cycle or even if you don't use OKRs, that quarterly cycle is good for making refinement decisions. Now when you see...before I ask this question, another question. We talked about what do you start with and that immediately went into the actionable work that you do with a product leader. But getting a company to wanting to do this, so that shift in mindset, that's a different beast. Is that something where you also engage or are you someone that is usually brought in after all of that is settled and the organization knows, "All right. We need a good product operating model as Marty describes it." And you basically help them build that model and especially teach the skills to do the direction, discovery and delivery piece?
[00:45:55]
Nacho: It's a good question. I think that the way I see it is that if the leaders of an organization, even the product leader or some higher up leadership, did not realize that they need to change...it's very hard that they will hire anyone to help them change. The way I see it is that they need to have some awareness. Maybe the awareness is different. Maybe they don't know that they want a product led operating model. Maybe it's that they are seeing that, for example most of their initiatives are failing or for example, they are stuck and they are not delivering anything. That's why they start bringing people and that's...I would say that my role is trying to show them the product operating model and how it can be different and the results we can get so they can say, "This is the model we need to opt in for."
[00:46:46]
Sohrab: Yeah. Now you're giving me an excellent segue because that was a question I actually wanted to ask before this one. It's the results. Any business is interested in results. And I attended...you and I were talking about this before. I attended Marty Cagan's transform workshop a few months ago. It was in July so almost a month and a half ago. And he spends a lot of time, which I believe is worth it, on what will be different after you've transformed. Can you share a few of those stories that you've experienced maybe throughout the time when you were still part of an organization but also afterwards, after you started coaching organizations? Where did you realize, "Hey, we've successfully made that transition. We are now able to do things that we were not able to do before and what those things were."
[00:47:42]
Nacho: Yeah, absolutely, absolutely. And that goes back to what I was saying for...that companies have different maturity levels. But I can talk about different examples and this might help. At the end of the day, it all boils down to they are doing work on [inaudible 00:47:58] software because most of these companies are coming from what Marty Cagan calls the traditional IT model. They are coming from investing in a software team that is not delivering the results they expect. That's kind of the underlying situation.
The problem with that in measuring results is that they usually don't have a good [inaudible 00:48:20] to compare it with because they are not even...some of these companies are not even measuring these results so they are saying, "Hey, we'll invest this money and we'll kind of...we say this is what we want to build and the business guys say hey, please build X." They build X and they are not sure what the reason was and they are not sure [inaudible 00:48:34] from it. That's a [inaudible 00:48:36] problem.
The way I see the benefits is that first of all, is it starting to understand that value. For the first layer for me of the [inaudible 00:48:46] the first maturity level is that you have a hypothesis for anything that you are building and when you deliver it, you can measure the result that it has. This is the very first basic station. I think it comes from kind of the very basic of delivery and measuring and being able to optimize what you deliver.
The second stage is that most of the time 70% of the things we build fail and they are kind of...I have an article on this but there are many companies that publish this very openly and how many ideas don't make any business impact. This is where the discovery comes into place. [inaudible 00:49:19] is that what you will able to see is that you have a pipeline that was never visible before because you will say, "Hey, this enters the pipelines and this [inaudible 00:49:26]" But we'll put a layer in front of that saying, "What enters the pipeline, we will do an assessment, we will do experimentation and we will discover things that are not valuable." You don't waste money on building those. That's the second piece.
[00:49:38]
Sohrab: Absolutely. One thing, one thing to add. One of the quotes that always helps me here is every feature is just a potential solution. We don't know yet whether it will be yet a solution until we have...maybe there are some ways to experiment it up front but at the latest when we built it, we have to test whether it is solving the problem that we intend it to solve. Every feature, the potential solution. Sorry. Continue please.
[00:50:04]
Nacho: No, that's perfect. And the third layer is what we discussed about the positioning. It is the hardest to actually measure because there are no ways to compare the results of having direction versus not having direction because as I say, you are making progress in different places. But you cannot compare because they don't have a direction to start with. When you're having a direction, [inaudible 00:50:27] that you will have all teams working on the thing you want to...the thing that you want the most versus teams focusing on many different layers. And this is especially true for larger organizations. This is something that you will not tell a startup founder. But if you stack these three [inaudible 00:50:43] visualize everything that you're building [inaudible 00:50:46] having, discover things that will not add value and focus on the right things, this is super powerful and this is to me the value of this [inaudible 00:50:54] of the operation model through action, discovery and delivery.
[00:50:58]
Sohrab: Yeah. Now this also connects, and we were talking about this earlier, to what Marty Cagan now is mentioning and he's going to bring it up in his new book coming next year in March or something like that, "Transform". He talks about how to build which is basically delivery. You need to become better at how to build stuff and continuous delivery, all of that is part of that. How to solve problems which is discovery. And ultimately...this is then their direction piece. How to decide which problems to solve. And I think if you managed to do all of that and create clarity for everyone around these three steps plus then direction in terms of, "Okay, these are the problems that we are focusing on." Could be problems of a certain customer group or a shared problem across multiple customer groups etc. You allow the product managers, the product owners so much better to focus their capacity, their energy, their passion on the stuff that actually is going to then advance the organization.
And doing that means you have to make decisions as a product leader which...
[00:52:08]
Nacho: That's a very good point because I see so many product leaders...because they are kind of calling and saying, "Hey, I want more empowered teams." I say, "Hey, it's your fault because you're not giving them the context anymore." It's very easy to say, "Hey, you need to empower. You need to decide what to build." And they have no idea because they don't know what problems you want to solve. You need to provide clarity. And this is kind of the mismatch between hey, you want them to be empowered but they are not doing anything. It's because you are not giving clarity on what you are expecting from them. I think that the direction part is a cornerstone of empowerment.
[00:52:41]
Sohrab: Yeah. The direction part definitely is a cornerstone. The other part is that you teach the competencies which then goes into the book that Petra wrote. All of these things first and foremost enable the teams to be able to take decisions and then you give them the authority which is the empowerment to take those decisions. And without the first elements, the direction, the competencies, give them all the power. They won't know what to do with it.
[00:53:07]
Nacho: Exactly. Exactly.
[00:53:09]
Sohrab: Nacho, this was an excellent conversation. I learned a lot. I like the trilogy that you have of direction, discovery and delivery. I think there's a lot of potential out there because looking at the organizations that I've worked with, this is really one of the big problems. What is the role of leadership in the future be it product leadership, technical leadership, etc. I think the concepts that you and I discussed can be used outside of the product domain. Not only outside of software but also completely outside of the product domain for other areas. Obviously, a few adjustments that need to be made. And I'm very much looking forward to reading your book. I mentioned to you earlier, I haven't read it yet. It's on my list. I'm going to get it. And the next I see...
[00:53:58]
Nacho: And I hope I bump into you.
[00:53:59]
Sohrab: Yeah. And the next time we see each other, you're going to sign that copy for me.
[00:54:04]
Nacho: Sounds good, sounds good.
[00:54:05]
Sohrab: All right. Nacho, thank you so much for stopping by and sharing your insights with me and our community.
[00:54:12]
Nacho: I really enjoyed the conversation. Thank you for coming.
