432: Creating or improving the product-led organization – with Paul Ortchanian

How organizations can empower product managers

Today we are talking about what a product-led organization is, barriers that can prevent an organization from being product-led, and actions to create the product-led organization.

Our guest is Paul Ortchanian, a problem-solver by nature and founder of Bain Public. He has a great deal of experience that has helped him be well-rounded in product management. Paul acquired the breadth of experience through his leadership roles at San Francisco Bay Area startups and high-growth companies. He helps rapidly scaling early-stage startups craft their Product Strategy and everything related to it. He also helps middle market and scrappy companies generate new product strategies for significant, sustainable growth. 

Summary of some concepts discussed for product managers [2:35] What does it mean to be a product-led organization?

When I was interviewing product managers, I realized most of them had spent only a year or a year an half at each of several organizations. I eventually got fired as a product manager. I wondered why product managers last such a short time at each organization.

If the leadership team doesn’t have a good understanding of how to engage with a product manager and what to expect from them, then any reason is enough reason to move on and find someone else. The second you have friction with the IT team or the engineering team, you’re going to be in trouble.

Product managers often end up in organizations where they’re not being empowered. The leadership team is not giving them the guidance, process, tools, and support needed to do product management the way we all want to do it. Often, product managers move from one company to the other seeking the elusive product-led organization. The product-led organization comes from the leadership team creating space for product managers to do their jobs right.

[4:32] Does empowering product managers require an organization to be structured around product?

Not really. It comes down to making sure there is a product leadership team. Usually that’s the same as the regular leadership team. Product managers have to pitch initiatives to the leadership team, which makes decision on what to put their money toward.

I noticed when I left San Francisco and went to cities like New York City, Montreal, and London, that these cities don’t have the heritage of product management. Leadership teams have often worked in service organizations or organizations that don’t have digital products, so they don’t know how to engage with a product manager. It’s not uncommon to realize your chief sales officer doesn’t understand that everything has to go through the product manager for prioritization, and they’ll just go straight to the CEO or engineers.

As a product manager, you’ll feel like you have to create order within all of this. You might feel stuck managing your product while also trying to train the leadership team to understand how to work with you and adopt processes and correct behaviors. The job of a product manager is hard enough without having to establish a process. If you try to put in a process, often you get fired for not doing your job.

A lot of product managers either accept they’re in the wrong type of organization that isn’t product-led or they decide to leave. As a product manager, you want to be in an organization where the leadership team is empowering product managers.

[9:21] What have you seen are some of the issues that make it difficult to create a product-led organization?

Often there’s a lack of awareness of product management. Often different teams don’t have a collective understanding of how to work with a product team. Road mapping is a collaborative effort, but the product, sales, and marketing teams might all be working in different ways. Awareness at the leadership level needs to be there for teams to understand they’re not working with product managers in the most efficient way and they need to fix that.

Often product managers think they’re doing a great job creating value for the customer, but the business might not be getting as much value. For example, the marketing team might not support the features that the product team has just delivered through the engineers. You need to make sure there is buy-in from all stakeholders.

I find that companies need a third party to come in and ask, “How do you hire and fire your product managers?” I want to hear it from marketing, sales, the CEO, and the CFO. Everyone needs to agree with how they’re going to engage with product managers and teams. You need to make sure there is a process and tools in place that people agree on. As a product manager, you’re the glue of the organization that is supposed to tie all these different groups together, but you can’t force them to engage and work with you if they don’t think it’s part of their job definition to engage with you. That agreement needs to come from the top down.

[12:59] Where have you seen product teams getting pushed out of cross-functional collaboration?

Often the sales team does not want the product team to be part of customer meetings. The sales team has a lot of anecdotes from customers, but if the product team is not allowed to have a conversation with those customers, how are they going to learn? I’ve seen situations when the sales team thinks they’re running a service organization. They don’t say no. They say yes to everything the customer asks. Soon the product is just an extension of a service offering where anything the customer wants the customer gets, and value isn’t being created.

We worked with one company in the AI space. They had a team working on AI algorithms, and the sales team would send any situation a customer encountered to the team, which would come up with an algorithm. It ended up being a very service-oriented business.

In this situation, I recommend the sales team start offering discounts. They can say, “I’m sorry, but this feature currently isn’t in our product, but it is on our roadmap. It’s going to be ready in a year. If you really want to work with us, we’re willing to give you a 30% discount on the product. You can use the product without the feature, and within a year it will be there. If you don’t want to wait that long, we have a professional services team that could custom-build the feature, but if we do that you will not benefit from the support-and-upgrade gravy train. If we build this feature for you, it will cost 10 times the price. We’re willing to give you engineering credits for $300,000, but the total cost is $ 1 million.”

Tell the sales team they can sell the product as-is with a rebate or they can sell professional services and give some credits away but for 10 times the price. They’ll realize there’s no such thing as saying yes. There are only options to offer. If the client is crazy enough to pay 10 times the price, that’s good for the company as well.

This method also allows the product team to see the motivations of the customer. They might say a feature is a must-have, but when the sales team throws in a discount, it becomes a wishlist item.

[19:55] What steps can a Product Leader (VP or CPO) take to help create a product-led organization?

I ask the product team to go to leadership and ask them for the deck that they’re been preparing quarterly for the board. Any VC-backed startup has a deck they need to show on a quarterly basis to the board members. That’s the high-level strategy for the company. That’s everything product managers need to know in order to say yes or no to whatever the sales or marketing team forces on them. It’s a forecast of the strategy.

We do a six-six-six exercise, where we ask leaders what features they’re going to build in the next six weeks, six months, and six years. You can’t express the features you’re going to build in six years as features, but you can express strategy, tactics, and metrics. These are the kinds of things in that deck.

If the leadership team is closed to the idea of the product team seeing that deck, I would say get away and go somewhere else. That’s not the type of environment that will allow the product team to thrive. If they are willing to share it, that’s the first step toward an understanding. Because those decks are created on a quarterly basis, you can go back to the leadership team and ask for the latest version of the deck to see what has changed. You can also use that deck to communicate strategy to sales and marketing teams.

Action Guide: Put the information Paul shared into action now. Click here to download the Action Guide. Useful links:

• Learn more about Bain Public
• Read the article “How to Align Stakeholders from Different Departments on a Product Roadmap. Speaking with Paul Ortchanian, CEO, Bain Public”
• Get the free ebook Essential Ingredients to Reach Your Product Goals
• Connect with Paul on LinkedIn

Innovation Quote

“Work should be organized, things should be managed, but people can only be encouraged, inspired, and led.” – Paul Ortchanian

Thanks!

Thank you for taking the journey to product mastery and learning with me from the successes and failures of product innovators, managers, and developers. If you enjoyed the discussion, help out a fellow product manager by sharing it using the social media buttons you see below.