Do you get the sense that something is wrong with your business, but you can’t quite put your finger on what it is?
Do you need a different approach to doing business but don’t know how to go about doing it?
Are you losing market share to competitors or is the competitive advantage you once had now at risk?
Are your best people walking out the door? Perhaps both are happening at the same time.
If your organization is in this situation, you’ve probably reached the conclusion that you need to change. If you’ve reached that conclusion, you need to understand what’s causing the need to change.
The world is changing rapidly, and there are a lot of forces that can stand in the way of you effectively responding to those changes.
Product transformations can help you respond to and take advantage of those changes. If you approach the transformation right, you can use those forces to focus on your customers, grow your business, and keep the best talent.
Product transformations are difficult, and they are not quick, but when done right, they can bring success to your business.
Forces driving transformations
The pace of change is increasing faster than it ever has. There are at least three primary forces driving that change: the move to remote work, new technologies, and customer self service.
Let’s look at each of these forces.
1. The move to remote work
A global pandemic sped the move to remote work by years, if not decades. According to Forbes, while nearly half of US companies offered remote work in 2019, that number jumped to nearly 59% in 2021.
While some would like the “good old days” back where knowledge workers trudged into an office every day, even if they didn’t need to, we’re not going back to exactly that.
Companies will see a new pattern for working that is more distributed than it was. That affects how your teams work with each other, and the products they will use.
2. New technologies
In 2021, NFTs went from a novel way to get money for jpegs to an entirely new model for making money. The NFT’s themselves result from a force driving change: the underlying technology of block chain.
In addition, machine learning and AI, while perhaps not immediately living up to the hype, are driving massive change as well.
The new technology driven trends of decentralization, artificial intelligence, and edge computing offer promising opportunities for growth and a potential for social change.
3. Expectations of an excellent experience
Customers expect more. They want their interactions with their banks and insurance companies to match the experience with their favorite iPhone app. (Which we can assure you is probably not their mobile banking apps.)
In a word, customers want their interactions with you to be easy and feel frictionless. People are no longer willing to put up with something that’s clunky to use when they have a choice to go elsewhere.
These options come from customer-focused startups that offer a better experience to accomplish those mundane experiences like buying insurance (lemonade.com) or help b2b companies improve their approach to banking (blend.com).
I’m sure none of this is a surprise to you. The winners emerging in nearly every industry are being powered by technology.
Benefits from addressing those forces
The forces discussed above can act as headwinds that prevent your organization from making headway in your market.
They can also be waves you can surf to realize greater success. But to succeed, you need a different model. Today’s world demands an alternative management approach that transforms “change” from a risk into an asset. The key is changing how your business operates in order to move with those forces. Product transformations are a way to change your business and put these forces of change to use for you.
Here’s a look at the benefits you can get from properly addressing those forces of change through a product transformation.
Achieve sustainable growth
Hyper-growth start-ups are driving established companies out of the Fortune 500 and regularly disrupting entire industries. When your organization operates in a competitive industry, you face threats from more nimble competitors who threaten to take market share away by solving customer’s problems in a much more valuable way.
You need to beat those competitors back to keep your existing customers and attract new customers.
A product transformation helps you grow in both ways. It helps you improve the value that customers get from your product, making it more appealing to your existing customers to continue to use your product and also sustain growth.
A unique differentiator of a Product Transformation is that you can get to valuable business outcomes sooner. When roughly 37% of digital transformations do not achieve their desired financial results , a product transformation places business value at the center, measuring success every step of the way.
Accelerate Business Value
Speed requires focus, leadership and quick, smart decision making that aligns with your bigger picture strategy. Speed and autonomy are synonymous.
But in order to give autonomy and freedom to discover customer problems and business value, you need a leader who has a deep understanding of your business and the customer. That leader also needs to inspire and lead a team to build amazing solutions.
Product managers act as those leaders at most of the top companies in the world. Frankly, speed is table stakes in today’s world.
Focus on the customer
Companies get caught up in the forces described above because they don’t have clear alignment on how they decide what they will and will not do.
Product transformations bring alignment by introducing a relentless focus on solving customer problems while also achieving business results.
A relentless customer focus changes how you make decisions. It’s no longer a matter of picking the projects you can justify in our budgeting process. Instead, you’re determining what problems you solve for your customers, and how you can do that in a way that is good for your business.
That means you know how to decide what you will, and what you will not do, all based on its impact to your customers.
When you decide in this way, you reduce the things you’re trying to do and give your teams the space they need to build the right products in the right way.
Customer focus also aids software enabled organizations. These organizations do not sell software per se but use it to enable creating, selling, and delivering their actual product. Product teams in this scenario still need to determine what products and features to build and not build based on their impact on customers.
The benefit to using that type of decision criteria is product teams have a way of picking through conflicting feedback from inside and outside the company. Product managers now have a strategic guiding principle to choose something that positively affects the customer and benefits the business – versus prioritizing a stakeholder’s pet project. Teams can also go with the items that add benefits to their customers.
Attract and keep top talent
At Pathfinder, we get so excited about the impact great, modern product management has on employee satisfaction! We see this in every single transformation we’ve done.
On average, in the first 6 months of product transformations, we have seen employee work satisfaction scores improve by a 30% jump.
It makes sense… people, especially engineers, want to use their skills fully and want to have a significant impact on the business. They also want to know how their organization measures their success.
A good product strategy and product operating model provides this! Both elements make it easier to keep the most talented people that work for you now and attract others you want to work for you in the future.
People want to work for a company doing a product transformation because when they work on an empowered team, they get autonomy, mastery and purpose, as described by Daniel Pink.
People see more meaning in being accountable for growing the business and business outcomes rather than being accountable for delivering what people ask for.
Really talented designers and engineers go beyond working with cool tech and want to know why customers care and how it helps the company to move forward. As Marty Cagan said, “if you’re just using your engineers to code, you’re only getting about half their value.”
Situations where product transformations make sense
Organizations that are in highly competitive markets are in a good position to do product transformations.
These organizations realize the need to differentiate themselves in order to stand out from their competitors.
Take automotive insurance companies – that is a highly competitive space so when an organization started on an agile transformation, they realized that they needed a product focus in order to really be competitive. Just delivering functionality faster was not going to differentiate themselves, they had to deliver the right functionality to differentiate themselves from other competitors.
If you’re in a niche market, you may not need to do a product transformation.
Or you may not need a product transformation if you already operate in a product manner (that one may go without saying).
Do you need a product transformation?
If those forces sound familiar and those benefits sound appealing, consider a product transformation.
If you think that may be the case, ask yourself the following questions.
- What business need to innovate to grow or at risk of being disruptoed?
- What businesses are struggling to get new products to market or struggle with adoption?
Business Transformation Risks and Issues
- What businesses are stugglring to operate as a digital busines or moving too slow?
- Where are product teams feeling disconnected from their busotners, users, and/or business?
Product Management Skill Gaps
- What teams are you seeing struggle to operate as a product team?
- Where are you seeing misalignment between your team and the business teams?
Talent Retention & Recruiting Challenges
- Where are you having issues keeping engineer, design and product talent?
- What teams are struggling to recruit the talent required to execute the product strategy?
Popular Retailer Discovers Their Need for a Product-Focus
COVID-19 drove people to fully digital products and services – also driving up the expectations of a frictionless experience. According to a recent Amplitude and Harvard Business Review survey, 78% of consumers have formed lasting habits during the pandemic and their digital adoption has accelerated and will never return to previous levels. A popular retailer saw the demand for their products and digital services increase exponentially, but being in a hyper-competitive space, they have been at the #2 spot in the U.S. market. They were delivering faster with their agile transformation, but realized something was still missing the mark with consumers. Today, two Pathfinder Product Coaches are partnering with senior leadership and teams to focus the company and empower product teams around a consumer-centric strategy, and redefining success with the practice of setting objectives and key results (OKRs), or outcome-oriented metrics.