Your company can enjoy great success fueled by little more than inspiration. A single insight, perhaps sparked by the founder’s direct experience, can drive the first wave of growth. Sooner or later, you recognize the need for experienced leadership and hire a new crop of managers to oversee the next phase. The company chugs along.
an upstart competitor introduces an innovation that leapfrogs your offering… the market you helped create begins to mature… you have too many projects in the portfolio and no way to prioritize them… products hang around too long without a disciplined process for killing those that don’t meet goals or match strategy.
At this point, I often get calls for help from VPs of strategy, development, or marketing. Something has gone off track—or, more accurately, onto too many tracks. The laser focus that propelled the organization to initial success has degenerated into chaos. Your company may be running well, but it’s headed here, there, and everywhere like a well-maintained train without a clear itinerary.
Here’s how to avoid the chaos that sometimes follows a fast, successful start—and get on the right track for continued growth.
That was then, this is now
Things were easy when you had a manageable number of customers you visited regularly. You could intimately observe the obstacles they faced—or perhaps you had faced those same obstacles yourself. Crafting solutions could be an organic, almost subconscious process.
Many things change as a company grows, rendering obsolete this simple, immersive approach to understanding customers and defining products:
- As new staff comes on board, the people creating products may have no direct experience within the customer’s world.
- Company culture may fall out of sync with what’s needed for the next stage of growth (e.g., too much or not enough emphasis on risk-taking).
- Team members may have divergent views of what the customer faces.
- Strategy may be driven by your past vision of the market and customers—not the world they live in now, or will inhabit in the future.
- You may rely on what customers say about the obstacles they face, rather than digging deeper with methods that get beyond their spoken needs.
- You may still be thinking about creating a limited number of products instead of a product portfolio
Three keys to successful evolution
Entrepreneurial leadership can compensate for a lack of process—to a point. Eventually, though, product development processes must evolve just as leadership and operations do. Here are three important things you can do to ensure that evolution happens in a way that contributes to continued growth and success:
1. Choose projects based on how valuable they will be to customers. This is the key to avoiding an unsustainable product portfolio. There are a number of ways to quantify customer value and use it to determine which products to include in the product mix, such as Kano analysis. No matter what method you use, the first step is to change your decision-making process. You don’t want to pick a product direction based on the persuasiveness of the product manager or your largest customer. Nor do you want to rely on financial projections, which are a notoriously unreliable predictor of product success. Shifting to customer value as a filter for new ideas gives you a reliable method to evaluate each product before you commit resources to it—and to kill it if it doesn’t meet your requirements for contributing to customer value.
2. Use customer value as a yardstick to measure success. A corollary to #1, this involves creating metrics around customer value. You may need to turn your current approach to measuring success on its head. You should be measuring the underlying factors that cause success or failure rather than the successes or failures themselves. You need to know what actions to take to create a product that addresses the customer’s need—not where you went wrong after the fact.
3. Create cross functional teams. Startups have built-in cross functional teams: a few managers may oversee the entire organization; a single person may run research, development, quality control, and manufacturing. It’s natural to specialize as the company grows. Just make sure that specialization doesn’t lead to functional silos. In the area of product definition, it’s particularly important to make a place at the table for all functions, from sales and marketing to distribution and pricing. Product development doesn’t start after the product is defined; it should begin the moment an idea emerges, with input from all functional areas.
Discipline is not a dirty word
I can’t promise that doing these three things will be easy. You’ll need to be prepared for resistance. The people who joined the company may have done so partly because they enjoy being involved with fast-growing, freewheeling organizations. They may fear and oppose any process. Or you may have been through a pendulum swing from no process to too much process, leaving everyone skeptical of the value of discipline.
The real question is whether your processes—whatever they look like—are working. Are you achieving your goals? Is your development organization capable of pursuing the new markets dictated by your strategy? Do you have the right people in place? Is your risk structure right? Do you have a culture that allows people to fail?
If you can answer yes to those questions, you’re on track for continued growth. Process and discipline don’t have to mean the end of growth—in fact, they’re the key to your next big success.