How do you navigate and overcome product management challenges for lasting growth?
In his latest essay for Aspire, Craig Strong lays out the common pitfalls of the project mindset. He offers ideas for how leaders can deliver growth using the principles of product leadership and active portfolio management.
As someone who’s deeply immersed in helping companies become more product-driven and customer-centric, I get to observe a number of common patterns across all industries.
Regardless of their size, it seems all organisations find themselves grappling with an abundance of ideas and limited capacity.
Leaders will often say, “We would love to innovate on net new ideas, but we don’t have the capacity and need to get our core business products sorted first.’’
So, how can product leaders overcome this fundamental challenge?
The challenge of finite capacity
We should think of the capacity challenge as a symptom rather than a cause.
As a product leader, the question you need to ask is how your company prioritises initiatives and allocates resources for continuous adaptation of your product portfolio.
This adaptation involves a strategic focus on delivering the full potential of the portfolio in terms of customer impact, growth, and critical return on investment (ROI).
Active portfolio management
For many of the companies I see, the single biggest cause of wasted or lost opportunities for new growth is poor portfolio management.
Most companies know they need to do more and make better prioritisation decisions but don’t have the capability to do so.
Larger organisations are generally very poor at knowing what projects, products, services, or platforms are performing well or not and which need to be killed or retired. Often, they realise this too late, well to the point of diminishing returns.
Rise of the Zombies
Poorly performing internal products can live on in spite of having no clear ownership or dependencies. These ‘zombies’ contribute to suboptimal resource allocation and diminished returns.
The inability to discern which products to kill, or retire, leads to an accumulation of underperforming products, hindering the overall performance of your portfolio.
Transforming your portfolio for future growth
Craig Strong, Aspire Expert & Global Practice Leader at Amazon Web Services (AWS)
In pursuing growth and innovation, you need to focus on developing capabilities for Active Portfolio Management, ensuring transparency and accountability. This means being able to provide leaders with data, having the confidence to make decisions objectively, and putting strategic goals and ROI at the heart of the process.
“Culture informs mechanisms, and mechanisms inform culture.”
But investing in data, platforms, and tools won't deliver results alone. In order to be successful, you need to develop a culture around this approach.
This means building key capabilities across the product organisation, embedding new ways of working, and creating alignment at the leadership level around the benefits these ways of working can deliver.
Overcoming short-term thinking
A culture that prioritises short-term achievement creates a disconnect between actions and their long-term consequences.
This way of working rewards the timely and budgeted release of short-term projects while too often neglecting the continuous effective management of product performance and impact.
Project Management Offices (PMOs) monitor delivery time, cost and scope, but not their ongoing business impact top/bottom line performance.
If your organisational governance and reward systems are structured around projects, it makes it challenging to instil a long-term performance incentive. It abstracts strategic goals into fragmented temporary projects.
The same is true of people. When teams work on projects, they’re less likely to be accountable for the overall success of the product as they’re not incentivised to think beyond the delivery of their project.
Fundamental change
Leaders need to realign the product discipline, looking at organisation design, team topologies, governance, skills mindset, and incentives. Through this change, companies can transform their product function from subservient product ownership to empowered product management that’s embedded throughout teams right up to executive levels.
When you connect the strategy to the execution, operations can evolve. Delivery is connected to outcomes.
Expect high rates of failure, develop a rapid pivot capability
Growth is hard.
In organisations, there is often a plethora of new internal and external products, services, and platforms that persist despite having questionable value.
In Venture Capital (VC), the failure rate of ideas is about 80-85%.
For enterprises, this should be closer to 90%.
Why?
Once resources have been invested and forecasts of future revenue have been baked into strategic plans; enterprises struggle to put a halt to ideas. In other words, there just isn’t the incentive to evaluate the market as diligently before scaling.
Many products in larger companies incur costs that exceed their returns, leading to diminishing overall returns and opaque cost attribution. Trying to identify these underperforming products is a common challenge, as employees may recognise them but, due to their ways of working and culture, hesitate to address the issue.
Inevitably, this means increased costs, management overhead, and resource consumption, contributing to a decline in overall performance quality and, at times, the emergence of blame culture.
It’s critical that you recognise and reward the release of locked potential. This means focusing on the top ideas within your operational capacity and rapidly testing and validating the riskiest assumptions at the different stages of development.
The team can use the data and insights to make the right decisions, which includes closing down ideas.
Timely identification of those ideas not worth pursuing and adjusting or retiring larger, mature products for emerging alternatives is essential. Actively seeking out and eliminating duplication across the portfolio further contributes to a healthier and more dynamic product ecosystem.
Rewarding and celebrating these decisions among the team will help reinforce your strategy and create a sense of security.
When a product is discontinued, the teams working on those products can be redeployed to new ideas. By nurturing this kind of continuous improvement across product teams, you’ll foster trust and encourage greater engagement in the decision-making process.
You may want to consider directing HR initiatives to incentivise retirement and closures, too.
Empowering decision-makers
Understanding organisational metrics and performance insights is crucial for product leaders.
Metrics and mechanisms are deeply tied to your culture, shaping and reflecting your organisation’s values.
‘’To enhance product performance, aligning metrics with your culture is key.’’
If you want to put in place metrics and measures that call out product performance, you will need the culture to respond effectively, or you could create tension across the organisation.
If you have the right metrics in place, then your company can benefit a great deal by investing in product operations and product portfolio management tooling.
These bring together fragmented, functionally divided, and siloed data in a unified way to ensure that cause-and-effect relationships, inter-dependencies, and cost-of-ownership are truly revealed.
High-performing, product-driven companies leverage next-gen Product and Portfolio Management tools to enhance decision-making quality.
We must differentiate between Product Performance Management (PMM) and traditional Project Performance Management tools to avoid hindering portfolio performance.
Product Operations and Portfolio Management capabilities bring together collective insights from delivery teams, Customer Relationship Management (CRMs), Enterprise Resource Planning (ERPs), customer success and support, value streams, and many other systems.
These collective insights allow product and portfolio/business leaders to know how products are performing individually against strategic goals, where and why they are succeeding or falling short, and empower teams to make data-driven decisions quickly and confidently.
This is a transformative capability that provides you with a significant competitive advantage.
Mastering product portfolio & lifecycle management
Too often, when developing portfolio management, teams overlook the humble product taxonomy and the governance of a product life cycle.
Both of these provide key context on the type and stage of an idea or product at different lifecycle stages, which also allow leaders to make more contextual decisions and apply the appropriate governance for the lifecycle stage.
When selecting Product Operations and PPM tooling, ensure these capabilities are supported.
A sure way to kill your innovation pipeline is to over-apply governance too early in the ideation phase.
Betting big and projecting ROI when you haven't validated an idea with real customers and real feedback is a big bet that most companies take and pay the price for.
Many mistakenly perceive the Product Lifestyle as a straightforward linear progression through stages.
To foster Active Portfolio Management, embrace a Lean/Agile Product Lifecycle that views the lifecycle as a circular model, allowing ideas to shift and skip phases, such as jumping to retirement.
Taking this capability further requires companies to implement and manage a Product Taxonomy. While often seen as administrative, a well-defined taxonomy brings clarity. Categorising and managing internal products, external products, platforms, and services becomes essential.
These classifications help identify duplication, conflict, dependency, or inheritance, preventing unintended duplication as products evolve. A managed product taxonomy facilitates easier management of dependencies, and triggers informed retirement decisions.
Establishing product performance councils
Product performance councils, known by various names like investment councils or portfolio performance boards, play a crucial role in actively overseeing and managing a product portfolio.
These small, empowered bodies should comprise a focused cross-representative group responsible for making decisions that impact the portfolio's success.
The council's role involves referencing product lifecycle governance against hypothesised plans and strategic objectives. Leveraging insights from product operations, they surface key questions to decide the future of products. This group actively challenges duplication, underperformance, and positioning, which empowers them to make decisions to retire products.
In addition to these responsibilities, the council makes crucial decisions about releasing capital and resources to test new ideas and scale higher-performing offerings. Functioning as an accountable, decisive body, they convene monthly and quarterly armed with holistic data, aiming to improve the impact and potential of the company's capabilities to deliver revenue and satisfy customer needs.
Summary
Companies are complex adaptive systems, subject to constant internal and external changes.
The result can be a lack of transparency, poor objective data measures, conflicting initiatives, and incentives that make it difficult to stop and start initiatives for new and existing products.
For some companies, deciding to retire products, platforms, or services is a daunting and high-risk task, often meaning that they over-allocate resources to underperforming products.
This stifles innovation and growth potential.
By transforming a company’s culture, mechanisms, and capabilities in product operations and portfolio management and adopting a rapid learning and recycling approach, leaders can make faster decisions with greater confidence to improve ROI and future growth potential.
Regardless of size, companies face the problem of finite resources and must recognise the limits on exploration and nurturing for growth.
Developing proficiency in identifying products, services, and platforms to retire is crucial. Additionally, mastering the art of quickly validating or invalidating new ideas will enable you to maximise the ROI of active products. This improvement in prioritisation and performance insights can be achieved without increasing total capital investment, as you can efficiently recycle existing resources.