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The Best Inc. vs The Rest Inc.
How to build products that customers love by building exceptional product teams.
I think we have a big problem.
90% of companies are unhappy about teams building their product.
The most common problems with product teams you’ll hear about:
- product teams are slow, don’t deliver on time, and are doing things that seem not crucial to the business,
- product teams and business stakeholders don’t understand each other,
- the company product isn’t improving, even though product teams are adding new features.
- people in product teams are not motivated and leave the company
Companies are right to be worried. They know that if they don’t fix those problems in time, their competitors will start taking their customers. It may take two, five, or more years, but it will happen.
They’re trying things to help the situation - hiring consultants and running big transformations, but things aren’t improving. Bad news bears. 🐻
They are also right to be desperate to fix those problems. Because they know that if they create the right environment for their product teams, it will significantly increase the company’s chance for success and bring profit in the long term.
Let’s zoom in. After reading this post, you’ll understand:
- what are the most common problems companies have with their product teams
- how do product teams in the best companies work to ensure consistent innovation and customer value
- how the same group of people can bring incredibly different results, depending on the environment they’re in
- what's the difference between product teams and typical feature/scrum teams
- how can you start changing your product teams today
Grab your coffee, and let’s change the world together. ☕
What are product teams?
I will refer to the product team as a team in a company that builds the product.
These teams typically include:
- engineers (developers),
- product manager or similar role like product owner
In some companies, these people are formally in one team; in some, they're in different teams but collaborate occasionally.
Some companies call these teams differently: feature teams, dev teams, scrum teams, or IT teams. Funnily enough, these names often pair with companies being unhappy about their product teams.
There is something more than just what label you put on the team. It's how you design the environment for product teams to work.
After reading this post, you should understand which tech teams are truly empowered product teams, which teams are not, and what to expect from both.
Let's look at what life looks like for the same product team in two different companies. These are actual companies, but I’ve changed their names to The Rest Inc. and The Best Inc. to keep them anonymous. I picked them precisely because they are all-rounded examples of how two groups of companies work - the best and the rest.
The Rest Inc.
First, let’s look at how life looks for a product team in The Rest Inc.
The Rest Inc. has hired three engineers, one designer, and one product owner. They’re not rockstars, but they are more than competent and friendly. Good people that you would like to have on your team. Engineers code, designer designs, and product owner handles backlog in Jira.Work
Company asked them to release things from the roadmap and take care of their website and mobile app.
They work in Scrum. Lately, they’ve rebranded themselves to squad in the hopes of copying the success of Spotify.
There are many meetings they need to attend and processes they need to follow. They work on features listed on the roadmap. Business stakeholders meet monthly to check the roadmap and discuss planned features.
The product owner gathers requirements on these features, puts them into Jira, then passes them to the designer. The designer designs it, then hands it to engineers to estimate and code it. There is a bit of communication ping-pong between them, but they all agree this is not ideal - the “We must work on the communication” note consistently gets the most votes on the retrospectives.
The deadline for the release they’re working on is getting closer, but the feature is not ready. It turned out to be more complex than estimated. The team cuts the scope and quality and tries to release on time. Once they finish the feature, they move to the next roadmap item.
Most of the features they deliver don’t bring significant product results (conversion, retention) if only these are measured.
Business stakeholders are unhappy:
- They’re not happy about missing the project deadlines,
- They get a feeling there is a gap between them and product teams,
- They’re not satisfied their product isn’t improving, even though the team is shipping new features
People on the team are unhappy:
- They do not understand why they’re doing what they’re doing
- They’re frustrated about jumping from one project to another,
- They get a feeling there is a gap between them and business stakeholders,
- They’re not happy their product isn’t improving, even though the team is shipping new features
The effect is that the product is not improving, everyone is unhappy, and people are leaving the company.
The only people who can be happy in the scenario are their competitors. They know they have a chance to take The Rest Inc. customers if they don’t fix the problem in time.
The Rest Inc. is an example of what 90% of product companies look like.
90% of all product companies cannot consistently innovate and deliver customer value.
Houston, we got a problem.
The Best Inc.
Now let’s look at the other side of the mirror.
Imagine the same group of people in the team working in the other company - The Best Inc. As a reminder, there were three engineers and one designer. This time we'll switch the product owner with product manager*.
* I have no beef with Agile or Scrum, but there is a big difference between Scrum Product Owner’s and Product Manager’s responsibilities. In short - Good Product Managers act as mini CEOs and have way more responsibilities than delivering features. Product Owners often are tasked to administer the product backlog and coordinate the delivery.
I may write on it someday—subscribe to get notified.
The team has worked together as a product trio for quite some time to discover and deliver valuable solutions for their customers. They make sure these solutions are in line with their business.
The team is empowered to decide what they build, but that doesn’t mean they do things randomly - they’re aligned with the rest of the company. Everyone in the company understands their vision - where they want to be in a few years. And everyone follows the strategy - the order of choices they made that should take them to the company vision.
Our product team has a specific objective connected to the strategy. Company asked them to try to increase the number of people adding something to their website cart. And they are accountable for the results of that objective.
They look at the data, do a lot of research, and interview customers to understand why some people don’t add things to their carts. Every week they get a better grasp on the situation.
They validate their theories by prototyping solutions and running many A/B tests. They constantly add small changes to their product that positively impact their objective KPI - add-to-cart conversion rate.
Everyone is happy—customers, team, and company.
The Best Inc. is an example of how only a few percent of product companies work.
Only a few percent of all product companies can consistently innovate and deliver meaningful customer value.
The Rest vs. The Best
As you can see, the same group of people could bring incredibly different results, depending on their work environment.
Differences between The Rest Inc. vs. The Best Inc. include:
- The role of product teams in the company:
- In The Rest Inc., product teams are considered cost centers - they serve the business.
- In The Best Inc., product teams are considered profit centers - they innovate on behalf of customers in ways that work for the company.
- The product team's responsibility:
- In The Rest Inc., product teams are responsible for releasing features on time (focus on output)
- In The Best Inc., product teams are responsible for lifting their product metrics (focus on outcomes/results)
- The amount of trust given to their product teams
- The existence of Strategic Context (mission, vision, strategy)
- The discovery, delivery, and roadmap process
- ... many more!
These are the true differences between empowered product teams (The Best Inc.) and features/scrum teams (The Rest Inc.).
Which company are you?
Time for some honesty. Are you working like The Rest Inc. or The Best Inc.?
If you're closer to The Best Inc. - that's awesome! The world needs more companies like you. Stick around, spread the word, and hopefully, you'll still find something valuable.
If you're closer to The Rest Inc. - don't worry. Most companies work like that and don't know how to change it. There is also good news if you want to work more like The Best Inc.
The good news is:
- While The Best Inc. is just an example of a company that can consistently innovate and build products that customers love, these companies exist. Apple, Amazon, Airbnb, Google, Spotify, and Netflix are just a few examples of companies. Many smaller companies achieve significant success working like this.
- The way the best companies work is not a secret.
- I believe you can change your company to be closer to how the best companies work and make your teams and company more successful.
Remember the days when you were a child and you were building things with plastic blocks?
You used different blocks with different shapes and colors to make various creations like buildings, vehicles, and animals. The same set of plastic blocks let you build different things. The only thing that was stopping you was your imagination.
Building things with plastic blocks is not far from building teams and companies. Think of the ways of working of each team and company as a set of plastic blocks. Each plastic block represents a specific technique, framework, and principles used.
While each company is different, the building blocks used by the best product companies (think Apple, Google, Amazon, Spotify, Netflix, and many more) are shockingly similar. This is where I write about the blocks they use - their techniques, practices, frameworks, principles, and views. No fancy talk, just step-by-step instructions on how to apply those yourself.
⚡️ Super specific how (SSH)
Here is your todo list for today:
- Start today. I mean it. Block a slot in your calendar to start planning.
- Subscribe to learn the building blocks of successful product companies and get instructions on how to apply them:
If you want to learn more about newsletter content, click here.
3. Check all 70+ best practices used by the best companies:
4. Read some brilliant people who write on the subject of empowered teams:
- Principles, by Ray Dalio
- Empowered, by Marty Cagan
- Work Rules! by Laszlo Bock
- Culture Code, by Daniel Coyle
- Drive: The Surprising Truth About What Motivates Us, by Daniel H. Pink
- Creativity Inc. by Ed Catmull
- Turn the Ship Around! by David Marquet
- Team of Teams, by Stanley McChrystal
- Team of Teams, by Stanley McChrystal