Your product roadmap is not a model, an algorithm or an artifact, it is an ongoing political process that requires careful management of the relevant stakeholders. One major challenge is that your stakeholders DO NOT WANT the same things. To make a Roadmap useful, you need an allocation model and a selling strategy that helps you: understand; manage the expectations of; deliver value to people across the organization who prioritize very different things. Rich explains some approaches to help you understand and manage a roadmap’s stakeholders so that your products and customers are prioritized over the requirements of other stakeholders.
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Rich Mironov: In honor of the recently late Aretha. Let me set the stage a little bit for a story I’m going to tell. And then we’ll dive right into it. I’m a 35 year veteran of Silicon Valley enterprise software which obviously means I’m not that smart I should’ve done something better and easier. About a decade with with big software companies I did six startups of which four we file under good life learning and character building. And for the last decade or so I’ve been doing a combination of things around enterprise software product management. I drop into San Francisco area software companies as the interim or temporary head of product management or Chief Product Officer. Generally that’s when things aren’t going so well, has a lot of marriage counseling associated with it. And I spend much of my day almost every day with one foot in the engineering and product camp and one foot in the go to market, marketing and sales camp. So I’m bilingual in some sense and the introverted folks on one side depend on me to say things to the extroverted folks on the other side that they’re embarrassed to say themselves.
So I’ve had a chance to sample or drop into an awful lot of companies and what one of the things I notice is that the road mapping process is almost always broken and it almost always is described in a way that’s very personal. If those product managers would just fill in… whatever sentence it is if the salespeople would just behave right. And it sounds in an individual instance that this particular company has an issue. But of course everywhere else it’s going fine. Right. And so I want to blow that up a little bit because what I see is something very systematic that’s about crossed or misaligned goals and incentives and organizational structures that causes this at particularly enterprise companies that I think is important that’s not about personalities. So I want to take this apart a little bit and lead us through and figure out what we as company leaders are going to do about it so that we don’t end up in exactly the same problem as we did before. Also worth noting since Addie was good enough to stand up in the corner last night with a target on her chest, that’s the job I have every day right. Trying to explain to folks on the sales and marketing side why they didn’t get what they wanted right. So let me take this through. And by the way all the pictures are intended to be humorous I want to make fun of myself as much as everybody else as we’re going through.
So I’ll pose this sort of three sets of questions that I know occurred in almost everybody’s heads during the road mapping process or the presentation and then let’s take them apart. So let’s start of course with product managers right. Do we know this product manager? He he’s very analytical and he’s done all the spreadsheets and sweated all the numbers and he’s presented this roadmap to a large group of folks. And here’s the question usually in his head right. Every time I do this I get at best no reaction and mostly I get hostility. How is this possible, I worked really hard. All I want is for people to love me and love my roadmap and love my product that I put so much of my time into. Yet here we are right. Anybody been that product manager? OK let’s turn around and and ticketing the other side. So of course we need management here. Right. So. So there’s almost always two questions that I hear from the executive team or the leadership team when faced with reviewing a roadmap or anything else that comes out of product management usually they are phrased in these two ways. Right. How come we’re not getting more done. Let’s just document anybody who’s a CEO in the room who’s either thought or said that out loud in the last two or three weeks. OK. Right. And then much more importantly why are we not more innovative. Right. And that’s the sort of unbounded question because it usually means we lost a deal to somebody who has a feature we haven’t heard of. Right. And then there’s a third group. Right. Most important in the enterprise space is our sales team. Right. And they all want to know what’s the question that the sales team wants to know? Every single person in that audience? How come the thing my street right my strategic customer needed a thing and I beat on product management mercilessly for the last 90 or 180 days. And yet here we are and it’s not in the roadmap. How is this possible? This is a really important deal which by the way when we close I get to go to Club in Hawaii. Right. No coincidence. So when I sit through or I’m supervising a set of product managers or I’m in the executive team, this seems like the drumbeat set of messages. On the one side – we worked really hard and we’ve squeezed everything we can squeeze out of it. And the other side gosh at best we’re unexcited and usually there’s another escalation coming. Right. So so how do we explain the fact that in almost every B2B and enterprise company I’ve seen we’re having this very same discussion it can’t just be because there’s somebody on your team who isn’t performing right. This fails to be an individual effort issue. So let’s dive in. And I usually start with a good idea train. You know the good idea train. If you’re a product manager every morning when you come in and open up e-mail and slack and the post-it notes people left on your monitor overnight and whatever else. Right. It’ll turn out that there are 60 or 80 or 145 really, really good ideas that people have shared with you overnight. And they’re from customers and they’re from salespeople and SD and their support team and especially the exacts will come back to the executives etc. So everyone in the world really desperately needs to share with the product management team that’s going to figure out what we’re going to build – this one special insight which is really pretty wonderful. Except mostly they’re not.
Right. And I’m always trying to coach my product managers in how to separate the appreciation for somebody who comes and shares their really wonderful idea with you from the commitment to do the thing. They tend to be very specific to one instance or one customer your support person has just gotten off the phone and that’s top of mind. Right if we go back to thinking fast and slow. Right. We’re all recency bias on this. So executives are over indexed on two groups of folks current customers who are really really unhappy about something and went all the way up the escalation chain to give you the CEO a piece of their mind – any of you gotten that call in the last two weeks? And the other is medium to large sales deals that need only one little special thing that’s gonna be really easy to close the deal. Right. Those are the things that worked their way up to the CEO’s office and helpfully CEOs including myself when I was in that job will then of course immediately walk down to the product management team and say something that always includes some of these words – just and only – as in can’t we just. And I bet it’ll only take. Right. Because they’re they’re deeply focused on doing something about the fact that folks are you know at issue right. And then universally everybody who has a requested demand requirement a feature that they’d like to do universal lives is it. Right. So particularly sales teams can only call on one really large customer will always use the word everyone as in all of the folks in our market need this thing. Now partly it’s because that’s the only people they talk to partly it’s again it’s our recency bias that says the last thing is is the one I remember. But as somebody who sat in the product management chair for an awful long time I know that almost everybody who comes to me has a relatively poorly thought out single instance solution description but they don’t understand the problem and it’s my job to write it down unpack it understand it and then deal with it appropriately. And for the eighty nine of those ninety dealing with it appropriate something we’re going to do in a second. Right. So.
So this is really important because there’s this impedance mismatch. There’s this challenge where every single person who has something that they need and want and they’re all really reasonable believes that the asking for it leads to the doing of it. Right. I need it therefore it must be easy and possible so why can’t you just… because we’re agile right. We can just slip it into this sprint whatever right. No big deal. So. So this is the sort of essential moment on the product management side where we know as product managers that we’re really dealing in the politics of hunger which is – my engineering team will never be big enough ever ever. Anybody have an engineering team is big enough to do all the things they want to do. OK. No engineering team on the planet will ever be big enough to do all of even the reasonable smart good things. And we’ll we’ll show you why in a second. Yet the requests come in a very honest and honorable way and we have to honor the people who bring them to us while giving them the bad news. All right. OK. So let’s keep going.
So let’s talk about what the engineering team does. Actually let me back off… a useful distinction. I’m going to not talk about companies that are in the professional service or custom software business. I’m only going to talk about product companies who make money by selling the same piece of software to a large number of customers. And that’s important because if you’re at a custom software or development shop you don’t have product managers you have account managers and project managers and you build the things that your customers individually ask you to do and you better price it so that you make money on every single deal because what you’re doing is you’re marking up the time and energy and smarts of your team and you don’t expect to sell that more than once. So in the professional services model we don’t need product managers we need purchase orders. And what we really love our change orders because that’s how we mark it up and make more money. So I’m going to specifically talk about folks in the volume or repeatable products side of the software world where I’ve got to sell things to a large number of customers I’ve got to keep them from churning. Right. I don’t make it on the back of one customer. So I can price my products low because it’s nearly a hundred percent margin to get the next one. And once I pass break even it’s all money right it’s all margin. So when I think about the investment portfolio for an engineering team that’s building my SaaS product for instance. Right. I don’t care what we’re doing story points or engineer weeks or whatever you like. I generally expect to carve this up into about four pieces. Right. And the first one this is the stuff that customers actually ask for and that we put on our marketing brochures and that you know press releases and hot kinds of stuff. These are all the things that people can see right the must-sell, must-do. This is where the external innovation appears right. Stuff that everybody’s excited about. If we do only that of course we’re out of business. So let’s look at the next few slices right the next one is of course all the -ilities. Right. We’ve got to have scalability and we’ve got to have security and we’ve got to have all of the things in the back which by the way no customer calls you up, no enterprise customer calls you up and says I’ll pay you extra to make sure your systems don’t fall over when I add more volume. Right. Thank you. But if we don’t do those things then it’s another good life learning and character building experience and close the doors and move on. Right. So hard to know maybe 20 percent right. If we’re not spending money on -ilities and stuff then our systems fall over and we’re out of business. Right. Next one I’m going to put a bunch of other things test automation. By the way anybody who’s doing manual testing I think you’re wasting all your money. Right. We should be talking about test automation. Bugs, dev ops there’s a bunch of things you have to do to keep your software shop running and without which of course customers stop paying you money. But again with the exception of the folks who pick up the red phone and call your CEO and complain about a particular bug customers don’t pay you extra money to keep your code working and in good health. All right. There’s actually a well-known syndrome here where we decide that just for this one month or just for this quarter we’re going to steal all of the cycles from bugs and dev ops and test automation and put them into features. But next month I promise that we won’t do that again. Right it’s identical to the problem of joining a gym but not going until next week. Right. Good. And then the last slice here really important and you know Jared was talking about it a little bit. There’s actually time you have to spend doing innovation and validation and customer interviews and figuring out what the f is happening in your market right. And that’s work. You actually have to schedule so that’s product management and design and some architects and going out in the field and test driving and kicking a bunch of stuff regardless of you know whatever model you’re taking lean customer de velopment or you know choose choose your methodology. But if we don’t allocate time and energy for the smart folks in our group this doesn’t get done really important and we’ll come back a little later to the why aren’t we more innovative question. Right. Anybody been through a half day innovation event where everybody comes in and writes things on post it notes and puts them on the wall. OK. Right. We call it innovation theater right. It doesn’t lead to much. It leads to a wall full of post it notes after those posted notes come down. There’s actually some folks who have to sort them think about them and figure out which ones make sense interview customers do a business model right. Architecture work. There’s gray work to do here. If we expect to bring out cool new stuff a few quarters from now or next year. Right.
So this is our investment pie right. By the way there is a separate set of stakeholders for each slice. OK. So there’s lobbyists on each side on the dark blue side for features certainly marketing, sales in general. Right. We need new stuff. What are we going to talk about next release. Right. There’s lots of pressure from all kinds of outside folks to build in more features whether we call it a feature factory or not. Right. But you know who’s the lobbying group for the red slice tends to be your engineering organization? Right. I was in Greece for the last few weeks and one of the things I love about the ancient Greek mythology is how smart they were. Cassandra. Anybody know about Cassandra so she was the daughter of Priam, the King of Troy. And she was cursed by the gods to always predict the future correctly and to have no one believe her. Right. So she’s the one who famously said I don’t know how to say it in Greek don’t wheel that wooden horse into the city it’s full of Greek soldiers and everybody said oh come on. You’re making this up right. Your engineering team is spending a lot of its time playing Cassandra here saying if we don’t get the scalability right and we got this AWS thing and who knows we could lose 12000 users worth of designs. Right. Thanks Peldi. Right. And they’re right. OK. But of course we can’t give the whole pie over to Red great if it’s a whole red pie we’re out of business in about three quarters because we’ve got nothing that that the customers want. Right. And the support team that takes all these calls from customers. Right. Jared was leading us through all those logging issues right. So they’re getting hundreds and thousands of calls if we’re lucky from people who can’t log in and they are all over me to put those things at the top of the list. Right. And given their druthers they would take the whole pie and color it light blue. Right. So we know. And honestly it’s hard to find the folks who lobby for innovation because we talk about as a theory but in a lot of companies we don’t ever remember it supported. But what’s important here is that we have different constituents and stakeholders who each want 100 percent of the pie. Well that’s not true. They want one hundred and fifty percent of the pie.
One other helpful thing because because I use pie charts a lot with exacts including myself. So there’s a really cool feature of pie charts but you know if you make one slice bigger you must make another slice smaller. OK. This is all about the exclusive org concept of we can’t do more of everything all at once right now. So there’s a constituent for each of these groups. Right. And the product management team which is trying to have a long term view of this product and let it grow up to be big and strong. Right if it’s going to play at Carnegie Hall in seven or eight releases we’ve got to drive it to a lot of music lessons. Right. My team and I have to figure out how to balance these in some useful way so we don’t lose the market but we also don’t poison the product and have something really limp and terrible that falls over. Right. So there’s a tradeoff here and it’s hard to find anybody else in the company who has a holistic view that isn’t lobbying on one side or the other really important. So I’m always trying to coach my product managers to think about the long term health of the product and the long term joy of the customers and not just this quarter stuff. Cause otherwise we’re joining the gym and not going right. We good? All right let’s keep going.
For those. I’m not sure anybody’s old enough besides me but for those who Leonard Nimoy was their hero when they first grew up and wrote code in the early 80s. This is maybe the most important thing I’m always trying to emphasize with my team which is if we’re in the software business, if we’re not in the custom business but in the repeatable we can sell it to lots of folks and make money on each one business, we must must must must sort and choose our features that are going to go into the feature half of this such that they benefit lots and lots of our customers. All right we’re gonna fix the worst bugs that most people are reporting we’re gonna put in the feature we think is gonna drive the most up sell or reduce the churn the most we’re thinking about markets and segments and large groups of customers. We’re not just thinking about one we’ll do the contrast in a minute right but everything about product management for a product software company is about making choices among our very very few choices that are going to benefit large portions of our customer audience. Some of you see where I’m going but I’m not going to get there quite yet. Right. OK so so here it is. There’s my prime directive. You’ve got to serve the larger audience almost anything that you do that’s just for one customer is a poor investment. Remember we’re not charging as much for each copy of the product as it cost to build. Right. So if we’ve got a thousand customers in the first three hundred got us to break even the last seven hundred are complete margin. Right. We’re making money because we’re selling the same bits to multiple customers. As soon as we pull a few really key members of our engineering team off of that to build this one thing that Deutsche Bank wants us to do which may be poorly thought out but it’s gonna bring in three hundred thousand dollars. We are stealing from our own product fund. Good. Let’s keep going. So a bit of a vocabulary exercise will make this a quiz. Right. So when I’m sitting on the product management side and all these wonderful people come up and share they’re really terrific ideas with me – and those of you who speak a little Japanese you know that the Japanese word Hai doesn’t mean yes I agree I’m going to put your thing in the plan it means yes I heard you right. So. So some vocabulary if I say if my team and I say it’s on this quarter’s roadmap right. What we probably mean more or less is you’ve got about a 90 percent chance of getting it right. And when we say it’s on next quarter’s roadmap what we probably mean roughly speaking depending on the company is you’ve got about a 70 percent chance of getting it right. Because stuff’s gonna happen and we’re going to see in a minute the stuff that happens. Right. OK so let’s get some other phrases that you guys might know OK this actually is better than it sounds because I try to coach my folks not to lie directly to anybody you know.
So we are in fact looking at it. But given all the things that we didn’t finish this quarter which are really high priority and the likelihood of how it’s going to go next quarter because I don’t know if you know this but all software people are optimists OK I bet we could finish that this weekend. No problem I’ll just knock it out right. So I don’t know what that’s worth. How about this one. Thank you! Let me put that in the backlog where it belongs. By the way the backlog is. It’s like eight hundred and fifty items long but for you I’m going to slide it into position six hundred and twelve. Don’t wait. OK. That’s a really good idea. Let’s look into that. OK. My favorite one right. It’s important that I appreciate and value and honor the folks who bring me this. But who has outdoor cats who occasionally bring you a fraction of a bird that they found and they leave it on your pillow because they love you because they’re cats. Right. You can’t get mad at them. You could decide to keep them inside. That’s a different issue right. OK. But what’s important here is that we’re dealing with the politics and economics of hunger which is there are one or two orders of magnitude more requests than we can ever ever ever ever do. Yet everyone who comes to us has the impression that if they tell us a good story and they make a good case we’ll somehow find I actually have a development team hiding in my pocket right which I’ll take out just for you because you convinced me. Right at that that this is about persuasion rather than raw economics. OK. Let’s keep going. So when I draw a road map I always try to put a little graphic flavor into it. Notice that the thing on your left on your left. OK thing on your left is obviously going to happen. Here’s our 90 percent box. Right. Whatever it is doesn’t actually matter what’s in it. Right. Dark shaded heavy bordered. Right. We’re pretty sure it’s an enterprise company we know what we’re doing we’re really good at building stuff we hope right next quarter a little lighter shading notice that the box is a little less right as we go across. If you don’t notice that there’s less certainty as you go across this thing then you’re really not paying attention. Right. By the way all of your enterprise customers understand this. No matter how we print the roadmaps no matter what your sales team says they all understand that the future is uncertain and the further you go out it’s more uncertain. I usually change my timelines too so there’s a quarter and then there’s a half and then there’s a year and then there’s a century. Right. So if we fool ourselves into thinking that our roadmap has veracity that it’s true that it’s predicts the future well we’re lying to ourselves and by the way we’re also lying to our customers and they’re pretty smart. OK. So.
So here’s a different picture of a road map which is the one I usually think of. Right. Every road map I’ve ever worked on has a few features one is that there’s no whitespace. I’m going to say this about eight more times because none of you believe it. OK we’ve allocated or we’ve assigned as much as we can possibly do and then because we’re embarrassed at how much we didn’t get in we put a couple of more things in right. So every road maps like one hundred and three and a half percent full right. There’s a lot of pressure to overload it because everybody needs things legitimate important things right. There’s never enough. And because our teams are almost always optimistic in the way we size and the way we plan on just doing this is already a little bit on the high risk side. Right. So. So the 70 percent for next quarter is probably about right. And of course it’s the Jenga thing because when somebody tells us something’s late and we pull one piece out. Right. This is the unstable roadmap that we have. And I think almost every size software company regardless of audience – anybody been at this place. OK. So but I’m specifically thinking about enterprise because we haven’t really talked about the one group in an enterprise software company that’s different from say a consumer company. Right. So if you’re building Fitbit right you’re going to sell 10 million government thirty five dollars or whatever the prices. And there’s no one Fitbit buyer who is so important that when they call your CEO anything happens. Right. Because it’s a large number of small buyers who are identical when you get to the SMB market. It’s still pretty much the same year selling accounting packages for 100 bucks a month or whatever or something for three hundred fifty dollars a month. That’s really not enough money that any one customer can tip the balance. Enterprise – Different story. So let’s repaint this and let’s put the other players in because this is how it gets complicated right. So by the way every enterprise customer – I don’t know if you know this – every enterprise customer wants at least one thing that’s not actually in your product today but they all have a list. Just ask them right. No product’s a perfect fit. And so the roadmap. Remember the roadmap we just published is the starting point for negotiations. OK. So every enterprise customer looks at your road map says ok got that got that got that I know you promised it for next quarter for two quarters away for three quarters away and… because and’s the important word… here’s what else I need. Right. That’s the square peg. Right. And all of these requests sound reasonable. Many perhaps most aren’t well thought out or they’re not smartly architected or the customers don’t really understand our technology or whatever but every single enterprise customer has a short list by no more than 50 or 60 things. Right. A short list of stuff that they bring to their enterprise sales team and say we’d love to sign this really big purchase order. Can you just… I bet it’s only right. So. So that’s important. And even more important is we have an enterprise sales team and this is what’s different between consumer companies and enterprise companies is they have an enterprise sales team. So we need a picture right. Oh I’m sorry. Each sales team they’re going to strongly advocate for their customers. That’s a key phrase I’m going to translate it the SEC because here’s our enterprise sales rep.
Do we all know this movie. OK. I actually take this six minute clip of Alec Baldwin’s brilliant brilliant performance from Glengarry Glen Ross. And I show it to my engineering teams because they don’t believe it otherwise. Right. You know. Always be closing. Always be closing. Right. This is where the coffee is for closers phrase comes from right. First prize is a Cadillac. Second prize – Set of steak knives. Third prize – You’re fired right. So in the sort of Myers Briggs world and Thanks Mikey for starting us on personality tests yesterday. I have these sort of disbelieving discussions with my engineering teams where they say things to me like nobody would be crazy enough to take a job where they don’t know how much money they’re going to make this quarter and they don’t know how much money is in each paycheck. Well we call those folks salespeople and by the way they make twice what you make if they hit their number right. The lack of belief and understanding across this huge gulf between the introverted non-verbal but Slack using team oriented deeply intellectual folks who believe that each word means exactly what it means and our sales team which we’re going to describe in a sec is vast right.
By the way let me just say I love my sales teams. They do something I can’t do. I’ve tried and that that’s one of those life learning stories that we’ll get back to another time they do something that’s really hard in a different way than building software is hard and both sides don’t appreciate the other and both sides think the other is easy and they have very poor communications. So let’s talk about what we hire and promote and reward our sales people for doing and being right. What kind of salespeople do we want in the enterprise right. We hire train reward promote them for right persistence. Right it’s not selling until the prospect has said no at least three times. Right. Optimism. You’d be crazy to go into sales if you didn’t think you were gonna beat your number again this quarter. Right. Often we give them a single account which means it’s live or die 1 or 0. Right. Hero or goat. You either go to Club in Fiji or whatever it is and I don’t know about the drinking and the sleeping around because I’m never invited but you either go or you fail. Right. Third prize you’re fired. They’re tremendously persuasive and they’re really good at taking whatever silly features and benefits we put together on the product side and turning them in a way that is really appealing to that particular account and plays to what those folks want. Right. And maybe most importantly because when you call on somebody who’s not excited about your product. One of the things we train and reward and promote and send our sales reps to club in Hawaii for is to figure out who in the organization can say yes. Right. It’s the boss of the person you were calling on or it’s one up and one over, you know how do we find champions inside to get us to yes? Because a lot of selling is about persuasion right. I mean it’s not so much about the features and the functions and the benefits. It’s about getting them to yes and so we pay them and reward them around the idea that being persuasive is important. Right. And then I’ll tell you something shocking. All right. So when that sales rep comes to somebody on my product management team and says oh by the way we have a huge deal with General Motors and we just need to do this one little thing – teleportation. Right. And we need it by Friday. Right. And my product manager says something between no, hell no, and don’t let the door hit you on the way out right. My product managers all think that that’s the end of the discussion. All right we’re done. They said no. Shockingly our sales team takes all of the same skills that they apply to prospects and customers and they look around the organization to figure out who they’re going to escalate this to to get the yes they need so they can close the deal. Right. And they come to me and they get a politer version of that and then they go up the chain right. So if you don’t know that this is the pattern then you’re not paying attention. Right. By the way if you’re a very young enterprise company you only have three customers, this is absolutely the right thing. We have to do whatever we must do to close those first three or six or eight customers or our venture backers close the doors and take away our Aeron chairs and we have to get another job. Right. But this doesn’t scale, doesn’t work in volume. And so here’s what I observe. Right. We pay our enterprise salespeople to subvert the product plan. Right. Because remember every customer wants something that’s not in the plan. And we pay these folks a tremendous amount of money and reward them and make them feel really smart, let them ring the bell and all the stuff to get what the customer says they want. Which means the escalations are pretty constant from each team. Right. And so. So this is a problem of aggregation. This is a problem of summing it all up and not seeing the pattern right. We’re going to keep going OK.
So it’s not about the big lie – I’m going to call it Internal salesmanship. OK those may be synonyms depending on where you sit. But I’m always listening for these words – just, only, and every. Do we know the sentences that these come with? Let’s try it. If product just understood how important this deal was. Right. This is all about the fact that from the sales side you think this is a persuasion issue. You think this is a a relationship thing. If the sales team talks to be about my daughter in the sports I follow in the kind of cooking I like right here takes me out to drinks somehow that extra engineering team is going to appear out of my pocket. Right. That persuasion is the thing we’re lacking relationship is the thing we’re lacking when on the other side. It’s honestly just bits bytes and people. Right. So I’m listening for the just I’m listening for the every. So remember my enterprise teams call on one or maybe two customers but they’re the only ones they meet. And so you can be charitable and say that they’re just narrowly focused that’s all the data they have. Or you can say they’re being persuasive. Doesn’t matter to me but every enterprise salesperson who comes to me will tell me the story that every customer needs this thing. Right. So I’ve got to train my folks to listen to that. And then the word only right this is my favorite only. Right. How hard could it be. It’s probably only 10 lines of code right? You guys aren’t on the camera so if you’re a CEO and you’ve said these words in the last month. Raise your hand right or thought them right. It turns out most of these things are hard right. Mostly things are hard. The other thing I train my folks I coach them on is when someone says this to me there’s a thing you’re supposed to do. You’re supposed to take your keyboard turn around give them the keyboard and invite them to write the 10 lines of code. OK. Because it turns out it’s not that easy. Right and the last one. Right. We wish product and development were more responsive. Right. We put in a ticket we put in a request and we didn’t hear anything back. Right. As if hearing back was going to get me what I wanted. So then we militate a bunch of things and we say all product managers must give a status report on all requests once a month all of which say it’s in the backlog. Don’t hold your breath right. This is a sense that the human interaction is what we’re missing if you guys were just paying more attention you could get all the things I wanted done. You know when we integrate over the whole problem of course it’s impossible but each individual person sees this as an affront. They see it as a personal issue because if they were just a little more convincing this would all work right. Okay. But remember our salespeople know something and have a skill that our engineers and product managers don’t have right which is they know how to escalate to the CEO right. So that’s why we’re all here. Let’s keep going. All right.
So let’s draw the picture again. Here’s here’s our pie chart Remember the pie chart. OK so now the team that’s calling on ANZ Bank in Sydney has this really big deal by the tail or maybe they don’t. Right. And it needs this one little thing which isn’t going to be easy. And the product management team is a stone wall. So they go up the chain and it ends up on the CEO’s desk. And I have to tell you that the last turn I took as a CEO I forgot everything I was training all the other CEOs and I did this very thing which is I walked down to my team and I used words like just and only and I said hey it can’t be that big right. This is a really important deal. It’s strategic. Anybody know what a strategic deal is. It’s all the ones that aren’t going to make money this quarter. Right. And we’re gonna slice it and we’re just going to put this one thing in right. So you ready. So here it is. Here’s the one thing right. It’s green because it’s money this quarter. And notice that the that what I displaced was half of all the time we spend on research and validation and innovation and figuring out what’s next because everything else has been promised and it’s underway and it’s in the engineering cycle. And also this request turned out not to be very well formatted or thought through. And so we’ve got to pull our architecture our product manager and our designer and figure out what the heck we’re going to do, because it was a post it note that said you know support three factor authentication right. Whatever. Right. I don’t know. Right. So we’re going to pull people off of the forward looking stuff to work out what this is and if it’s small it’s small right. Of course it’s generally a little bigger than we thought. So I’m going to draw it again. Here’s the real impact of that one deal knows we put in validation innovation all the way to the side with no little slice. All gone. Sorry. But we can get this one thing done right. Okay. We’re still alive it’s early in the quarter. The problem we have and it’s an organizational and reward problem is that the sales rep who got this is about to do something really important which is take the rest of the sales team out for drinks based on this huge commission that’s about to arrive and explain to them all how escalating to the CEO got her or him the thing they needed. OK. We’ve now institutionalized how we get things done right. Gulp. And it’s still only week three of the quarter. OK so let’s let’s draw later in the quarter. OK. So here’s the cumulative impact. And I do this as an experiment fell away. So I sit down I work with a lot of product management teams and I have them go back and look at the last two quarters and score how many things that they finished were actually in the roadmap at the beginning of those quarters and how many things they finished arrived from outer space in the middle of the quarter. And often I see 20 and 30 and 40 percent of all the engineering cycles devoted to things that didn’t actually turn out to close deals right. So I was conservative here I think that’s about 30 percent noticed that we stole from quality and dev ops and we stole from our elitism we stole from our features our plan features and now we’re gonna have this meeting at the end of the quarter where somebody on the engineering side and somebody on the product side are going to have to stand up and say we didn’t get all the things done that were in our roadmap right. And honestly we don’t know how it happened because we missed all the little transactions right. So this is this is how we steal from the present and the future one little slice of time but that’s how teenage boys eat whole fruit pies by the way. They take one little slice and they put it back in the fridge and they come back an hour later and they take one little slice and by tomorrow it’s all gone right. It’s hard to see the pattern as we go. Okay let’s keep going.
So I don’t know if you can tell that’s pixie dust okay Silicon Valley is full of it we use it whenever we’re pitching our venture capitalists on how big this unicorn is gonna be. Right. Unfortunately I ain’t got none right. So. So when we peel back the sort of bare facts I’m sorry man kind of stuff. What we see is that there’s no hidden capacity engineering we promise at all. And that we’re operating on the exclusive org principle which says if you’re going to put something in the roadmap that’s new we have to take something out of equal or larger size. Right. Because remember there was no whitespace even though nobody believes it right. And we on the product side tried to pick a set of features that were going to appeal to our larger market. And so whatever we take out is gonna touch a lot of customers. So in general when we give up the one feature for the one customer we’re going to lose something right. And traditionally product managers have been completely tone deaf to the need to have political support at the executive level to counteract this. So we’ve all sat in our little cubes you know like Sheldon doing equations on the board hoping that the math will be so obvious that when the executive team gets together and doesn’t invite us in the room they’ll make really really smart decisions and turn down with the sales team wants. It doesn’t happen so often. OK let’s keep going.
So what do we do? So. So something I did at one of my more successful less learning startups the V.P. of sales and I we went out to lunch every couple of weeks. We had a really good positive relationship. We agreed not to throw each other under the bus and the executive staff meetings, we were really tight. And what we set up was I offered up one engineer week of work every quarter for whatever he wanted OK. It had to fit right. That was the magic bullet. And the only rules were that when his sales reps came to me and said I need I want I need I want it’s a special deal it’s gonna be huge. I would say go talk to Stuart because he has the magic bullet right. If he thinks this is the most important thing and it fits in one week of engineering we’ll do it right. He actually had the correct incentive because he was trying to maximize revenue for the company not revenue for himself on an individual account. Right. And the other thing I did was we actually had a token. Right. So. So I found us a spent shell cartridge and I gave that to him. I said this is your magic bullet. And when he asked for the thing I insisted he give it to me and I would put it in my drawer and this was important because four or five days later when somebody else came to him and needed something and so I’ll use my magic bullet and he reached into his desk – we had a way to measure the fact that it was gone right. Scorekeeping was keeping was really important and it helped the sales leadership share in the pain and the decision making of what little pieces we’re gonna give away for for the sales slice – because by the way you can never get away with zero on that slice. Okay. Every enterprise company is going to have a few of these. What we have to do is we have to manage and control and track and meter because zero doesn’t work but 35 percent is end of job go home right. So somehow there has to be this you know high level executive conversation between the sales side and the product engineering side about how we’re going to limit the overflow. Good. OK.
So I think I’ve got some some takeaways coming up right. That’s our takeaway container for anybody who missed it. Right. So. So here’s the here’s the takeaways. The first is it’s really important. My message here is you have to see the pattern. When we as executives think of these as individual one-off items that don’t add up to anything and we just say yes right by the way the way we see yes is it’s now out of mind right. So that deals closed engineering hasn’t built this thing yet. Right. They haven’t sized it yet but from the CEO chair I can take it off of my mental plate because it’s dealt with and done and I can put it in the revenue column and the impact isn’t obvious. Right. It’s even more not obvious the second and third and fifth times I do it and 12 times and so it falls on the product team to keep score here and to come back to the executive group all the time and say here’s the sum here’s the add up here’s the overall impact. Is this really what you wanted. Right. Because it’s not about inattention. It’s not about bad behavior it’s not about not wanting to talk sports and wanting to be on slack. Right. Doesn’t matter where you are in the Myers Briggs chart. We don’t have enough engineering to do all the things we want to do. And we made choices that you don’t like. Sorry. There you go. Right. So you’ve got to see it for what it is which is a pattern the second one is what I see when we do a little of this. The first thing these one off special deals do is they consume all of our time that was set aside for innovation which if you remember back to our original two CEO questions one of was why are we not innovative enough and follow whatever pattern you want. But when we steal all of the cycles and the people to do your teleportation implementation or you’re you know special Connector to SAP that’s where we steal from first and then we tend to steal from quality and infrastructure and test ability and then we tend to steal from the -ilities in the features but they all cost right there. There’s no free lunch here. Right. The third one. So I’m always trying to push for us to track the aggregate input with the aggregate effect of the collected set of sales special requests because each one individually looks honestly pretty smart. And the sales teams are very persuasive. I love them for being very persuasive most days except when they get their way. Right. So we have to look at this as a group. Right the fourth one is we’ve got to share the tradeoffs with the sales leadership. It can’t be a name calling. I think you’re stupid right. My hands are bigger than yours thing. It’s got to be we’re doing this together at the executive level. This is this is not about bits bytes and roadmaps. This is about executive teams that get along and figure out how to support the business. I often describe what I do as marriage counseling but maybe less satisfying. Right. And then the last one is we’re stuck here because of course in the enterprise business there’s going to be lots of add on stuff. And so we should as product measuring folks try to engineer our products so we can give away or partner up on all the stuff we don’t want to do ourselves. If there’s gonna be a lot of database connectors let’s either find a partner with database connectors let’s find a company that does custom building of database connectors and let’s give them that part of the deal. I always see custom companies put a really really small professional services team together here which gets a little bigger because each deal needs some more and gets a little bigger and then we borrow some from engineering. When you’re professional service team gets above about 15 percent it all goes to hell in a handbasket. Right. So. So we’ve got to architect our products knowing that we’re in the enterprise space and that we’re gonna get all this stuff and we’ve got to find non like minded partners who can pick up contract and custom development work to finish what the customers really wanted good. Okay.
So I’m going to close this with you. Here’s me. Anybody who wants to copy my really really old product management book drop me linked in what you’ll see is that my last name is my domain name which is only possible because of the 26 or 27 million people in the former Soviet states with my last name didn’t get on the internet yet when I bought my domain in 1993. So. So there we go. But but let me you know that’s how to find me there’s 17 years of blog posts on my Web site. They’re all free. Help yourself. But let’s come back to this and take some time for questions. Good.
Audience Member: Sitting in the CEO’s chair, one of the things I hear a lot as you think about investment is the cheapest source of capital is revenue. And what you’re describing right now sounds very familiar to me but also sounds like madness because the salespeople are coming in and saying here’s how we can get extra revenue and the software people the product people are saying no no no this is ruining my roadmap for potential future business, when in fact there is an opportunity to get short term.
Rich Mironov: So let me rephrase that. Which is I bet the number one thing that the engineering and product team wants to build is something that’s let’s say going to reduce customer churn by 4 percent. Sure. Okay. And that’s going to represent among your thousand customers you know 40 customers who were going to renew. Right. And when we multiply the cost your product that’s going to be a lot of money. Right. Right. And if we don’t do that bad things are going to happen. Right. The deal that comes in that has a bunch of special work on it you’re actually going to pull engineers who aren’t… The deal doesn’t pay for itself. Okay. Even if it’s six hundred thousand dollars you’re going to spend one hundred thousand in engineering but you’re gonna give up all of the benefit to your overall customer base. So sometimes we do this sometimes we must do this but in general it’s poison it’s crack cocaine because after we do it once we want to do it again and what we end up doing is we consume our engineering team with all of these one off items and next quarter we got nothing. Right. We’ve got no new features we’ve got no innovation and the competitors are chasing us. But what we’ve done is a connector for Deutsche Bank and a special three factor authentication for General Motors which are not of general use and we’re in position 840 in the backlog. So if you’re in a professional services model and you can charge 3x or 5x and you can hire more people to do the work then it’s a perfectly sensible thing to do. But when you’re stealing your chief architect and the folks who are gonna keep your systems running to do something that’s only for one customer, the economics of it in my view don’t ever pay. They rarely pay out. And and as the CEO if you are trading you’re mortgaging next quarter you better do that very very wisely because if you do a couple or three of them it’s a steaming heap of bits on the floor.
Audience Member: Fair enough – if I could just quickly follow up, Mark. What you’ve been describing is basically robbing engineering cost of product development to essentially subsidise cost of customer acquisition. Why not have engineering expense in the cost of acquisition?
Rich Mironov: It’s not a financial issue. It’s not a costing issue. It’s a staffing issue. OK so if you had one hundred extra folks sitting around with nothing to do and this was a fit for their talents whatever that was then that would make perfect sense. But what you’re doing is… you can’t use the money to replace the folks who you who you spent on this because they’re very special they’re the only ones who know your product. You could go hire a bunch of other folks but we know that when you hire folks late in the cycle it gets later not sooner. Right. And as you build up your team you’re going to be faced with the same tradeoff over and over again because the first time it makes sense. And the second time it feels like it makes sense and the fourth time it’s all gone. So. So the key thing as the CEO is for you to count your tokens and ask about sizing and see how disruptive is going to be and ask the else question – if we do this what are we not going to get – and really cost the features we’re going to give up which when at the top of the list and you approved it at the beginning of the quarter because it was going to really drive revenue. Right. So the idea that we’re not giving up revenue by taking something out of the plan is a fallacy. So you have to ask what’s the least feature we’re going to lose and what was it worth. And who’s going to call you on the phone and complain because they saw the roadmap and we promised it to him right. That’s why CEOs have a really really hard job.
Audience Member: Hi there Rich. Thanks for the interesting lecture about putting an effective road map. If you don’t mind I’d like to ask you about something different entirely. It’s not entirely different… but to go back to Greek mythology and there are a lot of lessons I think from Greek mythology but you can argue that Midas had a well executed roadmap to turn whatever he touched into gold. Can you talk about the destination at the end of the road map and how you can begin to understand that you’re your road map is taking you to the place you want to go or if you’re picking the right destination for your road map to bring you to.
Rich Mironov: So so I skip the whole question of whether the right things are on the road map right and I’m assuming here that we have a destination we understand our market we’re building the right things we’ve got market intelligence we’re doing great discovery I skipped that step because that wasn’t the problem that we were unpacking here and it’s really hard to do and just the last thought on the Greeks is the Greek heroes the story ended really badly for every one of those heroes. So when we think about going to the office and being heroic let’s be careful what we wish for good who’s now.
Audience Member: Hi. I got a quick question about organizations going through a change growing organization starting off small and you touched on you on your talk. How obviously the received wisdom is at the beginning. You’ve got to MVP and then iterate purely purely in terms of what those customers want.
Rich Mironov: I don’t agree. So I think and let me get off on another rant here before I run out of time… but I think the whole MVP concept is flawed. The P doesn’t stand for product the things we build are prototypes and sketches right in the enterprise space if you ship a product that doesn’t do the things the customer needs in a whole way they fire you. So in the enterprise space you do a lot of experiments but you have to ship sufficiently robust products that they for instance don’t have security holes in them right. Not OK. But more back to your point. The first three or four or five or six deals you do as an enterprise company you do exactly what I didn’t recommend right. You build exactly what the customers want and you hope against hope that some of those pieces are reusable and renewable. My experience is it’s a pretty low percentage because they’re all special cases. If you worked in health care somebody taught me that when you’ve seen one hospital you’ve seen one hospital OK – every one of them is a special case. So what you end up doing with while you’re trying to close customer six through one hundred is unwind and pay down all the technical debt and silly architecture and one off crazy things that you did for those first five customers knowingly because you can’t scale the company you can’t ever get enough support and installation and implementation folks to do custom work unless you’re a custom software company. And then I don’t care because you’re not my client good.
Audience Member: My question was how many quarters did you do the magic bullet for? And what was the hardest thing about the magic bullet concept? Was it getting them to buy in the beginning or were there things that came up?
Rich Mironov: We did that for I don’t know a year and a half. So that’s six quarters. The hardest thing is that the sales organization is very poor at sizing things and they’re very good at minimizing the description of what they need because that’s how we pay them right so we pay them and reward them to make it sound easy and small. And then when you unpack it it’s not and it’s not on them because they’re not the you know the architects and the technologists. But often we came back and said well that one week thing is actually seven centuries worth of a team of nine hundred and it doesn’t qualify. So that was really hard because, because it was hard. The hard thing about hard things is that they’re hard. If it were easy somebody else could do it.
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