EMPOWERED: Ordinary People, Extraordinary Products

PART I

Lessons from Top Tech Companies

My first book, INSPIRED, discussed how strong product teams at the best product companies use the modern techniques of product discovery to solve hard problems in ways their customers love, yet work for their business.

INSPIRED brought me and my SVPG Partners into many more organizations, well beyond Silicon Valley.

The most striking thing we learned was that in so many companies—even companies trying to do true, technology‐powered products and services—product teams were too often not allowed to work the way they needed to.

We realized that it's not just the techniques that strong product teams use to discover successful products, but that the differences between how great product companies work and the rest run much deeper.

What we found in these companies was not pretty.

The Role of Technology

So many companies still have the old IT mindset when it comes to technology. It's viewed as a necessary cost rather than the core business enabler it needs to be. The people who work on the technology teams are literally there to serve the business, and the technology managers and leaders are there to facilitate serving the business. Or it's shoved off to the side in some digital business unit. The technology teams are disconnected from the real customers—in fact, they're encouraged to think of their stakeholders as their customers.

Coaching

There is little if any active coaching of the people on the technology teams. And even if they wanted to coach, the managers often don't have the experience themselves. So the problems perpetuate.

Staffing

Most of these companies recognize that they don't have the staff they need, but they have very misguided ideas about how to correct that, and what to look for in product staff. So again, the problems perpetuate.

Product Vision

These companies rarely have an inspiring, compelling product vision. They may have had one during the early years of their company, but after the founders left, the vision faded. The people on the technology teams feel like they're just working in feature factories.

Team Topology

The technology people are divided up into teams where they feel like they aren't responsible for anything meaningful, they can't do much without depending on changes from several other teams, and that they're just a small cog in a giant wheel.

Product Strategy

It wouldn't be fair to say that most of these companies have a weak product strategy, because in truth, most have literally no strategy at all. They are just trying to please as many stakeholders as they can with the people and time and skills they have.

Team Objectives

Most of these companies have heard that Google and others use the OKR (Objectives and Key Results) technique to manage their work, and the CEO watched a video or read a book and thought it sounded easy. So they adopted the technique—layering it on top of their existing product roadmaps and culture—and every quarter there's a planning exercise that consumes a few weeks and is then largely ignored for the rest of the quarter. Most of the people on the teams say they get little if any value out of this technique.

Relationship to Business

The relationship between the technology teams and the rest of the business is not good. The stakeholders and executives have little or no trust in the technology teams. And the people on the technology teams feel like unappreciated mercenaries, subservient to the business.

Empowered Teams

Worst of all, the teams are not empowered to solve problems in ways customers love, yet work for the business. And as such, the teams can't be held accountable to results.

The product manager is really a project manager, shepherding the backlog items through the process. The designers and engineers are there just to design and code the features on the roadmap.

Motivation is low, sense of ownership is minimal, and innovation is rare.

It is easy to see why so many of these companies are ripe for disruption. And nothing at all like how product is done at strong product companies.¹

What is especially shocking to me is that it is really no secret how the best companies work, and how financially successful they are. Which raises the question, why is this the case?

In my experience, it's not that these companies don't want to transform, it's that transforming is hard, and they just don't know how. Or even what it really means to transform.

What they need is to move to empowered product teams.

Now, you may not be using that term, and you may not even realize there are different types of technology teams.

But if what I described is similar to your organization, I need to share with you a few very hard truths:

First, you have very little chance of getting meaningful business results, let alone actually innovating, from your way of working

Second, your customers are big, ripe targets for a competitor that does not operate this way (e.g., Amazon), and knows how to provide products customers love, yet work for their business

Third, you are largely wasting the talents and capabilities of the people you have hired, and your best people—the ones you desperately need to survive and thrive—will likely leave

Finally, if you think that by moving to Agile you've already done some form of digital transformation, I am sorry to tell you, but you haven't even gotten started

I'm hoping that the reason you're reading this book is because you are convinced there must be a better way.

And there is.

Note

¹ To be very clear, we have found exceptionally strong companies well beyond Silicon Valley, including in Shanghai, Melbourne, Tel Aviv, London, Berlin, Bangalore, and beyond, just as we have found very weak companies in the heart of San Francisco. It is the difference between the best and the rest that we focus on in this book.

CHAPTER 1

Behind Every Great Company

In this book, I want to share and highlight the differences between how the best companies create technology‐powered products and how most companies create products.

The differences are both fundamental and striking.

The differences certainly include what many people think of as product culture, but strong product companies often have very different cultures from one another, so it clearly goes beyond that.

For example, consider Amazon, Google, Apple, and Netflix. I would argue all four are very strong product companies, having consistently innovated for many years, yet they each have very different cultures.

I still believe culture is extremely important, but there is something about great product companies that is more fundamental.

It comes down to the views they have on the role of technology, the purpose of the people who work on the technology, and how they expect these people to work together to solve problems.

Moreover, I don't think it's an accident that, despite their different cultures, these four companies have the most important elements in common.

What I will try to do in this book is untangle the parts of the cultures of these companies that are more a reflection of their founders' personalities from those that are essential to consistent innovation.

I want to share the important lessons I've learned regarding what separates the best from the rest.

One surprising common thread among many of the best product companies is the legendary coach, Bill Campbell. During their formative years, Bill literally provided executive coaching to the founders of Apple, Amazon, and Google, as well as several others.

To get a sense of Bill's views and values, here is one of my favorite quotes about the role of leadership in a strong product company:

Leadership is about recognizing that there's a greatness in everyone, and your job is to create an environment where that greatness can emerge.

This book is all about identifying what makes such an environment, and I want to encourage you to consider adopting these important practices and behaviors.

Please note that I am not arguing that these strong product companies are models of virtue. All of them have been justifiably criticized about some of their policies and practices.¹

But when it comes to the ability to consistently innovate, all four of these companies have demonstrated their skills, and I believe there is much to be learned from them.

At the core, I see three critically important differences between the strongest product companies and the rest:

The first is how the company views the role of technology.

The second is the role their product leaders play.

The third is how the company views the purpose of the product teams—the product managers, product designers, and engineers.

Let's take a closer look at each of these.

The Role of Technology

There is a fundamental difference between how strong companies view the role and purpose of technology as compared to most other companies.

At its most basic level, the vast majority of companies view technology as a necessary expense. They know it's important, but they think of it more as a cost of doing business. If they can outsource the labor, even better. Fundamentally, they don't really consider themselves in the technology business. Instead, they think of themselves as in the insurance business, or the banking business, or the transportation business, or whatever. Certainly, they need some technology to operate, but it's viewed as a subservient role to the business.

Because of that, in most companies, technology teams exist to serve the business. That is very often the exact phrase you will hear. But even if they aren't explicit about it, the different parts of the business end up driving what is actually built by the product teams.

In contrast, in strong product companies, technology is not an expense, it is the business. Technology enables and powers the products and services we provide to our customers. Technology allows us to solve problems for our customers in ways that are just now possible.

Whether the product or service is an insurance policy, a bank account, or an overnight parcel delivery, that product now has enabling technology at its core.

As such, in strong product companies, the purpose of the product team is to serve customers by creating products customers love, yet work for the business.

That is a profound difference, which impacts nearly everything about the company and how it works, and results in much higher motivation and morale. And most important, it results in a much higher level of innovation and value for customers and the business.

Strong Product Leadership

In most product companies, the role of true product leadership is largely missing in action.

Instead, they are mainly there as facilitators, responsible for staffing the in‐house (or even worse, outsourced) feature factory, and keeping the trains running on time.

In most companies, there is no product strategy. Notice I didn't say a bad product strategy—I mean literally no product strategy. The feature teams are simply there to serve the business.

The business certainly has reasons for what they request or put on the roadmaps, but they very rarely have a product strategy, or even the skills or data required to create one.

The stakeholders end up providing product teams with a prioritized list of features and projects that they need completed this quarter or this year. So, the product strategy, if you could even call it that, is really about trying to please as much of the business as possible.

When technology product companies moved to Agile methods over the past 10–20 years, many managers and leaders questioned whether they were still necessary, since team members would be expected to take a much more active role in how they work.

I realize this is counterintuitive to many people, but while moving to truly empowered teams does require moving away from the old command‐and‐control model of management, it does not mean you need fewer leaders and managers. It means you need better leaders and managers.

It's actually easier for a manager to manage (often micromanage) in the old command‐and‐control style. It's not hard to assign a team a list of activities, or a list of features to build, and just tell them to do the work as fast as they can.

While this command‐and‐control style may be easier for the manager, it creates teams of mercenaries with no empowerment in any meaningful sense.

In contrast, in strong product companies, the product leaders are among the most impactful leaders in the company.

They are responsible for staffing and coaching the product teams; they are responsible for the product strategy and converting the strategy into action; and they're responsible for managing to results.

Empowered product teams depend on skilled product managers, product designers, and engineers, and it is the leaders and managers who are responsible for recruiting, hiring, and coaching these people.

Further, a focused and compelling product strategy—based on quantitative and qualitative insights—is among the most important contributions of product leadership.

Empowered Product Teams

In most companies, the technology teams are not empowered product teams, they are what I call here feature teams.

Feature teams look superficially like a product team. They are cross‐functional, with a product manager, a product designer, and some number of engineers. The difference is that they are all about implementing features and projects (output), and as such are not empowered or held accountable to results.

The feature teams get to work first designing the features on the roadmap, maybe doing a little usability testing, and then proceeding to building, QA testing, and deploying the features (known as delivery).

These feature teams sometimes claim they're doing some product discovery, but they rarely are. They've already been told what the solution should be; they're not empowered to go figure out the solution themselves. They're just there to design and then code.

In these feature teams, there is usually a person with the product manager title, but they are mainly doing project management. They are there to ensure the features get designed and delivered. Necessary perhaps, but this is not product management.

Because the teams are provided, or are pressed to provide, roadmaps of features and projects, the focus of the team is delivery—delivery of these features. And features are output. Even if someone were to complain of lack of business results, who would you hold accountable?

In contrast, in strong product companies, teams are instead given problems to solve, rather than features to build, and most important, they are empowered to solve those problems in the best way they see fit. And they are then held accountable to the results.

In the empowered product team model, the product manager has a clear responsibility, which is to ensure that the solutions are valuable (our customers will buy the product and/or choose to use it), and viable (it will meet the needs of the business). Together with a product designer who is responsible for ensuring the solution is usable, and a tech lead who is responsible for ensuring the solution is feasible, the team is able to collaborate to address this full range of risks (value, viability, usability, and feasibility). Together, they own the problem and are responsible and accountable for the results.²

So, to summarize feature teams vs. empowered product teams:

Feature teams are cross‐functional (a product manager doing mainly project management, a product designer, plus some engineers), and assigned features and projects to build rather than problems to solve, and as such they are all about output and not business results.

Empowered product teams are also cross‐functional (a product manager, a product designer, and engineers), but in contrast to feature teams, they are assigned problems to solve, and are then empowered to come up with solutions that work—measured by outcome—and held accountable to results.³

Product Discovery

If you have not yet read INSPIRED, then you might be wondering: What is so wrong with the business owners and stakeholders deciding what goes on the roadmap, and therefore what the engineers should build?

This is considered the first and most important principle of product discovery: our customers, and our stakeholders, aren't able to tell us what to build.

It's not because our customers or stakeholders aren't smart or knowledgeable.

There are two fundamental reasons why our customers and stakeholders aren't able to tell us what to build:

First, the customers and stakeholders don't know what is just now possible—they are not experts in the enabling technologies, so they can't be expected to know the best way to solve the problems we're focused on, or even if the problem is possible to solve. It's often the case that innovations solve problems in ways that customers and stakeholders had no idea was possible.

Second, with technology products, it's very hard to predict in advance what solutions will work. There are many reasons why product ideas don't deliver the results we hoped. All too often we are excited about some idea, but our customers are not, so they don't buy what we thought they would. Or, we discover the idea has major privacy or security issues. Or we find out the idea will take much longer to build than anyone expected.

Empowered product teams understand these inherent issues, and product discovery is about discovering a solution that our customers love, yet works for our business.

We refer to this as product discovery to acknowledge that we understand what we can't know in advance, and to emphasize that our task is to discover a solution that is valuable, usable, feasible, and viable.

Notes

¹ For an unflinching critique of these companies when it comes to their policies, see the writings of Professor Scott Galloway (www.profgalloway.com).

² To be clear, the designer and tech lead contribute much more than simply ensuring usability and feasibility respectively; what I'm referring to here is who we hold responsible and accountable for each risk.

³ There is actually a third type of technology team, which is referred to as a delivery team (or Scrum team or dev team). A delivery team doesn't even pretend to be a true product team. They are not cross‐functional, and they are not empowered. There is a product owner (responsible for administering the product backlog) and some number of engineers. They are purely about output (code and ship). If you're running a process like SAFe, then this is unfortunately you, and truthfully, I have no idea why you would want to read this book, since what I describe here is the polar opposite both philosophically and practically.

CHAPTER 2

The Role of Technology

I promise that this book is very practical, and you'll be able to directly apply everything we discuss. But in this one chapter, if you'll bear with me, we need to get just a little philosophical.

It is plain to see the difference between feature teams and empowered product teams.

It is plain to see when companies view teams as there to serve the business, versus when they're there to serve customers in ways that work for the business.

It is plain to see when a company is just trying to please as many stakeholders as possible, versus when they have a clear and intentional product strategy.

But while these differences might be plain to see, that does not explain why these differences exist.

If we hope to close the gap between the best and the rest, we need to look at the root cause of this gap.

Roughly a decade ago, Marc Andreessen published what I consider one of the most important essays of our time, Why Software Is Eating the World.¹ He described why he believed that technology was about to cause major disruption across virtually every industry. He gave voice to what I had been seeing in my own work—primarily with the disruptors, but occasionally with those under threat of disruption.

Ten years later, it's clear he was remarkably prescient.

That said, most companies seem to have not really understood his warnings.

Yes, they're all spending more on software now.

Yes, they've (mostly) moved to Agile methods.

But most have not transformed in any meaningful sense, and in particular most have not embraced technology as the business enabler it is.

The examples of this are unfortunately everywhere.

One of the clearest and most egregious recent examples has to be the absolute ineptitude of the leadership at Boeing with the software at the heart of the aircraft manufacturer's shocking 737 MAX crisis.²

Boeing's fundamental mistake was to consider this technology as just a necessary cost, rather than the core competency that enables them to provide the safest, most fuel‐efficient, and most cost‐effective airplanes available.

Rather than staffing an empowered product team—continuously working to provide the safest, most fuel‐efficient, mission‐critical control software—they decided to outsource this technology, thinking they could maybe save a few dollars.

It's not just the aerospace industry. The automotive industry has suffered from this mindset for decades,³ until Tesla came along and proved what is truly possible when technology is at the core of the car, rather than treated as just a necessary cost. Going far beyond navigation and entertainment systems, using technology at its core and over‐the‐air updates, a Tesla actually improves over time rather than simply depreciating. Consider that for a moment.

Pixar has shown the film industry what is truly possible when technology is at the core of an animated feature film, rather than just a necessary cost. Pixar uses technology in ways far beyond traditional film‐making, and the technology teams are as valued as the creative teams.

As you may know, Pixar is now part of Disney, and look at how Disney has embraced technology to completely reimagine so many of their existing businesses. This includes everything from their legacy theme parks to what they've recently done with the Disney+ video streaming service.

The same story is playing out in the insurance, banking, health care, telecommunications, education, agriculture, transportation, and defense industries. I could keep going.

Often, when I am having dinner with one of the CEOs from a company that doesn't get this, they'll tell me how they're not a technology company—they're an insurance company, or a health care company, or an agricultural company. I'll say, Let me tell you what I would do if I was a product leader at Amazon or Apple, and we've decided to go after your market because we believe it is large and underserved, and that technology is available that enables dramatically better solutions for your customers.

After describing how we would set up our teams around the enabling technology to optimize for true innovation, I also point out that, competitively, we would be betting on them not being able to respond because they would be too busy trying to protect their old business.

It's not that these CEOs don't admire what companies like Amazon and Netflix and others have done—they generally do. It's that they don't see how these lessons apply to them. They don't understand what Marc was trying to warn them about.

Of course, there are many possible reasons why the CEOs of these companies have been so slow to grok this. Sometimes, they have worked in the old world of business so long that they need more time to wrap their head around the changes. Sometimes, I can't help but feel like they are fearful of technology. Sometimes, they just seem to be resisting change. But, ultimately, these are all just excuses. The board is supposed to be there to ensure the CEO is able to effectively lead the company.

What is especially ironic is that these companies are almost always spending far more on technology than they need to. In fact, I've never seen more wasted technology investment than I find in these companies that don't understand the true role of technology.

Rather than outsourcing hundreds or even thousands of mercenary engineers—and providing them roadmaps of features from their stakeholders which rarely generate the necessary business results—I explain to them that they will receive a much greater return from a significantly smaller number of the right employees. Employees who are given business and customer problems to solve and are held accountable to the results.

One way or another, becoming one of the best companies today requires senior leaders who understand the true and essential role of technology.

The Technology Leader

One very common manifestation of how a company views the role of technology is whether the engineers building the company's products report up to a CIO (chief information officer)/head of IT, or whether they report up to a CTO (chief technology officer)/head of engineering.

This may seem like a minor issue, but I've come to realize it's a much more significant impediment to transformation than most companies realize.

With the big caveat that each individual CIO is a unique person, I share this not as an absolute, but as something to seriously and honestly consider. Also, it is important to realize that the core CIO job (managing the IT function) is both important and difficult.

But here's the problem: the CIO truly is there to serve the business.

The very traits that make for a strong CIO can easily end up undermining the company's attempts to transform.

That's my theory for why I've found it very difficult to get CIOs—even strong CIOs—to appreciate, much less adopt, the mindset, methods, and practices of product engineering organizations.

What's especially problematic is that product engineers—the type the future of your company depends on—are rarely willing to work for a CIO because they know this difference in mindset is extremely important.

Engineers in a CIO's organization play a very different role than engineers in a CTO's organization. It's the difference between feature teams and empowered product teams.

In some cases, I've encouraged the CIO to retitle as CTO (because I believed the person was up to the challenges of this much larger role), and in other cases I've strongly encouraged the CEO to hire a true CTO to lead product engineering.

Notes

¹https://a16z.com/2011/08/20/why-software-is-eating-the-world/.

²https://www.bloomberg.com/news/articles/2019-06-28/boeing-s-737-max-software-outsourced-to-9-an-hour-engineers.

³ Bob Lutz, Car Guys vs. Bean Counters: The Battle for the Soul of American Business (New York: Portfolio/Penguin, 2013).

CHAPTER 3

Strong Product Leadership

The heart of this book is the importance of strong product leadership.

To be clear, by product leadership I mean the leaders and managers of product management, the leaders and managers of product design,¹ and the leaders and managers of engineering.

For this discussion, I will distinguish between leaders and managers. Certainly, many leaders are also managers, and many managers are also leaders, but even if both roles are covered by the same person, there are different responsibilities.

Overall, we look to leadership for inspiration and we look to management for execution.

The Role of Leadership—Inspiration

The subject of strong leadership, is of course, a major topic, but it is a clear and visible difference between strong product companies and most companies.

The purpose of strong leadership is to inspire and motivate the organization.

If product teams are to be empowered to make good decisions, they need to have the strategic context necessary to make those decisions.

Part of the strategic context comes from the senior leaders of the company, such as the purpose of the business (the mission) and critical business objectives, but the product leadership has four major explicit responsibilities:

Product Vision and Principles

The product vision describes the future we are trying to create and, most important, how it improves the lives of our customers.

It is usually between 3 and 10 years out. The product vision serves as the shared goal for the product organization.

There may be any number of cross‐functional, empowered product teams—ranging from a few in a startup, to hundreds in a large enterprise—but they all need to head in the same direction and contribute in their own way to solving the larger problem.

Some companies refer to the product vision as their North Star—in the sense that no matter what product team you're on, and whatever specific problem you're trying to solve, you can all see and follow the North Star. You always know how your piece contributes to the more meaningful whole.

More generally, the product vision is what keeps us inspired and excited to come to work each day—month after month, year after year.

It is worth noting that the product vision is typically the single most powerful recruiting tool for strong product people.

Product principles complement the product vision by speaking to the nature of the products that your organization believes it needs to produce. The principles reflect the values of the organization, and also some strategic decisions that help the teams make the right decisions when faced with difficult trade‐offs.

Team Topology

The team topology refers to how we break up the work among different product teams to best enable them to do great work. This includes the structure and scope of teams, and their relationship to one another.

Product Strategy

The product strategy describes how we plan to accomplish the product vision, while meeting the needs of the business as we go. The strategy derives from focus, then leverages insights, converts these insights into action, and finally manages the work through to completion.

Product Evangelism

Another critical role of leaders is communicating the product vision, principles, and product strategy—both to the internal product organization, and also across the company more broadly.

John Doerr, the famous venture capitalist, likes to explain that We need teams of missionaries, not teams of mercenaries.

If we want teams of missionaries, it's essential that every person in the organization understands and is convinced—they need to be true believers.

This requires an ongoing crusade of evangelizing—in recruiting, onboarding, weekly 1:1 coaching, all‐hands meetings, team lunches, and everything in between.

The larger the organization, the more essential it is to be very good at evangelism, and it's important for the leaders to understand that evangelism is something that is never done. It needs to be a constant.

We want to ensure that every member of the product organization has joined because they sincerely believe in the larger purpose.

Normally, it is the product vision that describes what people are signing up for, but one way or another, we need to ensure the people on the team are true believers.

For example, if your vision is to deliver mass‐market electric cars, then we need people that are willing to take the leap of faith that this is both possible and worthy. Note that it is not a problem if the person you hire has different views on what might work to get us to mass‐market electric cars, but it is not helpful, for example, to hire a passionate advocate for internal combustion engines.

The Role of Management—Execution

There are of course many types of managers in a company. I'm most interested here in those people responsible for hiring and developing the actual members of the cross‐functional product teams.

Normally, this includes the director of product management, the director of product design, and the managers and directors of engineering. I'm not focused here on more senior‐level managers (managers of managers), or non‐people managers (such