In the agile transformation organisations sometimes rely on implementing Scrum or some other agile frameworks. Scrum should make the company agile and customer centric. But the Scrum guide is incomplete by purpose. It only has a very limited set of tasks a product manager need to fulfil (Developing and explicitly communicating the Product Goal, Creating and clearly communicating Product Backlog items, Ordering Product Backlog items and Ensuring that the Product Backlog is transparent, visible and understood. [1]). How to create the product coal and any product backlog item refereeing to this goal is not part of scrum. This is where most companies get stuck in their agile transformation, as they tend to create the product goal and product strategy inside-out, top-down as usual. At this point, companies often wonder where the promised agility for success will lie.
Product led refers to growth strategy where the product is the primary driver of customer acquisition, engagement, and revenue. This approach prioritizes the user experience and focuses on building a product that is so valuable that it can drive customer acquisition and retention on its own, with less relying on traditional sales and marketing tactics. This approach is often used by software companies and can be contrasted with a traditional sales-led approach where the primary driver of growth is sales and marketing efforts.
Being product-led instead of sales-led brings some advantages for companies.
- Cost-effective: Product-led growth relies on the product to drive customer acquisition and retention, which can be more cost-effective than traditional sales and marketing efforts.
- Greater customer engagement: When the product is the primary driver of growth, it means that the company is focused on building a product that is valuable to the customer. This can lead to greater customer engagement and loyalty.
- Data-driven: Product-led companies tend to be more data-driven, as they rely on data to understand how customers are using the product and to make informed decisions about product development.
- Scalability: Product-led companies can scale more effectively as they rely lesss on salespeople to generate leads and close deals.
Overall, product-led companies tend to be more customer-centric, data-driven and scalable, while sales-led companies tend to be more sales-centric. Being product-led is clearly given advantages but the transformation is hard. In the following I describe some useful steps to become a more product-led company.
Product vision and strategy
Define your product vision and strategy: Clearly define what problem your product solves, who your target customer is, and what value it provides. If your strategy does not match your daily business or the daily business does not match your vision and strategy you are doing it wrong. A vision is not a set of actions, it is a clear goal what you want to achieve. This way anybody in the company is able to focus its work on reaching the goals.
Product people and manager need to sit down as long as it takes to have a product vision that is understood and supported by everyone.
Customer feedback
Prioritize customer feedback: Make sure you are gathering feedback from your customers on a regular basis and using it to inform product decisions. Do not try to define the needs of your software development inside-out. Only your customer knows what is needed.
Don’t be afraid. Go ask your customers what their biggest problem is you need to solve.
Product-focused culture
Build a product-focused culture: Ensure that everyone in the company understands the importance of the product and is working towards the same goals. Very often the different departments within the company (sales, consulting, marketing, …) do have very different goals in their daily work. Sales normally don’t care about being product centric. They need to sell whatever the next new customers need. Whether this is out of scope of your current product, or makes other customers unhappy is not important within the sales process.
Remove incentives on salespeople to sell more and more. Let them work instead to have the best product available on the market, to gain new customers.
Metrics
Focus on retention and growth: Measure the success of your product by looking at metrics such as customer retention and growth, rather than just acquisition.
Happy customers will lead to more customers. Make sure you have an idea what problems you need to solve for your customers need and how happy they are. This way you will easily get more customers.
Don’t stop!
Continuously improve and iterate: Use customer feedback, data, and testing to continuously improve and iterate on the product.
You are never finished with your product and you will never have ended to become even more product-led. Don’t stop taking the next step to get a better product.
[1] https://scrumguides.org/scrum-guide.html#product-owner