Rapid iteration, AB testing, and growth hacking, these buzzwords have everyone’s attention in product management today. But while they dominate the current discussion, something even more significant has been lost in their limelight–long-term value creation for the customer. Product advisors Rajesh Nerlikar and Ben Foster believe that consistently delivering meaningful outcomes requires a deep understanding of your customer’s definition of success.

In Build What Matters, Rajesh and Ben introduce you to their methodology for becoming a product-driven company. Through their tested strategies of stories and success, you’ll learn how vision-led product management helps you achieve company objectives by meeting both current and future customer needs.

Drew Applebaum: Hey listeners, my name is Drew Applebaum and I’m excited to be here today with Rajesh Nerlikar and Ben Foster, authors of Build What Matters. Rajesh and Ben, I’m excited you’re here, welcome to the Author Hour podcast.

Rajesh Nerlikar: Thanks for having us Drew, excited to be here.

Ben Foster: Yeah, thanks for having us, it’s great.

Drew Applebaum: First, to get us started, tell us a bit about your background, respectively.

Ben Foster Sure, I’ll go ahead and jump in. My name is Ben, I’ve been doing product management in some way, shape, or form for a little over 20 years at this point. I was fortunate enough to be hired by Marty Cagan back on his team at eBay in 2001, which kind of started off my product career in a lot of ways. I went from there to a whole variety of startups and then eventually got into product leadership positions, following my time as a VP of Product at O Power.

I ended up creating a consulting and advisory practice called Prodify and was very happy to welcome Rajesh into it later. It was a great way to meet so many different companies, so many different founders, and I think it was really that experience that led us to realize that we wanted to write this book based on some of the things that we had learned.

Since founding Prodify, I then joined as the Head of Product at a company called GoCanvas and then very recently joined as a Chief Product Officer at WHOOP.

Rajesh Nerlikar: A little bit more about myself. I am an engineer turned MBA, turned product guide. I have been doing product for more than 15 years. I started my career at Accenture as a software engineer architect and found myself a little bit more interested in the business side of things, so I became a business analyst in our government practice. That was my first step into product.

I wasn’t sure that consulting was the right long-term thing for me, so I went to business school up at Michigan Ross and used that to focus on a transition into the world of startups. I worked for a student-run company during my first year, that got acquired after graduation. In my second year I started a company through the business plan competition–so an accelerator. I spent about a year and a half trying to solve our Facebook app that lets you compare your energy usage to friends and family to utility companies and home energy professionals. And then I got engaged and decided a salary would be good. So, I joined Ben’s team as a product manager at Opower and Opower is a company doing something very similar in the residential energy efficiency space.

I learned a lot about product to kind of cut my teeth in my first product role there, by working on some internal tools on myself. I was interested in the financial wellness space and so I left Opower and joined another startup in the DC area called HelloWallet. We sold web and mobile apps that help people reserve financial goals, that were delivered as an employee benefit. I went there for about a year before we got acquired by one of our investors, Morningstar out in Chicago.

After the acquisition and I then moved to Chicago to take on a couple of additional products since I have a team of about 20 people between product managers, technical project managers, product operations, managing about five products that were expanded, and a couple of robo-advisors which were another part of our employee benefit, product suite. I found myself really missing the world of startups when I joined Morningstar as a slightly larger organization and started advising companies on the side. I really enjoyed it.

I feel like I learned a lot about sharing my stories and best practices with other folks who are early on in this life cycle. So, when we moved to Austin a few years ago to be closer to friends and family, I reached back out to Ben and it just happened to be great timing. He was thinking about joining GoCanvas as the Head of Product so I took over the advisory practice, Prodify, and I’ve been doing that for almost three years now.

The Audience

Drew Applebaum: Nice, who did you guys create this book for?

Ben Foster: I think the book is really for three different types of audiences–we discussed this when we started writing it. The first is people who are product leaders in a company, so they’re responsible for deciding who in engineering is going to work on which project, to make the biggest kind of impact on the customer experience.

Number two is intended for CEOs and founders of tech companies, who haven’t had a lot of background running companies. And then third, we really had in mind investors because we’ve all been in those board meetings with these discussions around what the sales numbers look like this quarter. But there is a lot less discussion around what the product strategy looks like. We felt like there is a real need to address those decisions at the senior-most levels around where the product strategy was headed for a given company, from an investor’s perspective as well.

Drew Applebaum: Now, each chapter in the book ends with an action checklist. Can you talk about the process you set up for product managers to implement what they read in the book?

Rajesh Nerlikar: Sure, this is actually something that’s not new to our practice, we’ve been doing this for years now. We’ve created what we call ‘The Library.’ And rather than being sort of hand-wavy advisors who just say, “Well, we think you should do this, good luck with that,” we wanted to be very action-oriented and give you the tools and resources necessary to take action on any guidance or tips that we might provide. The action checklists that come out of the book are an extension of resources that we’ve been using for years with our existing clients. They include things like worksheets, templates, guides, and meeting agendas for implementing all the concepts we talk about in vision-led product management throughout the book.

Drew Applebaum: This is hosted on your webpage?

Rajesh Nerlikar: Yes, exactly. They are supplementary to the book. You can visit buildwhatmattersbook.com and there will be a link to go download. There will be one document, effectively, that links to a bunch of other resources that get you access to.

Drew Applebaum: Now, diving into the book, what are some of the major dysfunctions happening that are stopping optimal product management in many companies?

Ben Foster: Rajesh and I were working on this section together around the ‘Top 10 Dysfunctions of Product Management.’ We started with a list of about 40. It was a lot of work to try to consolidate those down to something that was digestible, and it still ended up being a fairly long list as 10 of them.

The ones that stand out to me and the ones that I would probably focus the most attention on would be number one–what we called ‘The Hamster Wheel.’ That’s a lot of emphasis on output from product development teams over outcomes that are delivered through those product development teams.

There’s another one called ‘The Feature Factory,’ and we see this time and time again as these companies that are basically just launching feature after feature. Sort of, like, in air quotes, “Improvement after improvement.” The reality is a lot of times they don’t realize what the negative consequences are of taking their product in that direction.

Then the last one that I’ll point you to is the negotiating table. And this is probably the one that we see most of, which is when a product manager in their role is trying to work with so many different parties internally that they almost think of their role as being responsible for trying to keep everybody happy, rather than making the right decisions on the behalf of the customer.

Those are examples of the kinds of dysfunctions that we’ve seen in the book. We try to articulate what those look like inside of a company, so you can assess for yourself whether that’s something that you’re experiencing. And then we spend the rest of the book talking about how you go about solving those problems.

Drew Applebaum: Now, you mentioned you took 40 potential problems, and you narrowed it down to 10 but what do they all have in common?

Ben Foster: The thing that I think that they have in common is that they’re an attempt to fill a vacuum. That vacuum that is there, is really a function of not having invested thoroughly enough in understanding what’s going to make your customers successful and then producing that in such a way that you can explain it to the rest of the company in the form of a customer-focused product vision. So, our belief is that the best defense against each of these different types of dysfunctions is really a good offense. That’s a matter of piecing together the understanding for the rest of the company about what’s going to make your customers successful, and how your own business success is going to be a function of that customer’s success. And then, the deliverables that are associated with that in terms of a vision, a strategy, a roadmap, and downstream from there as well.

Product First

Drew Applebaum: Now, other departments might take issue here, you guys say that a company should be product-driven first, why is that?

Rajesh Nerlikar: I think our take would be that to each his own. There are companies that have grown to be successful and taken many different paths. What we found is that a lot of companies come and say, “We want to be a product-driven company,” because they know that it offers a very scalable and efficient path to growth.

But when push comes to shove and we say, “Well, what does that mean to you?” We do get a lot of blank stares. So, in the book, we articulate what it means to be product-driven, why you may choose that as the pathway forward, and how to actually become a product-driven organization. In the book, we also cover why it would matter to your customers, things like time to value and being able to pull a readymade product off the shelf at a very low marginal cost of delivering the same product to the next customer.

Also to the business assessment–product-driven companies often get much higher evaluations because of their scalability and profitability. Other departments may say well, marketing is the thing, and sales, that is the thing that got it there. But with a SaaS company, the sales team is somewhat limited by the product that’s being shipped, and they can’t always control what’s changing inside the product. The product management team is at the helm of that card.

Drew Applebaum: When you’re creating a product strategy, what are some of the key outcomes that you should look for?

Rajesh Nerlikar: One set of key outcomes that almost every team looks for, is one of the business outcomes, and has a dollar sign in front of it or maybe it’s a company evaluation. One of the things we talk about in the book is how you have to look at the key outcomes from your customer’s perspective, what is the ROI math that they’re going to be doing in their head to decide whether this product was worth it, whether they invested a lot of time or money or both.

When we talk about these things, we identify, “What is the number one outcome that this customer would care about?” And that may vary by your different target markets and actually, an important part of the process of establishing your product vision and strategy revolves around identifying the right target market.

Some of them might be more attractive than others for a variety of reasons. Size, regulatory trends, those types of things, but once you identify that key outcome for that specific target market, we use a pyramid visualization where we break that key outcome down into its constituent parts. That serves as a great foundational element to make sure that everyone’s on the same page of what the vision is intended to deliver for the customer, from a customer’s perspective. Versus what it’s intended to deliver in a business story to an internal perspective.

Drew Applebaum: Now, you guys also mentioned in the book that the foundation of product leadership is correctly mapping out the customer journey. Tell us what the customer journey vision is and how to focus on a more realistic vision?

Ben Foster: What I’ve seen with a lot of companies that I’ve worked with as an advisor has been something where the CEO gets up to the whiteboard and is excited to unveil their raw grand vision for the company. And they talk about all sorts of things, like what kind of evaluation they want to be at. Or what the name of the industry is that they want to disrupt. The one word that never really seems to show up a lot of the time is the word ‘customer.’

It’s because there’s not quite enough emphasis on understanding from the customer’s perspective what the value is that you’re intending to deliver. Then the next question becomes, “How does that value that you then delivered to the customer translate to value that then you, as the CEO, or you as a company can go capture yourself?”

We like to really emphasize with the customer journey vision that this is not just like a broad scope mission statement. But it’s actually getting into the weeds a little bit on what that customer experience is going to be. What we want to do is map that whole entire experience out into all these different parts and those different parts are the trigger, all the way from the very beginning. What makes a customer realize that the existing solution that they have, that maybe you’re trying to displace, isn’t actually working for them?

You get into the question of discovery and how they figure out that your product even exists. And then you get into this trial and evaluation type stages–eventually leading to a decision to purchase and a decision to continue using the product over time. What we really recommend for companies is that they try to map out that entire experience from the customer’s perspective. It doesn’t mean that every single little detail needs to be defined and that you need to understand exactly what the product experience is going to be–the button colors and everything like that.

Those are the things that you’ll figure out later, but overall, this whole way of actually achieving these outcomes that we just spoke about is predicated on the ability to deliver a solution that makes sense for customers. And that solution is only going to be as strong as its weakest link, which is why we encourage the companies that we’ve worked with to be very thoughtful about all the different stages of that customer journey. Hence, the description of it as a customer journey vision.

What is Product Strategy?

Drew Applebaum: Now that you’re focused on the end-user and you’ve envisioned every step of the customer journey, what are some of the best ways and strategies to align and communicate these important decisions to your teams?

Rajesh Nerlikar: This is where we start talking about what product strategy really is, which is working backward from that end-state vision and identifying the gaps between what the current product doesn’t have and what you would need in order for that vision to come to life. And it’s sequencing that works over multiple years, typically with the vision. And you’re probably talking three, four, five years for a lot of companies.

So, the alignment comes from not only knowing, like we talked about, what the metrics are of success from a customer’s perspective, what is the vision we’re trying to deliver in terms of customer experience but then, also, what the stepping stones are of these strategic milestones over the next few years that would help us realize that vision and make it a reality. And those are the things that we talk about in a strategic plan.

Having that down on paper is what we found is not always common. So, number one, getting it down on paper, drive some of the alignment, and then having the discussion. And this is where the cross-functional nature of that product strategy really comes into view. The reality is, at most companies, product marketing probably owns those first couple stages of the customer journey around the triggering moment and the discovery.

Perhaps even the evaluation where they’re building the pages that help explain what the product does and why it’s better than competitors, that drive people into a trial. And that’s usually where the product team would pick up the customer experience to trial and ongoing usage of the product and retention.

So, you can create this map of what sales are working on to drive, convert all the trials into paying customers. What’s marketing doing to fill the top of the funnel? What’s customer success doing to retain these customers? Once we have them, what’s product management or product development doing to engage these folks for a long time once they get into the product?

That’s really the idea behind the strategic plan is that it can become a cross-functional artifact that everyone uses to look at and to identify how their team is helping to change the customer experience over time–to make that vision a reality.

Ben Foster: And I’ll just layer one more thing on here with the strategy, some people get hung up on the difference between a vision and a strategy and I think it is important to separate those two things as really two distinct decisions that you are making as a company. The first one is saying, “Well if I’m at point A today, I think of a vision as planting a flag somewhere else at point B and saying this is what we want our customer journey to be at this future state.”

The strategy is the path that you take. It is often even easier to think of it from a backward perspective of, “Okay, what is the step that I will have to take before I get to that point B? What is the step that I am going to have to take before I get there?” So, you have a path that’s mapped all the way back to point A where you are standing today. So, the strategy effectively becomes the plan for how you go about getting there, given all the kinds of things that you might have to work around the obstacles.

Maybe it is fundraising and things like that that are in the middle between you actually delivering what you are delivering now to the target customer versus what that’s going to be down the road.

Drew Applebaum: When you have this vision and you are reverse engineering everything to start from the beginning, you have to put everything on the roadmap, and I think correctly executing that roadmap is huge. Do you have any strategies to help balance a product roadmap?

Rajesh Nerlikar: 100% every product team we found loves the idea of a vision and a strategy. But it is pretty unlikely unless you’re a super vintage company or launching a new product that you could just dedicate 100% of product development capacity to making that vision a reality. If you’ve got a product in the market, you probably have existing customers, you are getting feedback from them, and you have operational considerations.

We realize that every product team is probably struggling or balancing three different categories of road-mapping work at the same time. We call them category one innovation, category two iteration, and category three operation. And we cover all three of them in detail.

Innovation is really the strategic plan. So, what are the game-changing features or releases we are going to have that help us get one step closer towards our long term vision? The iteration are optimizations to the existing product. This is where a lot of teams work on AB testing. They are trying to get more people to click on a button, and get more people to use a feature after it launches. They’re iterative, right? They’re making minor tweaks to drive more people and usage inside their product. Then there is operation, which is really the cost of operating a modern SaaS platform.

These are the things that engineers are always asking about. Performance, security, up-time, cloud migrations. Many organizations, as the company scales, talk about operational tools that internal staff needs to provide a great customer experience. And the reality is, teams are marketing and they are trying to balance all of these things simultaneously. In the book, we do a deep dive into how, depending on the product life-cycle stage, you may have different balancing acts of what percentage of your capacity dedicated to each of these three buckets.

The one thing we do recommend is that teams have a discussion to do a top-down allocation first, before they decide what specific changes or features go into each of these categories. The reason being that, if you agree that 60% of all product development should go towards innovation, given this company and life-cycle stage, then you have gotten one step closer to avoiding a lot of the swirl that happens with road mapping where there are different competing priorities–that one team feels like, “Sales is always asking for the features that are going to close the deal and marketing is always asking for the features that will close and add stories.”

The Importance of Feedback

Drew Applebaum: Are you looking for feedback and input once you have a new feature or your MVP finally comes out? Where are the best places to go for that feedback?

Rajesh Nerlikar: You know Drew, there are a lot of places that our teams can go to get feedback. I’d say they have fallen into one of two major categories, probably three actually. There’s qualitative feedback, mostly from customers. So, you ask them how they feel about the product. And I’d say this has two different flavors. There is more usability testing where you are showing them wire-frames or mock-ups of things that are about to be delivered to them. Or you are asking them to go through existing features or features that just launched, and provide feedback, and this is where you are probably iterating. It’s making modest incremental changes, so they get easier to use or easier to find those types of things.

The other type of qualitative feedback is more strategic, where you are trying to understand, “What are the problems you face in your job or on a daily basis?” And this is more forward-looking from a product strategy perspective.

I am setting a division over a multi-year horizon. I want to know what the next wave of problems is that I need for my customers or what kinds of outcomes are they looking for from some product, which our product doesn’t deliver but would make sense for us to deliver to them in the near future, as an ancillary or adjacent space to where we are currently helping them provide value. That is the qualitative bucket.

Obviously, there is the quantitative bucket and a lot of teams do this really well. They have the ability to look at product usage data and hopefully correlate different features. So, people who use this feature tend to stick with us longer. They renew when the contract comes up for renewal, and those are the quantitative analysis that we see.

So, as product managers, our primary job is to make sure that customers and users have a great experience but that doesn’t mean we totally ignore all of our internal stakeholders, whether it be sales, marketing, customer success, finance, the list goes on. I think there is a lot of feedback that does come in internally, and product management needs to be ready for how to manage and handle that feedback as well.

Drew Applebaum: One of the interesting parts of this book, and the part I definitely love, is you both bring real stories and case studies from your careers for readers. I think this is really helpful, but you clearly went through some learning periods with these companies. Was it tough bringing up past lessons and, in some cases, failures?

Ben Foster: Well yes, sometimes, those memories are a little bit difficult to dredge up. The thing that I always thought about looking back in my own career is, I feel like I have learned a huge number of lessons from the successes. And also, a huge number of lessons from the failures or some of the mistakes. I think in a lot of ways, what we’ve always tried to do with the advisory work with our clients is to try to share some of those stories and try to interpret those for them.

So that ideally, they could avoid the same kind of mistakes that we made, earlier in our careers. And hopefully also learn some of the lessons based on the things that worked out really well. So, in a way, it is a little bit challenging to go back through your own career and have as much scrutiny about it and say, “Where did I make mistakes? And where am I accountable for bringing up these stories for readers who maybe don’t even know me?”

At the same time, I think it’s so core to what our advisory practice, Prodify, has always been about. It is a thing that, in many ways, differentiates the work that we have done with companies along the way. So, we have all of these stories to raise back as we are describing how to best handle some sort of particular scenario. It is those stories that I think people realize are incredibly valuable.

We really tried to sprinkle those throughout the book both, either as case studies through advisory work that we did or through hands-on personal experiences that either Rajesh or I had along the way.

Drew Applebaum: One of the most important building blocks is specifically your first product hire. What should companies look for when they are starting their product team?

Ben Foster: We run into this a lot with companies that we work with, where they feel like they need to hire very aggressively. Or make some really senior hire early on because they feel like it is just the right thing to do. The reality is for that first product hire, what we found is that the most important thing to do is to hire somebody who is a doer. Somebody who could get it done very well in those early stages. And that’s, in many ways, because a company that is younger–like a new startup–has the CEO who is the master of the product vision themselves.

It’s the whole founding of the company that leads into that vision. So, you wouldn’t want to hire somebody who is too senior, who would almost be stepping on your toes if you are the founder. The reality is, you want somebody who is on the ground, who can work with the engineering team to prioritize the right kinds of things, to get the right design decisions, but not have too many cooks in the kitchen when it comes to making decisions on the product strategy or the product vision.

Now as the company matures, that changes a lot, where the CEO is busy doing the CEO job. He can’t really get as much into the weeds on those things and that ends up being the right time to hire somebody who is more senior. But no matter what position you’re in as a company, we feel that the most important thing to look for when hiring good quality product candidates really, at any level, is not so much domain experience that they’ve had previously. Or even some of the background from an academic perspective or some of their own work experience.

Really, what it comes down to is can they do the job while they’re here? And what we found to correlate with that best is really what we call the product mindset. It’s a whole orientation of thinking about problems without necessarily having brought your own biases into it to realize that a lot of the facts are out there when it comes to doing customer research. To be curious and constantly be learning from customers about what is going to make an experience better for them.

Then to have, yes, the ability to communicate and have the technical expertise and things like that to work with the engineers. But to really understand how all of these pieces fit together and to think through synthesis about how to create these best solutions for customers.

Drew Applebaum: Now you have the strategy, you’re great in the boardroom, now you have the people but how important is company culture? How does it play into all of these and what can companies do to encourage productivity?

Rajesh Nerlikar: You know, in our experiences, having been at a lot of companies, startups, larger organizations, and worked with almost 60 companies in the last few years, we have boiled it down to four major things.

So, number one, you dedicate time to customer discovery. That means you are constantly talking to customers, understanding their problems, how they like the product, what they would do differently, what else you can be doing for them, those types of things.

Number two, focus on collaboration. Product is an extreme example of a sort of a team sport, right? We work with engineering, design, sales, marketing, executives, and finance and so that collaboration needs to be consistent and you have to create all of those pathways to make it easy. And set the right expectations.

Number three is delegate decision-making. This is an interesting one because product management–we talked about it in the opening of the book–is a little bit of a paradox. Who is actually accountable for whether the product succeeds in the market? Our take is that it should be the product manager. If that is true, then you have to give them the ability to make the decisions that are necessary for the product to succeed in the market. And so, we talk a lot about how decision-making needs to be delegated so that the team feels empowered and it feels a sense of ownership of their product or the part of the product that they are managing.

Then lastly, the fourth tenant of establishing a healthy culture would be to emphasize diversity. Of course, we mean diversity in the more common sense, race, and gender, those types of things. But I think another consideration is to look at your product team in particular and the experience of the individuals. So, we talk a lot about how, as an example, if you have a B2B2C business model and you have brought all the domain experts together on your product team who understand how to sell into the buyer space, well, maybe at some point you actually want someone who brings the consumer perspective because you’re going to need that for your product to succeed in that environment.

It is hard to get a renewal if they bought the product and no one ended up using it–whether it is the employees who got a benefit or the utility customers who got the whole power home energy report and it has actually changed their energy usage behavior, those types of things.

I think diversity is the last one to really consider as you think about establishing a healthy product culture.

Drew Applebaum: Now gentleman, writing a book is no joke. So, first of all, congratulations.

Ben Foster: Thank you.

Drew Applebaum: If readers could take away one or two things from your book, what would they be?

Rajesh Nerlikar: You know Drew, for me, what I’ve learned as a product manager in all my time in working with other companies is there is an inherent bias toward internal metrics. And it becomes so easy to get caught up in all of the revenue numbers and custom product usage metrics that show that the product is off to success that you quickly lose sight of the metrics that would matter to your customer.

So, I’d say the one big takeaway should be to think hard about how your customer would measure the value of the product that you bring to them in terms of ROI, the value that you are helping them achieve in their life. Or what outcome you’re helping deliver for them that’s really important in their work or personal lives. I’d say that’s the number one thing to take away from the book and everything else that’s built around that.

Ben Foster: Yeah, I think that is right. I think everything else is built around that. But there is one thing in particular that I would emphasize here. I would say that maybe it is even best told through a story, much like we have done within the book itself, which is when I joined Opower. It is a SaaS company that was delivering energy efficiency solutions to utilities but doing so by sending information in the form of these home energy reports to customers.

When I joined, we had signed up for so many different things that we were going to deliver to our clients. There wasn’t even a list of all the things that we basically committed ourselves to but when I added it all up, I realized that it was actually more than the total capacity that we had of engineering. You sort of wonder how you even get yourself as a company into a state like that where you’re saying “Yes,” to various customer requests.

This is one of the many dysfunctions of product management that we talk about in the book and there are many of those types of dysfunctions but they all have this one thing in common, which is they’re the results of you as a product leader, not necessarily having put enough into explaining to everyone else what it is that they’ll be losing if you say yes to a bunch of other things. You know, in many ways, what makes a product-driven company a product-driven company is that they get to the right answer by saying no to a lot of things that could end up being distractions.

However, the only way that you are empowered to do that, the only way that that’s even possible is because everybody is already aligned to saying yes to something else. That ends up being that product vision, that product strategy that drives all the decisions about what you work on next. And if you have clarity about what that is then, yes, you can adapt that based on circumstances and how they change. And yes, you can be nimble and flexible as a company but what you want to be unwavering on is the direction that you are headed for the sake of those customers. Once you get alignment around that, the rest of this becomes so much easier.

Drew Applebaum: Well Rajesh and Ben, this has been such a pleasure. I am so excited for people to check out this book. Everyone, the book is called, Build What Matters, and you can find it on Amazon. Besides checking out the book, where can people find you and can you mention your website again?

Rajesh Nerlikar: Sure, they can learn more about us at prodify.group.

Drew Applebaum: All right, well guys thank you so much for coming on the podcast today. I wish you good luck in the future.

Ben Foster: Thanks so much Drew.

Rajesh Nerlikar: Thanks for having us, Drew.