David Dewolf and Jessica Hall, co-authors of the bookThe Product Mindset, discuss how innovation issues are often company mindset issues. Most importantly, they explain how company mindsets are changeable and provide some valuable tips for resolving invisible issues that are holding back many businesses today from being as successful as they could be in the digital economy.

Ultimately, David and Jessica illuminate listeners on key pain points in innovation and how to go about beginning to peel back the layers of the onion to ensure your company, not only keeps up but also thrives in today’s digital landscape.

David Dewolf: I grew up as a software engineer, and in 2006, I decided that I wanted to be an independent consultant. So I struck out on my own and ended up working for a technology company that was known as a fairly innovative company. Yet, they brought me in because they in their own minds had stopped innovating. As I got inside, sure enough, they had.

They had become stagnant because of several different factors. This book is actually a result of everything we learned through that engagement, and really what built the company that I had built, 3Pillar Global, which is now a thousand people around the world, serving huge brands, about 75% of Americans use our software every day.

We just found so many powerful lessons in the lessons of this early client of ours that we had to share them with the world.

We always assume that your software product development is failing or you’re struggling because of people, process, or technology—but in reality, in the digital economy, when you’re building software products, it’s really a lot about your mindset and how you tackle these challenges. This is our sharing that message with the world.

Jessica Hall: My story picks up a little bit after David’s. I joined 3Pillar five and a half years ago, and I came to solve a particular problem that clients are having. They were spending 20-30% of their money before they saw anything on all sorts of engagements or in-house product development. They said, “You know what? It takes this long to see anything, and when we finally know what’s being built, it’s not the right thing.”

“We’re wasting money, we’re wasting time, we’re wasting effort. How can we innovate faster, how can we test out new ideas, how can we minimize risk in the developmental software?”

My task all those years ago was to put together new offerings for our clients to help them develop that, and that was definitely an interesting road over the years working with a lot of different clients and a lot of different situations.

Helping particularly practitioners like me, people with background in user experience or product management or engineering or QA, figure out how to make more of an impact. How to have more of a voice so that they could really help their companies grow.

I kind of represent the hands-on approach, where David represents the executive point of view.

When Innovation Is a Struggle

Nikki Van Noy: This is a fascinating point to me that you guys have seen innovation companies that struggle with innovating. Why do you think that is? What causes that to happen?

David Dewolf: I think, by and large, when we think about software, often times, a lot of that thinking and the mindset that people have about it comes from the world when IT organizations were building software for their internal operations. They were really building software to drive efficiencies or to automate things within the organization.

And so much of innovation today is happening with software, yet we bring this software mentality from the IT world into our innovation work. And the reality is that product development and building a software product versus an internal application is fundamentally different.

There are different characteristics, and that’s exactly what the book is all about it is outlining: Here are the three fundamental characteristics that are different between research and development and internal application development, and then here is the answer. Here are the three principles by which you need to think and how you should make judgment calls and decisions in this world of innovation.

I think it’s mindset at the end of the day, that is the reason that companies are struggling with innovation. They haven’t adapted their thinking for this digital economy.

In fact, it’s interesting as I think through that, we have just done some research over the last few months with Forrester, really looking into the principles of a product mindset and what is it that organizations are not focusing on that’s leading to either success or failure. What we found over and over and over again and what this research really showed was that organizations don’t know why they’re building software.

They are struggling with the definition, they are struggling with being able to make these product decisions and these tradeoff choices, because they are often too focused on interestingly enough, minimizing time to value and going fast.

They’re going fast without taking the time to define the mountain.

We find that product mindset is about really doing both. You’ve got to make sure that you are driving towards that outcome, right? That’s self-funding of the product, you’ve got to make sure that you’re meeting your customers and providing a true value to them, and you have to make sure you’re going fast.

Doing two of the three of those doesn’t work. Innovation comes from the combination of all three, and that’s why the three principles of the product mindset are what they are.

Jessica Hall: They’re relying on their processes or how their agile processes are, which is one way of planning and executing work. They’re aligned on strategy to have big ideas. They’re relying on investing and rock star talent. All those things are good, all those things are helpful. But if the organization isn’t thinking about how to create growth, how to learn quickly, how to experiment, how to change direction, then all of those wonderful things are not going to add up to anything that’s in the market place, what the customers want, that’s going to be generating revenue for the business.

And we’re seeing the pattern play out year after year. It took us a while to figure out exactly what it was. What was that different thinking, what was that different thing that these successful teams had that other companies are struggling with? And then we started to say, “Well, we think it’s this, based upon our experience.”

And then we started to talk to people more outside of our organization and figure out that there are a lot of people who could benefit from our school of hard knocks.

David Dewolf: One of the keys that Jessica said there is so important too: innovation is different from invention. She talked about innovation on driving growth or results. Well, that’s the difference. Invention is technology for its own sake. Innovation is all about driving value, not just to the end customer, but also the business itself.

Driving actual business results. It’s a big focus of the book.

How We Break Developments

Nikki Van Noy: What are some things that are broken, that they’re allowing that to happen?

Jessica Hall: That’s a great question, and I think there’s been a really tremendous case study that’s happened very recently. So, if you go online and Google Accenture and Hertz, what you’re going to find is that Accenture is being sued by Hertz for 32 or 35 million dollars. And Hertz is so pissed off at them that they posted this 16-page complaint online.

You can actually go and read about one of these major high-profile failures and kind of understand and start to diagnose what happened. I went through all 16 pages, very interested to see what happened and to see if that kind of aligned to a lot of the things we see, and we definitely saw that.

So, one is that they tried to do way too much at the first-end. They wanted to do the entire website and the entire mobile experience all at once. That’s a lot of money, that’s a lot of effort, that’s a lot of risk that things may not be quite right.

And if you think about rental cars, when you’re trying to rent a car, you’re just trying to rent a car. You’re going to compare the price and I just got to get a car by this time, by this date.

I don’t want to deal with a lot of nonsense, and if you make me put up with that, I am going to leave. So, they tried to do everything at once.

There’s no indication in the entire complaint that there was ever any testing with the customers. Making sure that they understood how the flow works, that they understood what the buttons meant, that they understood how to select between having the economy card, a plus card, how to order a car seat, which is something that I’ve done.

One of the things they complained about is that they didn’t test things in pieces and they only tested what they thought people would do. And that’s something that we see, we call it the happy path. That’s why everybody does exactly what you expect them to do and then follow through a chain events to me, like buying a dress online or something.

Nobody does what they think they’re going to do, so they didn’t really spend a lot of time or effort testing that, and because they tried to do everything at once, there was a huge risk.

So, wasn’t incremental, not testing, not involving the customers, not really having a good sense of business objectives and what they’re trying to accomplish, these are all things that felt really similar to things that happened in the book.

This lawsuit actually came out after we finished the book. So, that kind of made us feel good that we were pretty accurate.

David Dewolf: We say that product has three fundamental things that are different from other types of software assets, right? The first one is that it must be self-funding, it’s got to drive its own revenue, its own growth, its own business outcome versus something that’s just saving pennies off of other supply chain.

You hear the story Jess said, you know, there was no clear objective, what were they trying to do, right? We see it over and over again, it’s the same problems where people don’t have what we call it context. They don’t have the context for what they’re building.

“Why are we building this? What does the customer want and what are the dollars we’re trying to drive out of it?”

Rushing Tech the Right Way

Nikki Van Noy: As an outsider, we all sort of have this belief that technology moves fast, so when we’re building it, we have to move fast. Is there some of that at play or are there other issues here?

Jessica Hall: That’s a really good point, you certainly need to move fast. I mean, the one that comes to mind is Facebook’s now retired motto of “move fast and break things.” I think you’re seeing the technology and just grow up a little bit in the last couple of years. There’s a lot of things that happened.

There is a big push to be first to market, to be early to market, to beat your competitors, to have new things in market, and I think that pushes a lot of people to go fast. Certainly a lot of the people who come through our doors want to go fast.

But there is a way to go fast that is smart.

There is a way to go fast that increases learning and reduces risk. If you do a lot of things small and you do them quickly, you can go fast, minimizing risk by making sure you’re investing in the right things. That’s a principle in the book called minimize time to value. A lot of times, people are focused on, “I need to get to market really fast, I need this list of 20 features.” Really?

I mean, maybe we could have two or three combined in a right way and we could get this thing out in a month or two less than you thought, but we can allow the customer to do something that can complete a task or take advantage of an opportunity or access some content. And they can do that, we can get that on the market in three months by doing something really small and focused and targeted, and then we can continue to grow the product over time.

Where people get into trouble—they do a lot of things, they don’t really test them out, and the other thing that we’re really seeing particularly, I’d say in the last six to eight months, is what happens when they don’t think about what’s happening around the experience. When they don’t consider things like privacy and security. You know, what are some of the kind of outliers and edge cases that may come up that may bite you?

And if you’re working in a small and incremental way, you have a much greater likelihood of discovering those things and fixing them quickly. Where, a lot of cases, if you went all in on something and it took you nine months to build it, it may take you two or three months to fix it.

Holistic Digital Movements

Nikki Van Noy: So, another thing you guys touched on in this book is the fact that companies are not served when these digital movements are not taken on in a more holistic way that involves the entire company. Can you talk to listeners a little bit about that?

David Dewolf: Yeah, it’s a challenge we see all the time where people just assume it’s the job of the technology team to innovate, right? The reality is that innovation comes from connecting dots. What I mean by that is, collecting information, observing things, and then finding the trends and finding the interesting connections.

That’s innovation, right? That is finding unique value that doesn’t already exist and that really requires an entire organization. And what we talk about in the book is how the product mindset can be used to connect these inter departments and get departments speaking the same language, focused on the same things, and really importantly, making judgment calls the same way because they all have the same context. And then hopefully, that builds a culture where they’re able to collaborate and share or the insights and the data points that they’ve collected. More dots can be connected.

Really, that’s the point of the product mindset is to provide this context to make sure that everybody knows, how does this software we’re building actually make money?

How does this software we’re building actually serve the customer?

We believe that that’s really important for everybody, all the way from the CEO down to the junior-most quality assurance engineer. And that if everybody has that type of context at their fingertips, they will make more and better decisions in their day to day jobs, but they will also be able to collect more data points and insights they can pass on to others that really fuels innovation within the enterprise.

Nikki Van Noy: That makes a lot of sense to me, simply from an observational point of view. I know that most companies I’ve worked for, it’s like, there’s almost been this delineation between the technical department of the company and everybody else.

David Dewolf: Isn’t that sad? Yeah, so true. You see it in very unhealthy ways, you even see it in healthy organizations. And so, it’s not just a good culture, bad culture thing like a lot of people assume. It is even healthy cultures they become this bifurcation of “Those are for technology, they’ll take care of all of that.”

Well, technologists are 10 times better when they’re interacting with folks in the business and other aspects.

Bringing IT into the Team

Nikki Van Noy: For some of us, having an IT department was new, it was like they spoke this different language from everybody else and we had no idea what they were doing and if there was just sort of this pattern set that’s maybe continued on somehow.

Jessica Hall: Yeah, it’s funny, at my last company, our group that did product development, we were a part of IT, which was 10 floors lower than all the other floors. You’re down on the sixth floor, hidden away from the fancy people who worked with clients, and we just toiled away, separate from everything else.

I think some of it was, “Well, that’s the way the technologists liked it at the time.” And I think some of it was just necessary—there is a need to focus and spend a lot of time and a lot of effort doing kind of deep work. But when we see organizations where the teams are more fully integrated, they share the same goals.

I can give you two examples of how this plays out. One, we have a client in the financial services base. They’re are big company—I guarantee you’ve heard their name before—and everyone in that company has the single goal. They have one metric that they’re all focused on, the company culture is aligned to it, decision making is online to it.

Everybody is onboard with, “We are driving this number, this is what we’re trying to do.” Whether you work in customer successor technology or marketing or sales. They’re really focused on the same thing.

Another client that I work with in a different industry, a smaller company, I remember doing some consulting with their team. I sat down. I said, “Guys, I think you just burned $1.5 million, so how much money you’re going to generate next year?” And they all looked at me like I was crazy. They’re like, “No, no, we just built this stuff.”

I am like, “Yeah, but you have equity in this company. You have an investment in this company. And you are spending a lot of the company’s money and a lot of people are counting on you to deliver this product that is going to open up a market that’s been closed to you. Do you guys get that? Have you thought about that? Have you thought about the contribution? Have you thought about what is on the line here or are you just focused on pumping out features and hitting dates and not taking the moment to understand that people are betting on you?”

They are betting on us. We need to deliver because the future of that company is dependent on that product being successful, and that team didn’t know that. And they didn’t take that to heart and that wasn’t influencing their decision making. That meant that product was getting delayed and delayed and delayed and it really had an impact on the valuation and the trajectory of that company because they were so disconnected from everything.

David Dewolf: The other thing that comes to mind as you describe that, Jess, is in the second chapter of the book, we described what the digital economy is. I think it is a phrase that people use without even knowing. It is one of those, “Right, I’ll know it when I see it,” type of things.

So we spend a lot of time really setting up in the book the digital economy, the definition, and one of the things we talk about is the fundamental reality of this digital economy.

It is a digital economy because business models are changing because of technology. It is not just the technology is impacting and influencing business, right? That’s been happening for decades. It is because business models are changing. So I do think that this requirement of technology infiltrating all aspects of business is a reality, right? Digital leaders are the leaders of tomorrow’s companies because the business models are digital.

I don’t care if you are a CFO, I don’t care if you are a CMO, I don’t care, you name your role, your title—it is essential that you get to understand not necessarily how to write software, but technology, to the extent of how these technology platforms are the good that is being bought and sold in the economy in the channel through which services are being delivered to their customers.

That is why that shift has happened, where it is no longer okay for an IT organization to be buried within some part of the organization where it doesn’t interact with everybody else and they just write these apps and produce this technology that supports everybody else.

No, no, no it is the business now and that is why that matters.

Working with David Dewolf and Jessica Hall

Nikki Van Noy: I am curious, when you guys step into a company, so basically you are coming into a culture that is not your own it’s probably very obvious to you when this cohesion is not present. What do you to help clients create that?

Jessica Hall: We wrote a book.

Nikki Van Noy: Perfect answer.

Jessica Hall: Sorry that is a great question. I am only partially kidding because part of the reason why did this is to get it out into the world what we’re thinking and how we’re approaching.

We figure if you know something about that before we get there that it might be easier.

But yeah, I usually tell people when they’re interviewed with the company nobody calls us because things are awesome. Like Facebook or Google, actually Facebook has problems now, Google, Apple these big Silicon Valley unicorns that you hear so much about they’re not the kind of companies that call us.

People call us because they are in trouble.

They are behind, things aren’t working, they are missing some capabilities they need, and we arrive at the moment when they are already under pressure. And we are there to help.

I remember coming into a company that start up moving really fast, and I’m like, “Okay, we are here to give you room to breathe.” And he said, “Breathing would be delightful.”

We are really focused on the time to value that I talked about earlier.

How can we very quickly get up and running and start delivering things? Now, are we going to deliver a lot? No. Is it necessarily going to be perfect end to end? Probably not, but we are going to get up and we are going to move. So, you dive in really quickly, you ask a lot of questions. You learn the business; you learn the market. You get a sense of the people, and we have some structure processes for how we identify things are in the sales process once people get on boarded.

But I think the main thing is to get in, ask a lot of questions, flip over a lot of rocks and then get moving, because everything else you can learn while you are moving, trying to uncover everything, to understand everything when you just walk in. It is going to stop you from making progress and start to put those wins on the board.

A lot of times, you come in, you start with one team, one product, one feature, one area of the thing and say, “We’re going to really focus on this.”

We are going to get this moving; we are going to get this setting the example of how to be different and how to operate in a different way, and then we are going to get people excited about starting to adopt different ways of thinking.

So, a good portion of the book was influenced by the work of Carol Dweck who wrote the book Mindset. I would definitely recommend that book, and one of the things her research has shown is mindsets are changeable.

That whether you are a company or an individual or a child or an adult, your mindset can shift and change—it is not something that is going to be fixed and can’t change. So, you can change the way people think. You can change the way people behave.

If they start to see that this is more effective. If they start to see that, “Hey, we’re putting wins on the board, we’re generating momentum, we are getting customers excited.” People feel more empowered, and then the work they’re doing that they’re going to contribute more that they have more impact and have more voice, and then you can start to change organizations.

I am proud of our teams when we come in this all really gnarly product, technical UX problems. But I am also really proud when people that we’re working with, they change the way they think, they change the way they make decisions. They change the behaviors of the organization. They change the process of the organization to start to work in a new way and people get really excited about that.

It is a whole lot of fun to watch that entire process unfold.

Companies Making Progress 

Nikki Van Noy: So, let me ask you guys is there a company you can point to either that you have worked with or who is out there that listeners will be familiar with, who has done a good job and seen great results by incorporating these things?

David Dewolf: Yeah, we talk about how 75% of Americans most likely use our software every day. One of the examples of the software that is out there that folks are using and don’t even know we’re behind it is PBS.

We started working with PBS over 10 years ago, and at the time, they barely even had a streaming video up on their website. I mean they couldn’t distribute content through digital through any means, any streak of the imagination. As we started working with them, we really started by shaping not only their mindset but also how would they even go about trying to create a digital organization?

We helped them to build it from scratch. And over the last 10 years, they have become really a stalwart and one of the media companies that the media industry is a whole look to as an innovator. They have done that by really embracing the product mindset and leveraging those principles day in and day out and staying really committed to it. Minimizing time to value, they are releasing new software into the hands of consumers every single day. Continual innovation always, over and over, taking and improving little by little.

That is a great example of an organization that just has drunk up these principles and actually in a great part of helping to develop them over the years and perfect them and refine them and feedback into the process the way it has evolved over the years.

Jessica Hall: We have offices in India and Romania, and every time I go to Romania, I always connect with the alumni. The people that were with the organization.

So many of them have gone on to be entrepreneurs to open up their own companies and start to run them with the product mindset in mind. So many of them have gone on to lead their own departments, and now they are leading product departments or engineering or user experience departments.

We also have a client, and this happened recently. He was a QA manager—he had risen through the ranks and had reached a certain level.

And then he started working with our team, and there was a very heavy focus on digital transformation in this particular client. He jumped on board, went out in the field, did testing with our team, really embraced the idea, and then he created an entire new career path for himself because he leaned into this and then started teaching other people in his organization how this works.

So, it is pretty cool to watch people go because a lot of times people are being measured on, “Well, how much stuff did I make?”

And not as much on, “Did I make a smart tradeoff? Did I suggest an alternative? Did I ask a good question? Did I put us on a different track?”

And to a certain extent, there is this looming threat that there is automation and a global economy, there is a global talent workforce where it’s not clear what’s going to happen. One thing is pretty automation-proof and that is innovation creativity problem solving.

Understanding the business problem, applying a lot of different ways to it. Those are ways that you can really distinguish yourself and have a career that goes far beyond just writing code or making some comps.

Where to Begin

Nikki Van Noy: For anyone who is listening right now and has a feeling or the full-blown knowledge that their company is approaching one of these crisis points that bring people to you, what’s the first thing that you would have them do to try and get a hold of this situation?

David Dewolf: If you go to www.productmindset.com, you can order the book. I think we lay out a lot of this in here. In all seriousness, I do think the book is a great manual for just really starting to frame this challenge, right? A lot of people really go, “Oh, I am struggling with innovation, I am struggling to compete in a digital economy,” right?

All of these clichés, but they can’t even tell you what that means.

What we do in the book is to distill what that means, and I think being able to name your problem is the first step of resolving the challenge. I would encourage folks to go order the book and to take a look at it.

I think that would really provide some directions on where do you start and how do you start thinking differently before you start trying to do things differently. So that is where I’d start.

Jessica Hall: Well I have the benefit of probably going to do this in about a week. I have something about to start. Real quick, I think as I understand the symptoms, they are not moving as fast as they want. They are not seeing customers aren’t using the product. They don’t see a lot of engagement. There seems to be a lot of friction in the organization. They are arguing about prioritization.

Everything I see on all the symptoms point to they don’t know what mountain they’re climbing. Everything to me says and I think the leadership in the organization was like, “We don’t think they know what mountain they are climbing either.”

I’m like, “Great, we are going to start there. Where are we going?” Because if we know where we are going, we can know if we are making progress towards it or not and then we can start really focusing on starting to make that progress.

But if we don’t know where we are going, we are going to go in circles.

We are going to argue about which direction to go. There is a lot of prioritization frameworks—how do we prioritize? How do we decide? That should not be that hard if you know the customers and you know what you are trying to achieve. It should be pretty easy to make a decision about what the next thing is, and then you test it out and figure it out quickly.

But when you don’t, you are going to spend a lot of time spinning and thrashing and being frustrated and not being satisfied with the results that that’s generating. So real quick, just walk around your organization. What are we trying to do in the next three months or the next couple threats? If you walk around and you talk to 10 people and nobody has a good answer, it is right there.

David DeWolf: It never ceases to amaze me how many clients, how many prospects we talk to, how many folks out there building a software product go out and say, “Why? What is your ultimate goal, what are you trying to do to accomplish?” And they can’t name the goal, right?

It should be a revenue target or a user adoption target or a market share you are going after, right? There should be some big goal, this is why we’re building the software product.

And the number of just days and confused looks we get when we ask that question is amazing. So, don’t be embarrassed if you don’t have that, you know? Don’t be afraid to step up in your organization and say, “We’ve got to figure out why we are doing this.”

It is not digital strategy for its own sake. It doesn’t matter, right? It is not about driving a business outcome. So, name your business outcome, to Jess’s point, and really define the mountain we are climbing.

That is so powerful.

Jessica Hall: There is a client who we just started working with recently and one of our longtime very, seasoned leaders in the companies working with them. So they are in excellent hands with Rahul, and he started talking to the client as, “What are your objectives?”

And the client says, “Okay, I’ve got to get this feature out by this release. I’ve got to get these features out by this release,” so he peels back the onion a little bit because he is a super patient and thorough guy.

And then the client says, “Oh well how about a small market? There are only so many people in the US and Europe that could be potential customers of ours and there is a portion of that market that has been unavailable to us because we don’t have this ability to serve them. And this product is how we are going to be able to open up that market again, be able to sell into places that we are not able to sell them today and we think because these things is going to actually appeal to the people who turned us down for the last couple of years.”

David Dewolf: Game changing defining that, yeah.

Jessica Hall: Totally game changing, and what amazing context too that you can start to share with the team and get them to circle around. I have seen people mess up on whether they sit next to each other or in the same time zone or around the world is people under investing context.

What is it that we are trying? How are we going to make money, what are we trying to do?

And so, this was one example of Raul kept poking at it. And he was able to get the context of really understanding the objectives and share it with his team.

He is so experienced and knowledgeable that he knew exactly how to get at it and make it available to everybody else, which was a stellar move on his part.