Becoming product-led
Becoming product-led
About the important things that should be considered when an organisation is moving from being sales-led to product-led
At South Pole there has been a lot of talk recently about becoming ‘product-led’. I think this is a great idea, and I’m a part of the camp pushing for it. I believe it’s the approach that lends most effectively to addressing the problem of climate change because it has the greatest potential to scale.
However, there are many challenges that South Pole faces in actually becoming product-led. They all stem from the fact that it is currently, and has always been a sales-led organisation. It’s a consulting firm at heart and so certain biases and behaviours are a part of its DNA, a part of its culture.
This is fine, but to become product-led things would have to change. I’m going to look at behaviours of sales-led organisations, point out how these behaviours conflict with being product-led, and then talk about some changes that could be made to become product-led. This isn’t a comprehensive list, just what I think would be important for South Pole.
A culture of sales
South Pole is a large organisation with numerous teams and departments, all of them are affected in some way by its sales-led approach. The two that are most clearly connected are the sales teams, obviously, and consultants.
Typically both of these kinds of departments are incentivised to close big deals, and complete client projects as quickly as possible. Intuitively this makes sense, sales are gonna sell, consultants are gonna consult, and the company makes money. This approach leads to consultants doing whatever they need to do in order to help clients, and it leads to sales doing whatever they need to do to close a deal. Whatever the cost. Great.
But if you want to become product-led, this is a problem.
The issue with a sales-led consulting approach
Your typical consultant takes on projects within their expertise and skill sets and are generally given freedom to solve client problems on a case by case basis the way they see fit. Of course there are standard practices and typical project structures, but the work itself is done in a ‘custom’ way. Done right, this makes for engaged and happy clients, but doesn’t scale.
Ways of working among consultants become disparate and non-standard, different projects tend toward being unrepeatable, and so consultants tend to work in different ways from project to project. Beyond that, the fundamentals that support numerous consultants don’t get as much attention because people have to focus on special cases.
It becomes less important to think about solving problems in an efficient way, and more about making the client happy quickly.
The issue with a sales-led sales approach
At sales-led organisations, sales people chase the biggest clients, figure out what they’ll pay for, and do whatever they can to get them to sign a contract; even if it means agreeing to work on things that aren’t planned. When this happens, unless you’re set up to work this way, you end up with unhappy customers. Sales numbers plummet, and suddenly your plans aren’t well informed because salespeople aren’t actually talking to the right people.
Even if you are set up for this to work it means you have to build exactly what your customer wants as fast as possible.
Being set up in these ways isn’t necessarily bad, South Pole was built to handle some of these problems, and many successful companies are set up this way, especially consultancy businesses. But it’s certainly not product-led; you just focus on one use case and it simply doesn’t scale to a problem the size of climate change.
Customers or users always come first
In both sales-led and product-led organisations customers and users always come first. The difference is in how those organisations use or manage the insight they get from customers. In a sales-led environment you’ll hear about how the customer is always right, you’ll take what they say, internalise it, and get it done. If they say ‘jump’, you say ‘how high?’. Individual clients inform decisions.
In a product-led environment you have to listen to what numerous customers say, try to understand the underlying problem, and find a way to solve it that serves more than just one client. This applies to consultants as well as sales people, taking requests and suggestions, getting a signature and closing a project, just isn’t enough.
In both instances the user or the customer is the most important part of the puzzle, but in one instance you prioritise their solutions, and in the other you prioritise their problems.
Getting to product-led culture
Changing from sales-led thinking isn’t easy. For some it's probably even uncomfortable. It means embracing the fact that you don’t necessarily know the best thing to do. You have to admit this to yourself and start talking to people. For sales, that means spending less time pitching and agreeing, and more time asking. For consultants, it means spending less time doing the fun stuff and more time working on ways to make yourself more efficient.
For whole organisations that are trying to change it means an entirely new way of making decisions. In theory, it's easy, being product-led is a choice, anyone can start making product-led decisions at any time, that way behaviours change and the culture shifts. In practice, especially at big organisations like South Pole, it's going to require a lot of movement.
It starts and ends with leadership
I’m a strong believer that the first time a problem or issue arises in a team or an organisation, it can be traced back to leadership. That could mean tech leadership, product leadership, company leadership, whatever. Once the issue is identified it's up to said leader to take responsibility for it, and make changes to solve it.
This is the difference between a good leader and a bad one. Anyone can lead or manage situations when things are easy, but when there are problems and decisions that need to be made, you see how good a leader really is. And make no mistake, becoming product-led is a change, and a big problem to solve.
Following this logic I think it is up to leadership to become product-led first. Whether that means educating themselves by taking courses, hiring advisors, or by hiring people with more experience to step in (there are many things leaders could do), but the point is leaders need to make a decision that changes the status quo, make it clear, and deliver on it.
Ideally this decision then trickles down the organisation. If leaders go on courses or get advice I’d expect to see the ‘lower level’ leaders also educating themselves and their teams in the new normal.
Now, again, in theory, this isn’t much of an issue, but I think everyone can agree that this kind of shift in mindset doesn’t happen easily even for individuals, never mind whole organisations. It means doing things that you don’t have experience with, and going against tried and true sales-led instincts.
These are some of the big challenges leaders are going to face in changing from sales-led to product-led:
Mindset
Senior leaders are going to be resistant to changing things that have ‘worked’ in the past, no matter how supportive they are of becoming product-led. I would expect to hear a lot of ‘well yes we’re product-led but this particular thing worked well before so we’re going to keep doing it.’ No.
Product-led business is about long term investment, you need a vision of the future and a roadmap (that is changeable but clear) that you can bank on. Stepping away from short term revenue and thinking about the long term is understandably scary, but necessary. Product-led approaches are famously unstable in the beginning.
Cultural change
Becoming product-led is a big cultural shift. Leaders and workers in the organisation need to be educated on what it means to work this way and, most importantly, need to be reassured that making product-led/user-informed decisions is a good thing, and they won’t come under fire for it.
Culture is defined by behaviours, by the things that people do. In healthy organisations when leaders make different decisions it influences their people to make different decisions too. If for example you want to grow a culture of honesty and transparency then the leaders need to start. If you want to make a culture of inclusivity, the leaders have to start, be seen doing it, and incentivise it in their people too. It works the same for building a product-led culture.
Organisational change
If an organisation is set up to do one thing and it wants to change to do another, the organisation itself has to change too. Culturally, of course, but also in terms of structure. Resources, headcount, and skills at each level need to be reconsidered to effectively support the change. This is, I would imagine, the hardest part because it is where those decisions have the most obvious effect on real people’s lives.
When you have people working for you these kinds of decisions should never be taken lightly. If an organisation wants to keep those people throughout this kind of change they should strive to manage this change well. Be as transparent as possible about what is being considered, how it will affect people, and when things are going to happen. But I digress.
Numbers don’t lie
That’s the leader stuff, the qualitative stuff, then you have to get to the quantitative stuff, you have to make the numbers; the targets, the KPIs, and incentives reflect the change too. This means setting goal posts, trackers, and rewarding behaviour that reinforces a product-led approach.
Setting targets and KPIs
To make these numbers work you have to know what to measure and what behaviours to reward. This is obviously incredibly context specific so I won’t rattle off many examples but to illustrate my point, for sales people, in the beginning instead of the target being ‘X millions of euros’ measured through revenue and ‘deals closed’, maybe the target should be ‘greater than Y target companies bought in’ measured through ‘interviews conducted’ or ‘sign ups to early access programs’.
This would shift the focus from immediate returns to investing in foundations for the future. No, it isn’t likely to make a lot of money fast, but done right it will make money in the long run because you’ll be able to do more, more cost effectively.
Incentives
In the real world most people need a reason to do something. In the corporate world, in which I have set this article, that reason is some form of monetary incentive. The carrot you put in front of people to get them to perform.
Changing incentives to reflect a more product-centred approach should be easy, and is very important. Consultant incentives could be changed to split their time between client work, targeted toward similar or repeatable jobs, and the success of ‘internal’ work where they contribute to standardising practices, accumulating knowledge bases, or supporting initiatives to automate workflows.
And sales people could change from a pure revenue perspective to a ‘relevant user’ incentive where they’re judged based on the number of conversations they have with relevant potential clients, and value that customer brings to the discussion.
Education and reinforcement
Once you have leadership making decisions in the right direction and you get the numbers right, it really all becomes about education and behaviour change. The focus for the organisation shifts from being solely on revenue, to also being on the user. People need to know this, they need to be told, clearly, and told again.
Sales people who close deals are great and should get a bonus, but sales people who sign numerous companies up to early access programs, or provide insights that make it onto the roadmap, or get 100 responses to targeted surveys or interviews, should get a bigger bonus. But for this to actually work, they need to learn how to do it, and it needs to be reinforced as a good thing to do.
If a salesperson at the end of a quarter said ‘I closed zero deals but I manage the relationship with five contacts who the product team consider core users.’ It should be celebrated. Because again, done right, that turns into five long term, bought in clients who the organisation can learn from with real recurring revenue potential.
This is difficult of course. For all the reasons mentioned in previous sections and because it requires a runway. It requires that you don’t have to generate cash tomorrow. If you try to, you will almost surely fail. You can be quick, if you can design your discovery process to work fast and be constantly iterating; this way you could get to revenue generation quickly, but without a mature and experienced team there’s a big risk of rushing things and making the wrong decisions as you do.
Conclusion
My stance in generally and recommendation at South Pole is to get these three things right and then to invest in establishing and supporting good practice. The teams across the company are not mature in this approach and the people with experience in it are few and far between. While the product teams and people with product-led experience make decisions and establish processes, we need to get the rest of the organisation listening and learning.
I would encourage the leaders to find trusted ‘product advisors’ externally, to get into the details with the experienced people in the company, and to learn from them. I would encourage the incentive and target setters to think more long term and ask themselves, how they can better understand the market. And I would encourage everyone in the company to make ‘discovery’ a part of their day to day. To take time to think about how to standardise workflows, collect better documentation, or better understand customers and users. We’re going to need it.
A great insight into comparing sales led and product led businesses. Does getting on board with southpole appeal or not.... ?
To the point article. A tough point I've discovered during this transformation is the realization by leadership that the final product will not be able to solve everything for everyone; it will apply to a market segment. That is, there will be some prospects that sales will have to say that the product does not work for you. That's tough to sales persons that have been accustomed to custom solutions that can potentially solve every need. Marketing can be a great ally there.