Losing sight of the market can be one of the biggest threats to your startup.
Siobhan Maughan of Integrated Thinking is a product management mentor and coach, helping companies to establish a strong product strategy and discipline.
Here, she focuses on the challenges faced by businesses who allow their sales or engineering teams to overly influence their product strategy:
I have recently had the opportunity, as a mentor with the Startup Commissioners Mentoring for Scale initiative, to meet innovative and dynamic entrepreneurs at the very early stages of their product journey.
Having being involved with tech companies at all stages of their development, Im conscious that it can become very easy for a business to disregard market need and focus instead on the next cool feature in their product.
Investors and mentors of early stage businesses encourage founders to think carefully about their business plan. To survive the first couple of years, these entrepreneurs need to have identified a clear market opportunity and have a solid understanding of their target customers.
Maintaining an outside in view of the market can become challenging for even the most successful startup.
Early stage technology founders typically drive the product strategy and hire engineers, marketers and sales people to support them. They run a tight ship and cross-team communication and collaboration is straightforward.
Success brings growth in revenues, but also raises organizational and business challenges. As things get busier and the number of people involved in the business grows, it can become more challenging to maintain a validated view of the markets needs.
Face it, engineers dont often talk to customers, they are too busy writing code.
I spoke with Michael ODwyer, Founder and CEO of SwiftComply at our last Mentoring for Scale session. SwiftComply is a startup that offers an online solution for the environmental regulation of the food service sector.
As is the case with many startups,” he says, “we started with a goal to fix one problem. However, after speaking to our customers we found several other problems worth fixing. The process of identifying customer needs versus wants can be difficult and it is easy to go off track. To prevent this from happening, we focus on a value proposition that is closely aligned with the market need we have identified and validated.
Michael understands the importance of taking the right approach from the start. Ensuring that this discipline remains engrained as a company grows, however, is much more challenging.
— Siobhan Maughan (@thinkabl) July 4, 2014
As the business scales, a Founder or CEO may find it more difficult to focus on the market.
Although they can still influence the product strategy, they may not have the capacity to communicate with everyone in the organization to the extent they previously could.
In this vacuum, where the business is looking for guidance on where the product should go next, there is always the risk that engineering, sales or some powerful customers will overly influence the products strategic direction.
1. An engineering-led strategy may result in a technology and feature-rich product that is looking for a problem to solve!
Face it, engineers dont often talk to customers, they are too busy writing code. Allowing engineering to drive product strategy could lead to a product that is effectively feature soup, whereupon new features are continuously added without any real understanding of the business benefit they will deliver.
2.A sales-led product strategy may make your business more tactical than strategic!
Allowing sales to drive the product strategy may put pressure on the business to create bespoke solutions focused on driving sales revenue targets. Although revenues may grow, it is important to understand whether the revenue mix is right for the business. A strong services focus can lead to product variants that increase support, maintenance and engineering costs. For companies that want to drive scalable product revenues, it is crucial to provide the sales team with a clear value proposition for products that they can repeatedly sell to a defined market.
3. Focusing only on the needs of one or two influential customers may alienate the broader market!
For many companies, listening to the voice of the customer can simply involve letting existing customers (those with a strong contribution to overall revenue) dictate what they would like to see in the product. Just because one large company wants something, however, does not mean that there are lots of customers with this same need.
The Bottom Line: Successful businesses ensure that a market-focused approach drives product strategy.
It makes sense to establish product management as a discipline in the business as early as possible. This ensures that a close eye is kept on the target market, and that your business delivers the solutions that customers really need.