The very best tech companies put product quality and innovation at the heart of their business. In the first episode of this series we heard from Jonathan Gale who, as a sales leader by training then successful CEO, pointed every potential success in a SaaS company in the direction of product.

In this episode of the Pain of Scale we will be digging into product strategy with Gib Biddle, discussing what it means to innovate at scale.

When we think of the very best tech companies on the planet – Amazon, Facebook, Google and Netflix – what sets them apart is that innate ability to innovate. Gib was previously VP Product at Netflix and Chief Product Officer at Chegg and is now one of the most highly valued - and well-travelled – speakers and thinkers in product strategy on the planet today.

You can listen to the interview in full here:

Highlights:

• Why culture is so much more powerful than a bunch of rules
• Building great products is messy, that’s why strategy and customer science are so important
• Why you should never lose your punk startup risk-taking muscles

When it comes to innovation, what is it that sets the best tech companies apart from the rest?

The ability to innovate comes down to a magical combination of three things says Gib: a unique customer insight combined with the ability to learn through experimentation; being clear about what you are building and why; and lastly creating a culture that helps attract highly talented people and allows them to do their jobs without too much process or too many rules.

What’s more, “If you can give people focus, the feeling they are working on hard problems and the knowledge are doing it with bright peers you can achieve great things.”

How does culture help drive innovation?

A profound benefit of a good culture is that it helps people make good decisions without having to consult others. “If people really understand the values, behaviour and principles then they can make great decisions - about people, product and business – on their own”, says Gib. However when businesses get big, they can get complex, try to do too much, lose focus and hire lots of people. That’s when rules and processes come into play.

“The challenge with rules and processes is they are no fun for bright and talented folks and more importantly you can’t create rules for everything. Take Netflix for example, they went from a DVD by mail company, to a streaming company, to an international company, to a leader in original content. You’d need four different rule books!”

If you can create a culture that gives folks freedom and responsibility with few rules, even at scale, but a culture that is super clear about what is expected and what is not, what behaviours are expected and what behaviours are not, then you can let people work together and do so effectively. “That is what the Netflix culture – and the famous Netflix - culture deck is all about and why so many people have downloaded it”.You can read more about that here. here.

How did you come to the realisation that culture was so important?

Gib joined Electronic Arts in Silicon Valley in 1991, when it was still a relatively young start up.

“I was surprised and impressed that they knew what their culture was, which spelt the acronym ACTION. I saw how thoughtful they were about it and that people could make great decisions without talking to each other.” One of EA’s values was Now, the N in action, meaning the business had a high sense of urgency.

“I remember asking someone to do something for me in my first week and they said “Clink”. In the old days when you put your money in a coke machine, it would give a ‘clink’ when it was ready to dispense your drink. So buy saying “Clink” what they were saying was, “I’ve got this and will treat it with a sense of urgency”.

Gib knows first-hand that building great products can be messy. “It’s a combination of chaos and discipline. You need the chaos, that’s where the creativity comes from but you also need strategy to bring discipline to the chaos.” Culture helps us to be more effective when working with other humans, which can be confusing and complex. “We often don’t understand each other”, Gib explains, “so culture helps us understand how, as humans we can work well together and most importantly how we should behave when no one else is looking.”

The discipline of strategy is how you get things done.

Product leaders are all trying to invent the future and that’s hard. Gib defines the role of the product leader using the DHM model:

• D - Delight the customer, in
• H - Hard to copy,
• M - Margin enhancing ways.

“DHM forms the framework for product strategy. It forces you to think about all the creative ways you could delight your customers, but doing so in ways that your competitors will find it hard to live with, and doing it in a way that supports the business to make money, largely so you can create more products that will delight your customers.”

Product leaders need to combine the strategy with metrics to know what’s working well and what’s not and also combine with the tactics that define what they do and don’t do. “That is the discipline of strategy. But building a great product is a creative, chaotic process which you won’t get right every time, so you have to also be learning from success and failure.”

The quarterly product board is a very effective method for guiding strategy and execution.

Gib espouses the quarterly product board as a means of bringing product leaders together in larger groups to share their strategies, metrics and tactics, but in an environment that allows for debate, “Because that’s how we learn”.

Choosing who to invite is important, with a maximum of 15 people. “You don’t need everyone there, so you may need to limit attendance, and don’t let it turn into a powerpoint parade.” The quarterly product board is designed to answer some simple questions, “What should we invest in and why and how much will we invest.” But it must allow some time to think about the long term. Three to five years is good, but occasionally you must think about what you can achieve when you take a really long-term view.

“You need to create the mentality that in the long term, anything is possible. Who would have thought that a DVD-by-mail company established in 1998 could win 27 Emmies in 2019. That’s mind boggling. But why not, if you give yourself license to think out 20 years, what could you achieve?”

We all hugely overestimate what we can achieve in 12 months, but massively underestimate what we can achieve in ten years.

The GLEe model at Netflix is one that encouraged this kind of long-term thinking and any business can develop a similar mindset to think in waves.

• G – Get big on…DVDs
• L – Lead on…Streaming
• E – Expand internationally.

This may be unique to Netflix, but a similar mental model can benefit all companies.

“Netflix is now on their fourth wave - original content - and who knows what will come next. Perhaps interactive content. So, think long term and think in waves.”

As companies get big, they get slow.

One thing that defines a startup is their attitude to risk.

“It’s as if the big company loses the muscles that made them successful as a punk startup. One of the most important muscles is the risk-taking muscle. But in many companies that muscle atrophies and as they get successful they start playing it safe.”

What we can see is the best big companies maintain the risk tolerance they had as a “punk start up”, and that helps them to innovate at scale.

“What did Facebook do right after they went public? They spent $18BN on WhatsApp. They continue to embrace risk and if you don’t, you won’t be one of those companies that lasts 30 or 40 years.”

A common question is what kind of person is the product leader?

Navigating the huge changes in a fast-growing business are profound and Gib sees the world in terms of starters, builders and super-scalers.

Starters like to make something from nothing; builders like to take something established and build it up; and super-scalers? “Well they don’t have the allergic reaction many of us have to being in a super large company!”

There probably aren’t a huge number of people who are effective in all three phases, so “You need to acknowledge and accept that you need different people, with different skills, at different junctures in a company’s life.”

Mission versus vision.

Product vision - as encapsulated in the three steps of GLEe - is really about describing the different stages of the company. At some point conversations come around to mission.

“At Netflix, the mission was to “connect people with movies they’ll love” and that was important. Now, I’d say, it’s about entertainment and everyone in the company knows its their job to entertain their customers, even if producing a documentary it should still be entertaining and engaging.

So maybe the idea of mission wasn’t really that critical at Netflix? But at Gib’s next startup, Chegg, it was critical. “Chegg provides textbook rentals and homework help, with a mission to help students save time, save money and get smarter. That mission informed of everything we did.”

No one said it was easy.

Product leadership is about marrying the chaos that is critical for creative work with the discipline that comes from strategy. But at a certain point even that isn’t enough.

“It’s hard to change the world with a small team and eventually you’ll need to get big and that is when culture kicks in. But the holy troika for me is the combination of culture, strategy and consumer science.”