Marty Cagan – Q&A – World Product Day 2020

  • Keep seeing dramatic differences between how great teams work and how most teams work. It’s an incredible waste of human talent.
  • Something Silicon Valley startups know: if you don’t solve the hard problems it’s game over. Great product teams are there to solve hard problems.

Remote discovery techniques

  • We’ve had a problem before the pandemic, where it’s too expensive for companies to staff their offices in San Francisco, New York, and London. It’s not scalable from a cost perspective.
  • When you talk about teams working well remotely, you have to separate it into two activities: discovery and delivery.
  • Delivery activities (code, QA, ship) can do at least as well remotely as a co-located team. We’re already optimising for teams to divide and conquer on the work anyway. The less interruptions the better.
  • Discovery activities are where the problems are. When you hear leaders like Jeff Bezos talk about the magic of co-located teams, it’s because of the discovery aspects, not delivery. Because they’re trying to solve very hard problems as fast as they can. This requires very intense collaboration.
  • One issue here: most product teams are actually feature teams, and they don’t really do any discovery anyway, so it’s a non-issue. For them it’s just a little design, and project management. That is not discovery though.
  • What I’m talking is real product teams. Some examples: Etsy, Trainline, BBC, The Guardian, and of course Amazon, Netflix, etc.
  • Three challenges to making it work:
    • Teams start reducing collaboration. It’s not that they don’t want to, it’s just more difficult to do. So people start saying: just give me the info and I’ll work on it. Collaboration collapses, and you’re back to the waterfall method. When you break collaboration you nearly or completely destroy your ability to solve hard problems. Product teams are not feature teams – rather than just building features and delivering a roadmap, they are instead given problems to solve. Collaboration is key.
    • Collaboration is built on trust. Trust is a fragile thing. When you’re face to face with somebody you have so many more non-verbal cues (which help develop trust). Email is the worst, slack marginally better, phone call marginally better again, and video call better. But it’s really fragile.
    • When working remotely it can be hard to find synchronous time together. One team said to me that the only time they can really get together is at 10pm at night.
  • You can overcome these three issues, but it’s just a lot harder.

The use of OKRs for teams

  • They are a terrible tool for feature teams. They think because Google is using OKRs then they must be a good thing to adopt. But Google doesn’t work like a feature team.
  • If you are an empowered product team then OKRs are a good match.

How to get management buy-in?

  • Worth looking at this article on the topic:
  • Getting the leaders to understand the role of technology in their company.
  • Most companies still don’t understand the necessary role of technology. They view it as an IT organization, as a cost center.
  • Some companies create digital business units, and kind of tuck it away.
  • Leaders have to understand this point. Have not seen any successful transformations without the leaders first understanding this.
  • What happens is that some technology-first company starts coming after you. Like an Amazon. And if they do that it’s normally too late, because it can take years to develop these necessary muscles. So you can’t wait until you have somebody who really knows how to build products like we’re talking about to come after you.
  • There are a lot of companies out there that are ripe for disruption.

Best practices for being outcome driven

  • Being outcome driven is really a core tenant of product teams. You’re responsible for the outcome, but also given the room to solve the problem.
  • It doesn’t mean that you don’t have tech debt to deal with, or other kinds of projects. But the project mindset is the problem.
  • If you’re on a feature team, and called a product manager, don’t fool yourself, it’s essentially a project manager job. You make sure it gets designed, added to the backlog, gets delivered – this is project management.
  • The problem is usually the product managers. They have to completely change their mindset, from project to product. They often don’t even know what that means.
  • Top companies don’t necessarily hire anyone better for the role, it’s just that they train them better and align them to proper product management, not project management.

How to be more product and outcome driven when working in Government environments?

  • US Government is terrible for this kind of thing. The UK Government is maybe a shining light that gives hope to others that Gov doesn’t have to be so terrible at technology.
  • It’s a very hard problem to solve. It’s hard enough trying to convince a CEO, but a head of a Gov agency is much harder.
  • When you have something to lose, you protect it. So it’s easier for a startup to adopt new methods. But not so easy for established companies, like Governments.
  • It’s important to note that discovery techniques are there to reduce risk and avoid failure. It’s much cheaper to identify things which don’t work in the discovery phase than on shipping it and finding out after – that is really failure.
  • Lean startup is a subset of the discovery techniques. These techniques are designed to reduce risk, waster, and avoid failure.

How to empower teams when their priorities are on infrastructure projects?

  • A typical product team is given 1 or at most 2 things to work on during a quarter.
  • The question is, how are those 1 or 2 things decided on?
  • The problem is lack of product strategy. Feature teams are just trying to please as many stakeholders as they can.
  • For tech debt (and infrastructure things), this is really not up to the PM. They should not decide on this work.
  • The PM and product team should be working on the 1 or 2 key problems to solve, not the tech debt items which should be managed by engineering.

Educating leaders on empowered product teams

  • The people who carry the most burden are the managers of PMs, designers, engineers. This is where the real challenge is.
  • Share articles, that can be shared with a CEO or leaders. Give people a copy of Inspired.
  • Talk to the leaders and ask them what they think about running a test. Take one team or squad, and let them try to run as a product team, and let’s see how it works.

How can you tell from the outside if a company has empowered product teams?

  • Due to the pandemic, a lot more companies are open to remote working now. Realise the main driver of that is actually the cost of having everybody in SF, NY, London.
  • You can now look for a company to work for pretty much anywhere.
  • An experienced product person can write their own ticket now, they are so in demand today.
  • Don’t worry about what kind of company you work for – consumer, business, etc. Just look at the hiring manager on LinkedIn, figure out where they worked and whether those companies were strong at product. And ask them that if you come and join, will you devote to the time to help me develop. I’m coming to this company to be coached by you.

What do you believe about PM that most others don’t?

  • What most people think about product, I consider complete and utter nonsense.
  • Saw an article about the difference between a PM and a product owner, but it was from a mindset from twenty years ago, describing the old model of the PM talking to customers and the PO talking to engineers. This is so obsolete. But it’s also distressingly common all around the world.
  • I find I’m mostly on the side of uncommon opinion about product.
  • Go to conferences and there are people speaking about product talking nonsense and I cannot believe the organisers have let them talk in front of all these people.
  • Processes like SAFe – what in the world are companies thinking?

How will collaboration between product and design evolve?

  • Both are super important, but they are very different.
  • You want a head of product, head of engineering, and head of design. They are very different skill sets.
  • The designer is responsible for usability.
  • The PM is responsible for value and business viability.
  • Honestly, most PMs are unsatisfied in their job, they didn’t really want to be doing project management on a feature team. They then tend to gravitate towards design.
  • What real designer would want to go work on a feature team?

Recommendations for PMs out of work due to the pandemic

  • A lot of the good companies are hiring remote workers now, and even hiring now without once meeting in the office.
  • A lot of people have extra time right now, so don’t waste this time.

Product Strategy: The Missing Link – Marty Cagan at Lean Product Meetup

  • Meet a lot of teams, and some even in Silicon Valley and SF, that are not allowed to work the way good teams work.
  • Went on a crusade to find out why. Started a multi-year effort around this.
  • Increasingly being more honest about the difference between being a PM on a feature team and an empowered product team. A PM on a feature team is really like a project manager.
  • Strategy; one of the hardest topics to talk about. Easier to talk one on one to company about it rather than generally.
  • For those that haven’t heard me talk: I’m all about the difference between the great companies and everybody else.
  • Amazon, Google, Netflix, Apple – four companies that have influenced me a lot. They have consistently innovated. They have very different cultures. But they share a commonality of empowered product teams.
  • But how does a company choose what problems to work on? That’s product strategy.
  • If you Google product strategy framework, you’ll get a lot of garbage – fill in the blanks sort of stuff.

  • Companies don’t do strategy well because it’s hard.
  • There are four things that are required:
    • 1) Ability to focus in on the critical business problems
      • Most companies don’t even know what focus is. They think it’s prioritisation.
    • 2) Generating insights on how to attack those problems
    • 3) Coordinated actions for each product team
    • 4) Active management of the work
      • Do not mean micro-management. But also don’t mean passive management. We need better management.


  • It’s not a secret that most companies really struggle with focus.
  • At this level, if you’ve got more than a few initiatives, you’ve got too many.
  • The ‘Pandora Product Prioritization System‘ – a blog post which describes exactly the opposite of what you want to do. They give fake dollars to stakeholders and let them buy whatever features they want. They were bragging about it. But remember that feature teams are there to serve the business, and product teams are there to serve the customer (in ways that work for the business). This is serving the business by adding features stakeholders want.
  • Could tell that this a recipe for disaster. They were going to get no innovation from this. And what happened: stock gradually went down and they got sold, they’re gone.
  • They were confusing Focus and Prioritization.
  • What does Focus really mean? It means two things:
    • Impact: Only a few things on your big list of work to do is really going to move the needle.
    • Throughput: If you try to work on too many things at once, everything slows down. You get more throughput if you limit the amount of things you work on – like Kanban.
  • How do you pick the high impact things to work on? That’s where the smart leader comes in. They really look at the data to decide what is going to have the most impact.
  • Organizations spend way too much time worrying about prioritization. They think about things that they don’t, and cannot know, like how much money it will make. Try to get them to stop looking at prioritization, and instead learn to focus.
  • Part of this is getting very good, and fast, at trying things out.


  • At most companies, they are too busy satisfying stakeholders to look at the actual insights.
  • Strong companies: insights are everything.
    • They can come from anywhere, but mainly:
    • Qualitative insights – conversations with our customers and users. Prospects, former customers, competitors customers.
    • Quantitative insights. Data is good, but it sometimes cannot tell why, which is where qualitative comes in.
    • Technology insights. The tech foundations are always changing. Things we couldn’t do before, we now can.
    • Industry insights. Good teams live for this, and share it with everybody around them. Great leaders are like learning distribution machines.


  • There are two ways to turn insights into action:
    • Command and control way, which usually turns into a roadmap.
    • The empowered team way.
  • OKRs
    • I don’t recommend them anymore. I used to be an advocate.
    • There’s a lot of OKR theatre.
    • The fundamental issue. The OKRs came from the empowered product team companies like Intel, Google. If you take a company with feature teams, and overlay OKRs, you get a mess.
    • The real issue is not OKRs, but moving to the empowered team model.
    • Empowered product teams require a real product manager, not a project manager.
    • OKRs are not about individual targets, or manager targets, they are about the product team.
    • The Objectives need to come from the leaders (based on the insights and focus areas). The Key Results come from the team.
    • If you don’t have these three things, then OKRs are not for you:
      • Empowered product teams not feature teams
      • Product team’s objectives not manager’s objectives
      • Active leaders not passive leaders


  • No strategy survives first contact with reality – there will be a lot of learning.
  • What do most teams do? They make roadmaps. This is all output, with a bunch of dates. This is not empowered product teams. This is what feature teams do.
  • Management at good companies is very hands-on, but not micro-managing. They’re removing obstacles. Letting the team come up with the right solutions.

In conclusion

  • It’s not that hard to know what really matters (for focus), it’s usually just a political issue. The board level usually knows. They can see something like retention, and it’s a fundamental issue that needs to be solved.
  • Problem is you have a lot of different stakeholders and they all have their perceived needs. So it becomes a process of trying to do a little bit for everybody.
  • Insights don’t just come out of nowhere. Good leaders are always preparing, studying the data. Using dashboards. Understanding the economics and dynamics of the company. At a company like Amazon it’s not unusual for leader to be tracking several hundred KPIs every day – they have a deep big picture view of the business. They’re doing their homework so that they don’t miss the opportunities.

I’ve been a student of product strategy all my life. I like the discovery part most, because it’s just fun. But the strategy part are the most important, and the most valuable career wise.

Best books on learning about strategy:

Beyond Lean and Agile by Marty Cagan at Lean Product Meetup

  • There is a growing backlash to agile. This is to be expected, as in this industry there is always something new that comes along. None of the techniques that come out are a silver bullet, people eventually realize this, and that starts the backlash.
  • But I believe the principles behind agile and lean are not going away. They just don’t go far enough for product companies. The best companies out there know this and have pushed on way ahead of everybody else – perhaps even a decade apart on how they work.
  • Average companies don’t really practice agile, it’s actually waterfall.

Three big themes

  1. Address major risks up-front
    • Value risk
    • Usability risk
    • Feasibility risk
    • Business risk
  2. Collaboration
    • Define and design collaboratively, not sequentially
  3. Focus on outcomes, not output
    • Good teams are given problems to solve and focus on results

The risks

  • Most teams don’t even tackle value risk, because they assume value – this is the problem with roadmaps, somebody assumed there was value in those items on the roadmap.
  • Usability you lean on your UX and product designers.
  • Feasibility you lean on your engineers.
  • Value and business risk are firmly on the product manager.
  • Too often product managers are more like project managers, who write stories. They don’t understand the customers, they don’t understand the business and how it really works.
  • Some people think getting certified in scrum is what product management is. This is ludicrous.
  • The purpose of an MVP is to tackle these four risks up front.

The Product Manager

  • It’s a ton of work. The PM needs to focus on the product.
  • Stop being a project manager.
  • Stop being a UX designer, making wireframes.
  • Need to take away product marketing as well, in most cases you need somebody specific on that.
  • Smart, creative and persistent. This is what a PM needs to be.


  • The best product teams you see PM, design and some of the lead engineers really working together to solve the problem.
  • They should sit next to each other.
  • This is where the magic happens.
  • Lots of companies ask if we can make this work with distributed teams. You will pay a price for having them distributed.

Outcomes over output

  • It is time for roadmaps to go.
  • Roadmaps are about output.
  • Roadmaps are the antithesis of agile and lean.
  • Stop giving teams features to build and give them problems to solve
  • This is what it means to be an autonomous and empowered team
  • This is a lot harder than just building features

Dual track product development

  • Objectives
  • Build the right product (discovery)
  • Build the product right (delivery)

Dual track: customer development

  • Single favourite technique for best chance of success is the customer development program
  • Develop a set of reference customers in parallel with building the product

Final word on the product manager

  • Using your time effectively as a PM is important
  • It takes about four hours a day of real time, using your brain, to do discovery
  • This could be time with the designer, or showing it to sales, or time with customers
  • You’ve got two choices:
    • From 6-10 at night
    • Or, get really disciplined with your time during the day. Start leaning on others. Stop going to all these meetings.
  • However you solve it, I don’t know how you do this job without four hours a day of this quality time

The Group Product Manager role

  • A player coach
  • Has 1-3 product managers they coach in a very hands-on way
  • As well a being a PM themselves

Favourite book on tech: The Hard Thing About Hard Things by Ben Horowitz

EMPOWERED – Achieving Extraordinary Results with Ordinary People – Marty Cagan

Key Points:

It’s not helpful to sugar coat things. It’s better to be honest and frank on a lot of this stuff.

Introduced to a lot of companies, and amazed by the difference between how great companies work and how the rest work. To me, that difference is unacceptable, it’s embarrassing, at this point in our industry.

Product Discovery – it’s my favourite topic, could talk about it all day. Focus on the four risks.

Teach a lot of companies this way of working. But find out later that they are not allowed to work this way. It bothers me, because I know that unless they work this way, they are almost certainly going to go out of business.

In great organizations teams are there to come up with solutions that customers love, but also work for the business. This is fundamentally different to teams which are just there to serve the business.

Truly empowered teams – this is not even new, this is old news. Here are some books that talk about it:

Why don’t more companies really empower their teams?

It comes down to trust. The leaders don’t trust the teams.

It’s also fair that they are mostly right – the product managers are mostly not the right ones to trust. But that is also the leaders fault for hiring them.

Amazon, Apple, Google = have consistently proven how to innovate on behalf of their customers. They have very different cultures. But they have something in common: all four founders were coached by the same person, Bill Campbell.

Etsy: Mike Fisher and Marty Abbott. Both went to West Point and served in the military. Examples of great leaders.

The Role of Leadership – five key responsbilities

  • Product Vision
  • Product Strategy
  • Product Principles
  • Product Priorities
  • Product Evangelism

Great product leaders, at all levels, acknowledged what they don’t know, and what they can’t know. They are humble.

The Role of Management – the three key responsibilities

  • Staffing
  • Coaching
  • Objectives

Most product managers are not competent. So who is helping them? It’s not their fault, it’s their managers fault. This is where I would point the finger the most – the managers of product managers.

Worry less about the company, but rather find a manager who has been there and done it, and is committed to coaching you for the next year or two. That’s the best way to learn product. The vast majority of people however, have never seen and done it.

New Zealand All Blacks have the No Asshole Rule. They’ve figured out that no matter how skilled you are, you can’t be an asshole.

Designers should sit right next to the product managers. The best ones are not just graphic designers, they are product designers.

Findings from Google Project Aristotle – it’s not the team of rock-stars that produces, it’s the team of ordinary individuals who happen to really trust each other, where they don’t have an asshole on the team making them feel unsafe or uncomfortable.

The true test of empowered teams:

  • Is the team staffed with competent people with character, covering the necessary range of skills.
  • The team is assigned problems to solve, and they are able to decide the best way to solve those problems. (This is the best test of whether you have an empowered team or not).
  • The team is accountable for solving the customer or business problem (outcome vs output)

Marty Cagan Ask Me Anything session with Israeli PMs

Key Points:

  • Criticism of SAFE framework – it’s absolute nonsense. Banks and finance companies use this. Recommend to stay away from this.
  • Find the best techniques used by the best companies and share them. Over time this builds up a body of knowledge we have at SVPG.
  • People want a silver bullet. Something that works every time. None of these things work for every situation though. When is it appropriate or not, that is the question for each technique.
  • Don’t recommend OKRs to product teams in most cases, because most teams are feature teams, not actual product teams. You need to have the empowered teams model to make it work. You get a complete mess when applying OKRs to feature teams. OKRs worked at Google because of empowered teams.
  • The weak link in most companies is not the engineers or the designers, it’s usually the product manager.
  • But I never blame the product manager. It’s really the fault of the managers of those product managers.
  • There are so many people trying to tell PMs how to do their job. But they’re basically telling them how to be a project manager. No – that is not the job.
  • Marty tries to give guidance based on what the successful teams do.
  • Very smart people who know how to get things done. This is what Google originally looked for in PMs.
  • APM programs are a good way to coach people. Define what it means to be a competent product manager. Being customer focused is key. The litmus test: your CEO should believe you as a PM know as much about the customer as anybody else in the company. This is critical. If they believe the sales people know more than the PM about the customer, they’re not going to listen to you.

The four most important aspects to the PM role:

1. Deep knowledge of the customer is always first.

Example when Marty was learning as a PM – his superior wouldn’t let him make a single decision until he had visited 30 customers face to face. 15 in the US, 15 in Europe.

2. The PM needs to become an expert in the data that’s generated.

It’s great to have a data analyst on the team. But it’s not enough. The PM needs to be an expert on how the product is used.

3. PM needs to understand your business.

Not your customers business (that’s no.1), but your business. A PM needs to know all aspects of the business. How it generates income, how marketing works, legal issues, ethical issues, etc. The PM really understands your business.

4. Understand your industry.

The trends, the landscape, the competitors.

It’s your managers job to get you competent on these four things before you can really make decisions.

Working remote can be OK. Lots of tools to enable customer testing and interaction. What is challenging is being remote from your engineers. You end up reverting to sending the engineers specs.

The four risks PMs should focus on:

  • Value risk: would somebody even buy this product?
  • Usability risk: could they figure out how to use this product?
  • Feasibility risk: can our engineers figure out how to build this product?
  • Viability risk: would this product be legal in the EU (for example)?

When thinking about prototypes, you have to ask which risk is it trying to address?

Empowerment means: who gets to decide?

In a feature team, management decides. The team is really just there to build.

In an empowered team, the team gets to decide.

Consensus model: I hate this model. Everybody has to agree to decide. It comes from people who have a good heart, they want people to feel included. But it goes wrong, I never advocate it.

The opposite end, the dictatorship model. The PM just says I decide. This is no good either.

The middle model is the collaborative model. The person who has the expertise makes the decision. If it’s technical, engineer lead decides. If it’s business viability, the PM decides. If it’s design, the designer decides. And run tests to prove it as much as you can.

An experienced PM can move between different industries. We’ve learned that domain expertise is less important than what people thought. It’s usually much easier to take a PM from a good team, who knows how to do product than to take a domain expert who doesn’t know product. Good product people love to learn new spaces.

There are some domains where the PM will need access to a subject matter expert though. Example of building a product for surgeons, you don’t have to be one yourself, but you need access to them to learn.

The most common reason people leave their job is because of their manager.

Marvin Liao on growth best practices

“Working on the right problem is more important than working hard.” – Caterina Fake

What is the most important thing for startup success? Is it having a good product? Solving a general problem?

The most important thing for startups, is to start with a vision.

Assuming that you’re making things people actually want, then beyond that, the best companies had a very clear vision of what they wanted to accomplish from the very beginning.

Marketing is the differentiator

It’s now expected that you have a great product, and it delivers a great user experience. The differentiator is now how you are found and how you acquire customers.

Don’t look at a successful company and study what they did in year five, look at what they did in the very first year. Your tactics will be defined by the scale of growth you are in. There is a wealth of great information out there (books, blogs, videos), but you need to filter based the content to fit with where you are at as a company.


In the early phases of a startup, growth hacking is really important. As your company becomes bigger, marketing becomes more and more important. With marketing, you can invest a dollar and know what you’ll get out – this is important when you need more predictability around growth.


Growth is a process. You have a hypothesis, and you run a bunch of tests, over and over again.

Story from Facebook in 2007: they were spending so much time and effort on bringing new users in, but those users were dropping out. They stopped focusing on acquiring new users, and spent an entire year looking at how to keep those users they already had. This ultimately fuelled growth, as those users who stayed invited more friends to join.

Figure out Activation, then figure out Retention. These two are the most important things you can do, even more than acquiring new users. This is contrary to what you commonly read.

Keep in mind: 9 out of 10 tests you run will be inconclusive. But that’s OK. You’re learning something small each time. You have to do this over and over again, even when tests are not providing conclusive results. This is hard, and it’s why most companies don’t succeed at it.


Marty Cagan on Customer Discovery Programs

Customer discovery programs allow you to work on an important problem closely with a group of customers. It needs to be a limited amount, and you need to avoid the trap of building a custom solution for one customer. Marty Cagan – who writes about this in his book Inspired – advises to limit to one target industry at a time. The end result is a group of delighted reference customers, and product / market fit.

Everything depends on strong products

Without strong products, our marketing programs require customer acquisition costs that are too high; our sales organization is forced to get “creative,” which drives up cost of sales, lengthens the sales cycle, and puts downward pressure on price; and our customer success organization is forced to take it on the chin every day with frustrated customers.

The downward spiral continues because the sales organization loses a lot of deals when they try to compete with a weak product. So, what do they do? They start yelling at you about all the features you don’t have, and the competitor they lost to who does, which typically just makes the bad situation even worse. And then you start complaining about working at a sales-driven company.

This entire book, in one way or another, is intended to prevent or correct this situation.

Reference customers

There are few things more powerful to a product organization than reference customers.

…I will warn you that this technique takes substantial effort, primarily on the part of the product manager. I wish it were easier. But I will also say that if you do this technique, I consider it the single best leading indicator of future product success.

…The basic driver behind this technique is that, with a significant new product, the most common objection is that prospective customers want to see that other companies, like themselves, are already successfully using the product.

…If you end up targeting two or three customers from two or three different markets, this program will not give you the focus you want and need.

…For example, first develop six references for the financial services industry, then six for the manufacturing industry, and so on.

Only launch when you have the reference customers in place

I do my best to persuade teams to not launch a product in the marketplace until after they have those six reference customers. We don’t want to turn on the sales or marketing machine until we have evidence that we can help them be successful, and the reference customers are our best evidence.

We are looking for prospective customers that truly feel the pain and are near desperate for the solution we want to build. If they could find a solution that worked for them elsewhere, they would have already bought it.

Avoid custom development

…You are, however, deeply committed to coming up with a product that works extremely well for them and just a handful of other companies.

Further, your job as product manager is not to put in the features that all six companies request. While that would be much easier, that would yield an awful product. Your job is to dive deep with each of the six customers and identify a single solution that works well for all six customers.

Limiting the number of customers to six or eight

If you are working on an important and difficult problem, you will likely be overwhelmed with customers that want to participate. It really is a good deal, and customers know this. If you have a sales organization, they’ll try to use this as a bargaining chip, and the result is that you’ll be leaned on to include many more customers than you can handle. This will take finesse at times, but it’s important that the members of the customer discovery program be the right set, and no more than eight. However, it’s no problem also having an early release program that is essentially unlimited for those customers that want the software early, but you determine aren’t right for the customer discovery program.

Finding the right product ideas

Remember that this technique is not designed to discover the necessary product – that comes next. Rather, it is designed to give you direct access to the target customers where you’ll find the product ideas necessary to generate reference customers.

Product / market fit

If we can get to the point where we have six reference customers in a specific target market, we will typically declare product / market fit for that market.

So, each reference customer is a truly significant milestone. But, for example, getting six reference customers in a given target market for a B2B company is perhaps the most significant, meaningful milestone business result for a product organization and something truly worth celebrating.

If you want a culture of innovation, it all starts with hiring

Creating a culture that has a thirst for and thrives on innovation is the holy grail of business today. But it’s not as tangible, nor as easy, as creating processes, borrowing best practices, and funding innovation initiatives. Managers across the globe sit and weep in their offices, because this problem … is all about … people. The one darn thing their MBA didn’t teach them about.

Google is perhaps one of the best examples of an innovation-driven culture – or at least their culture appeals to me, so I was keen to read a new book on the subject by long-serving Google executives, Eric Schmidt and Jonathan Rosenberg. In How Google Works, we get a glimpse into what really makes their environment so different, and so innovative compared to most companies.

Hiring is everything

I was surprised to see that above everything else, the one thing that stands out in the book as a clear strategy for innovation, is the passion and dedication for hiring the right people.

“The most important skill any business person can develop is interviewing.”

Google is obsessed with what they call smart creatives. People who are highly intelligent, but are also creatively motivated – they enjoy figuring things out, they seek out problems to solve, and in their own strange way, they are highly interesting people.

At Google, they have something called the ‘airport test’ – which is to say, if you were stuck in an airport, delayed for hours on end, and you had to sit with this person for the duration, would they be boring, or interesting? Would the conversation keep you from being bored? You don’t have to get on with the person that well, but you do need to find them interesting – they need to have diverse interests, hobbies, backgrounds, and ways of thinking to yours.

“You must work with people you don’t like … homogeneity in an organization breeds failure. A multiplicity of viewpoints – aka diversity – is your best defence against myopia.”

But don’t talk about passion

Passion is not something you should ever have to mention or justify – passion should be demonstrated. Google look for people who have deep interests in subjects in and outside of work, because they are looking for people who tinker, who mess with stuff, who like to keep learning. And crucially, people who tend to be absorbed in something, with persistence and grit.

“Henry Ford said that ‘anyone who stops learning is old, whether at twenty or eighty. Anyone who keeps learning stays young. The greatest thing in life is to keep your mind young.’ Our ideal candidates are the ones who prefer roller coasters, the ones who keep learning. These ‘learning animals’ have the smarts to handle massive change and the character to love it.”

To help weed the phonies, Sergey Brin poses a deceptively tough question for his interviewees:

“Could you teach me something complicated I don’t know?”

This is where they expect you to bring something new and interesting to the table. Maybe it’s about how to fix up an engine, rig up some DIY solar panels, or build an algorithm to improve Netflix’s recommendation engine. But it won’t be about defining go-to market strategies, or benchmarking KPIs. What would you say to somebody who is as bright and well-informed as Sergey? Tough question.

“Comfort with ambiguity, bias to action, and collaborative nature.”

People that can adapt to change

Because the world is changing so quickly, you need people who can adapt. People who are always learning (i.e. they have a growth mindset) are better able to make that rapid change. People who take action, try things out, discuss and share with others, are a strong preference. Don’t hire for a specific role, hire for the company as a whole. Job positions are expected to change frequently, so you need people who can move into other areas – therefore look for general abilities, not specific ones. Typically companies look for past experience when filling a role, but that’s not how you find a learning animal.

“Favoring specialization over intelligence is exactly wrong, especially in high tech. The world is changing so fast across every industry and endeavor that it’s a given the role for which you’re hiring is going to change.”

Put simply, hire outstanding individuals, the superstars. Act like a top sports coach, spend significant energy on drafting, recruiting, and trading the best talent you can find.

“We want to hire the best minds available, because we believe there is a big difference between people who are great and those who are good, and we will do everything we can to separate the two.”

And as for finding these great individuals? Well, firstly Google wonders why you need recruiters. There is a place for them – perhaps for other companies – but everybody in the company should be a recruiter. Because if you find one great person, the chances are they will know more – interesting folk tend to congregate with other interesting folk.

“A workforce of great people not only does great work, it attracts more great people. The best workers are like a herd: They tend to follow each other.”

The hiring process

Hiring should be peer-based, and not hierarchical. It’s one decision where a committee actually makes sense. This is because you need to hire all round good individuals, that can quickly jump to other areas of the company or different projects. Google puts people through a series of short interviews with the members of the committee.

“From the outset, Google’s founders understood that to consistently hire the best people possible, the model to follow wasn’t that of corporate America, but that of Academia. Universities usually don’t lay professors off, so they invest a lot of time in getting faculty hiring and promotion right, normally using committees.”

Most interviews will result in a no-decision, therefore schedule every interview for a maximum of 30 minutes. Why should it be an hour when you know the probability is a no-go? If the candidate is bad, you will know very soon into the discussion. If they are good, you’ll want more than 30 minutes with them, so schedule another talk. 30 minutes also forces you to avoid the waffle and get to the important questions. Also know that a highly qualified candidate is evaluating you, the interviewer, as much if not more than you are evaluating them. A top candidate always has multiple options, you are just one of them. And crucially, look for people who engage rather than sit there deflecting your questions:

“People who ask good questions are curious, smarter, more flexible and interesting, and understand they don’t have all the answers – exactly the type of smart creative characteristics you want.”

There is a limit of five interviews, because they found that statistically more than five does not impact the quality of the decision. They use a scoring system between 1 and 4, and they encourage interviewers to take a strong stand. Offering up a 3 means you are fine with the hire. That’s not good enough. You want to be more than fine, and by issuing a 4, it means this person will get hired, or you can expect the interviewer to “hunt you down and … passionately debate the decision.” Smart creatives care a lot about the people they work with, it’s like an addition to the family, so you can expect emotion.

A hiring ‘package’ is created for each candidate. This is a standardized document, containing all known information on the candidate, and feedback from each interviewer throughout the process. This means everybody on the committee has the same information. It must be filled with data, not just opinion – and it’s the only source of information for the committee, everything must go in. A successful candidate will end up with a stuffed document, full of interesting pieces of data and examples. This process is the same across the entire company, for every level.

“Once you get your smart creatives on board, you need to pay them; exceptional people deserve exceptional pay.”

Just like successful athletes, great employees have a disproportionate impact on the company. They help teams win, and winning brings huge business benefits. Should you pay them disproportionately right away? No. The pay curve should start low, but accelerate fast and high when the impact is made on the business.

Google’s innovation methods

So now that you have your well paid, high impact, smart creatives all buzzing with new ideas, how do you manage their innovation potential? The first step is to ensure you have speed built in – you must move fast. The only way to really handle this is through agility and iteration. You must try stuff, often in a low-fidelity way, learn, and try again.

“Product development has become a faster, more flexible process, where radically better products don’t stand on the shoulders of giants, but on the shoulders of lots of iterations. The basis for success then, and for continual product excellence, is speed.”

Iteration is the hardest part. Once developers finish the initial work, they tend to look for something new – getting them to stick around for the improvements is not easy. So start small, and ship it quickly to get results – focusing on the improvements for the user. Google also recommend saving a ‘wow’ feature for after initial launch. If people like the product, then hit them with a giant wow feature very quickly.

Employees at Google have famously had 20% time, but Schmidt and Rosenberg explain that it’s not really 20% out of the working week, it’s more like they work 120%. The idea of 20% time is to give permission to employees to work on anything they want. It’s a reinforcement of the culture and ethos:

“Twenty percent time is a check and balance on imperial managers, a way to give people permission to work on stuff they aren’t supposed to work on.”

10X everything

Google’s attitude towards innovation is to improve something by 10 times or more. Try to find the areas, even in existing products, where you can make a 10X improvement. 10X is big – it changes the game, like Gmail did with its enormous free storage on launch. This idea has permeated into every area of the company, with people often discussing how to 10X their job. It’s a great mindset to have – how would we 10X what we’re doing here?

“Many companies get comfortable doing what they have always done, with a few incremental changes. This kind of incrementalism leads to irrelevance over time, especially in technology.”

For Google, innovation is not incremental. Rather it must fulfill three criteria: it must be new, it must be surprising, and it must be radically useful. They safeguard time for this kind of work, by following a 70/20/10 plan. 70 percent of projects are related to the core business, that of search and search related advertising. 20 percent is related to emerging projects which have already achieved some sort of early success or promise. And 10 percent is allotted to completely new things, which are high risk, but with a big potential pay-off.

Radical innovation

Google’s Project X team could be considered part of this 10 percent allocation. They work on exclusively radical ideas, like the driverless carGoogle Glass, or Project Loon. To determine whether an idea is funded in Team X, they use a Venn diagram with the following criteria:

  1. It has to be something that addresses a big challenge or opportunity, something that affects hundreds of millions or billions of people.
  2. It must be a solution that is radically different from anything currently in the market. Not try to improve on an existing way of doing something, rather start from scratch.
  3. The breakthrough technologies that could bring that radical solution to life have to be at least feasible.

Despite these grand ambitions, in general Google has a philosophy of not over-funding ideas:

“When you want to spur innovation, the worse thing you can do is overfund it. As Frank Lloyd Wright once observed, ‘The human race built most nobly when limitations were greatest.’”

Say no to the CINO

Another area where Google seems to divert so radically from other mainstream companies, is their belief that the CINO role is a mistake.

“A few years ago, a major consulting firm published a report advising all companies to appoint such a ‘Chief Innovation Officer.’ Why? Allegedly, to establish a “uniformity of command” over all the innovation programs. We’re not sure what that means, but we’re pretty sure that ‘uniformity of command’ and ‘innovation’ don’t belong in the same sentence”

Innovation they claim, cannot be owned, unlike other things in business. It resists typical MBA-style tactics. Rather, ideas must fight their way to survival in a Darwinian kind of evolution. You must create a ‘primordial ooze’ that cultivates innovation – i.e., a culture. People should never be told to innovate, but they should be allowed to do so at every opportunity, which is why hiring is the bedrock of the strategy. When smart creatives work on ideas they believe in, the ideas travel a path which is perilous, but if successful will have become a stronger idea, picking up supporters and momentum along the way. Weaker ideas won’t make it. And perhaps most concerning for other companies scrambling for an innovation best practice, Schmidt and Rosenberg have this to say:

“There is no process by which to implement this evolution; its defining characteristic is its lack of process.”

Bingo! It’s all about the people.

This article was originally posted on LinkedIn.

How Crowdsourcing Evolves: The Four Stages to Transformation

The innovation management industry is highly fragmented today, which makes it confusing to understand which methods apply to which scenarios, and what the difference is between those doing crowdsourcing, and those doing enterprise programs designed to facilitate business transformation.

Front-end, back-end?

Terminology is part of the problem, which stems from the overuse of the word innovation (how about we stop using it?). Generating ideas is not innovation, for example, but are commonly bundled together. More specifically though, we notice that there is confusion between the front-end and back-end of innovation. Many people consider the evaluation phase of ideas to be the back-end of innovation, but in fact this is still part of the discovery process, because we are in the domain of figuring out what to implement, not in the actual implementation phase. The back-end is where the value creation process begins, and where the outcome of that process is captured.

The back-end – the domain of implementation where innovation truly happens – is drastically undervalued and ill-considered in crowdsourcing. Ideation is not innovation at all, and it’s also not where business transformation happens – for this, you must execute. You will never transform the way you work simply by generating a lot of ideas, and making people feel engaged. Michael Schrage’s observation from The Innovator’s Hypothesis is worth putting up on a poster in our offices to remind us:

“Good ideas have nothing to do with good implementations … Implementation – not the idea – is the superior unit of analysis for assessing value creation. How organizations enact ideas – not the ideas themselves – is the soul and substance of innovation. More often than not, implementation ends up redefining both the boundaries and the essence of the original idea.

What is Crowdsourcing?

Crowdsourcing can also mean anything from the outsourcing of effort to tackle a task, like Amazon’s Mechanical Turk; a call for solutions to a specific problem; or an employee idea suggestion scheme. Jeff Howe, who coined the term, defines it as the first of these:

“…the act of taking a job traditionally performed by a designated agent (usually an employee) and outsourcing it to an undefined, generally large group of people in the form of an open call.”

In a research paper by Estellés-Arolas and González-Ladrón-de-Guevara, the authors found 40 different definitions of the term. Yikes!

Specifically, when we look at the major platforms available to organizations, we see more confusion. In a recent analyst report, Forrester listed 15 vendors in their Wave assessment, 11 of whom were ranked as Market Leaders, the other 4 were Strong Performers, and there are no Contenders and Challengers. How can it be that there are 11 market leading solutions on offer? It must both be true that the criteria used by Forrester is somewhat flawed, requiring more nuance, and the market itself is not clearly defined.

There is a big difference between something like MyStarbucksIdeas, and an enterprise platform which has real-time trend scouting integrated, multiple channels for ideation to happen, different and specialized workflows, individual governance models for different areas of the business, and a back-end that supports concept iteration and tracking.

There is of course nothing wrong with MyStarbucksIdeas, but it’s designed for branding and engagement purposes. A program that is there to support a transformation in the way a company is working looks entirely different.

The Perils of Crowdsourcing

The BP oil spill crowdsourcing challenge garnered a lot of press attention when launched, but a retrospective view saw that 43,000 ideas were submitted, from 120,000 people, taking an enormous amount of time to triage and evaluate, but ultimately resulting in: “a lot of effort, for little result”. See the Guardian’s summary for more background.

More recently, the Natural Environment Research Council (NERC) in Britain asked: “What shall we call our fancy new boat?” In a moment of brilliance, somebody submitted the idea of Boaty McBoatface, and it quickly gathered 30,000 votes before the website crashed. See the Independent’s article on the ‘perils of crowdsourcing’ for more info.

It’s tempting therefore to conclude that crowdsourcing is really a bit of a joke, and not a serious initiative to facilitate transformation. But far less publicized cases of enterprise crowdsourcing exist, which demonstrate an altogether more serious effort of large companies trying to do things differently. A recent example comes from Liberty Global – the largest international TV and broadband company – with their program which further extends its reach and capabilities every year, and includes a well thought-out plan to train and educate employees on innovation methods and tools, and develop a network of innovation managers who magnify the program’s reach. Many of the initiatives of the program are actually offline, but the online platform is the single source of truth for everything, the visible window into the transformation. You can read more about it in a deep dive write-up here.

The Four Stages

At a macro level, all enterprise crowdsourcing programs move along the same trajectory, although many get stuck half way – let’s look at the stages briefly.



All programs begin with the challenge of achieving a certain level of engagement; getting people on board and collaborating together. For some companies, this is already a major challenge, because of a skeptical or disengaged audience – and/or a lack of empowerment from management. For others, the culture is such that engagement, even across divisions, comes easily.

However, it is important to note that engagement and collaboration by themselves have no inherent value. Unless it is converted into the second stage, it is essentially worthless – sometimes even damaging. This is a delicate trap, because engagement can feel like momentum, and give the program a positive outlook, but ultimately reveal itself as a fool’s gold.


Engagement must deliver insights. Otherwise the program will surely die – it’s just a question of when. The goal of getting the critical mass of people to engage in innovation is ultimately to discover new perspectives, new ways of thinking about a problem, or surfacing new opportunities. If you didn’t need these new perspectives, then you could just have the same folks sit down in a room and come up with the same ideas.

Ideas are cheap, and you can get plentiful ideas just through engagement, but what you really need is a new viewpoint, new insights; this is how innovation starts. There are many subtle difficulties to generating insights, as opposed to just generating ideas. For example, the quality of the question being posed is critical, and so is the way collaboration is guided (think of De Bono’s Six Thinking Hats  methodology to explore different perspectives on an idea). It’s not as simple as just asking for ideas, and getting the valuable new insights. Quite the contrary.


Ideas, insights, and perspectives, are only just fragments. Another step is required to develop the fragments into something the business can work with – i.e., a solution. For some companies, this means creating a business case that makes the idea fit with the existing performance engine, rather than antagonize it (see Trimble and Govindarajan). For others, it means quickly iterating through build, measure, learn cycles to find a product/market fit (see also: The Most Important KPI for Building Innovation Muscle for more on this piece).

Solutions are synonymous with concepts, or lightweight innovation projects. The challenge here is finding a suitable way to realize the value from the concept. A company is ideally looking to have a portfolio of these solutions, or concepts, rather than just a portfolio of ideas.

It is extremely challenging for those companies who struggle with transformation, because unlike generating engagement and ideas, this stage requires that all parts of the business confirm the value of the solution, and a process must be established to handle the creation of innovation (the implementation, back-end phase!).


It’s tempting to think that the previous stage is the end of the process. But transformation happens only once the company has successfully implemented these solutions, and has made the entire process a part of the way work is now done. Employees must be able to clearly recognize and understand the process, and the process has overcome any significant organizational resistance.

The investment axis is important to note, since it is often cheap and easy to get engagement, and with careful consideration you can also get the valuable insights too. But it becomes significantly more expensive to convert this into tangible outcomes – it requires resources, education, budget, and constant negotiation with different parts of the business. But of course the impact is far greater, exponentially so, because of the return on investment with new products, services, disruptive innovations, and the impact on company culture.

Because of the issues around terminology, and the disparity between idea crowdsourcing and enterprise innovation management, it can be hard to pick apart the differences. But from my perspective at least, the four stages above are a window into the process, and a way to start the dialogue about where companies get stuck, and how they get to where they really need to go.

Why You Shouldn’t Call It Innovation

In 1860 Swiss historian Jakob Burckhardt released his book The Civilization of the Renaissance in Italy. Up until that point the term ‘Renaissance’ was not widely used as the label for what we now think of as the period approximately between 1480 and 1520, where cultural, artistic and scientific creativity flourished. Burckhardt was the one who fixed the notion of the Renaissance into the common lexicon, and helped us to describe this seemingly unique period in history.

We think of the Renaissance as a period of great innovation and ingenuity, but at the time it was less about looking forward, and more about looking back – the overwhelming theme of the time was to rediscover and emulate the great minds of the Greek and Roman eras, it was a resurgence back to antiquity. We think of Da Vinci as one of the greatest painters in history, but at the time to paint was seen as the most common and lowly artistic form. When applying for a job with the Duke of Milan, Da Vinci lists 10 skills he can bring to the table, including the construction of bridges, cannons, and catapults. At the very end of the letter, he also mentions that in “painting I can do as much as anyone else”. To paint like Da Vinci was really no big deal.

What’s the point of this? The point is that innovation is only true after the fact. Innovation is a label you apply after the value creation has been achieved – not while you are attempting to create it.

All to often today we see companies saying they are going to be innovative, pursuing innovation as a top strategic goal. But this is a category mistake; we will be the judge of whether they are innovative or not, you don’t simply get to choose.

Hewlett-Packard was a hugely successful company. In 1990 it was worth $9 billion; through a series of innovations it grew to $135 billion by the 2000’s. But as it started to reach this plateau, it began hyping up its ‘innovativeness’, launching a branding campaign around the imperative to ‘invent’. Things soon began to fall apart, and in a desperate search for ideas it launched a consulting arm and merged with Compaq. By 2005 its market cap rapidly dropped by half to $70 billion.

When Apple unveiled the iPod, Steve Jobs talked about many things they strived for, like fitting 1,000 songs in your pocket, but how many times during his 1,400 word speech did he mention the word innovation (or innovative)? Not once.

When Apple released the iPhone in 2007, a truly breakthrough innovation, Steve Jobs talked about making a product which leapfrogged any mobile device there had ever been, and making it super easy to use. In his lengthy 9,200 word speech, how many times did he mention the word innovation? Three times. Not much considering how truly breakthrough this product was.

Yet if there is one company we’ve labelled innovative more than any other in recent times, it’s Apple. Those who innovate don’t talk about innovation.

A couple of years ago the annual reports filed with the SEC showed the term was used 33,528 times, a 64% increase from five years prior (when Jobs unveiled the iPhone). Companies are hiring Chief Innovation Officers, and setting up Innovation Labs, or Innovation Teams. But as Chris Trimble and Vijay Govindarajan note in their excellent book, The Other Side of Innovation, you should be very careful about labelling such expeditions as innovation:

“We offer one small but important piece of advice. Since the Dedicated Team is purpose-built for an innovation initiative, it is natural to think of it as the “innovation team.” But doing so leads to several problems … calling the Dedicated Team the “innovation team” undermines the partnership [with other parts of the business]. A relationship of mutual respect is unlikely if there is a perception that the Dedicated Team is unique innovative. The implication that the Performance Engine [regular business] is not innovative will be heard loud and clear.”


Da Vinci wasn’t aware he was living in the ‘Renaissance’, and he wasn’t even aware that his painting skills were going to be remembered far beyond his catapult-making skills were. The term Renaissance is for our benefit, to categorize and label these achievements, as historian Paul Johnson notes:

“Needless to say, it is not those who actually live through the period who coin the term, but later, often much later, writers. …  If the term has any useful meaning at all, it signifies the rediscovery and utilization of ancient virtues, skills, knowledge and culture”

The Renaissance was a collection of many individual achievements and initiatives across Italy and eventually throughout Europe, each one adding to the momentum of the whole. Similarly what truly innovative firms are doing today, is creating a network of initiatives and capabilities – importantly not called innovation – which are collectively driving results, and transforming organizations. Specifically we are talking about things like:

You don’t need to talk about innovation, it’s what others will talk about when you generate significant new value. In the meantime let’s talk about exactly what is happening to make better products, better companies, and happier customers, and beware of the trap of saying “we’re going to innovate”!

This article was originally posted on the HYPE Innovation blog.