Building a strong product culture in big organizations can be a challenging task, but it is essential to foster innovation, ensure customer satisfaction, and stay ahead of the competition. In today's digital age, businesses that do not embrace technology risk falling behind their competitors and missing out on new opportunities.
According to McKinsey, “Organizations face an urgent need to overhaul their tech architecture and operating model to keep pace with the changing landscape.”
There are several reasons why technology has become the core of an organization's transformation. First, it has enabled companies to automate and streamline their operations, reducing costs and improving efficiency. Second, technology has opened up new channels for communication and marketing, allowing businesses to reach customers in new and innovative ways.
Technology has also facilitated the creation of new products and services that help to open up new business models and opportunities. Even companies that may not traditionally be considered "tech" companies, such as retail, use technology to improve their operations, increase efficiency, and better serve their customers.
“In strong product companies, technology is not an expense, it is the business. Technology enables and powers the products and services we provide to our customers. Technology allows us to solve problems for our customers in ways that are just now possible.” ― Marty Cagan, Empowered: Ordinary People, Extraordinary Products
How product-first companies are reshaping the traditional businesses
Startups challenge traditional businesses
Startups are challengers to traditional businesses because they bring new and innovative ideas to the market, disrupt existing industries, and offer unique solutions to consumers. Startups are typically leaner, more agile, and more focused on innovation than traditional businesses, which tend to be larger and more established.
Startups often identify a gap in the market or a problem that traditional businesses need to address and develop new solutions to address these issues.
The rapid pace of such disruptions mostly shakes up established traditional business models. For example, Uber and Lyft broke the monopoly of the taxi drivers and disrupted the taxi business. Airbnb disrupted the hospitality industry. Slack is changing businesses’ communication and reshaping the way we work.
The financial services industry is another great example, where “disruptor” brands are on the rise — digitally native challengers that deliver innovative experiences across products and services to make customers’ financial services easier.
Using technology to their advantage
Startups are often more tech-savvy than traditional businesses and use technology to their advantage. This can include using data analytics to better understand customer needs and behavior. This gives them a significant competitive advantage over traditional businesses, which are often slow to adopt new technologies.
That is why corporations began to understand that they needed to develop their own digital products. But since initially everything was built for other areas of business (which are very often not digital), it is difficult for such companies to catch the culture of building digital products.
If enterprises want to start developing a digital product, it will not be enough to focus all efforts only on those departments that deal with digital products. It is important to look at all processes and change them to fit the culture of developing digital products.
With technologies, organizations can differentiate themselves from others in the market, create a favorable business environment and stay ahead of the competition with modern technologies. The shape of the industry changes by moving traditional businesses beyond their common comfort zone to modern solutions that ensure bright growth.
Being more customer-centric
Startups tend to be more customer-centric than traditional businesses, meaning they focus more on meeting the needs of their customers. They often do this by gathering feedback and data from their customers and using it to inform their product development and marketing strategies.
The role of product culture in organizations
A product-first culture aims to create a more cohesive and aligned organization focused on building the best possible product for customers. This approach includes everything from customer research and design to development and launch.
There are different examples of companies that we’d consider successful product organizations that have different approaches to building their product culture.
In EMPOWERED: Ordinary People, Extraordinary Products book by Marty Cagan, he offers a framework for identifying winning product organizations:
- The role of technology: “The vast majority of companies view technology as a necessary expense. In contrast, in strong product companies, technology is not an expense, it is the business.”
- Strong product leadership: “In most companies, the role of true product leadership is largely missing in action. In contrast, in strong product companies, the product leaders are among the most impactful leaders in the company.”
- Empowered product teams: “In most companies, the technology teams are not empowered product teams, they are what I call here feature teams. They are all about implementing features and projects (output), and as such are not empowered or held accountable to results. In contrast, in strong product companies, teams are instead given problems to solve, rather than features to build, and most importantly, they are empowered to solve those problems in the best way they see fit.”
To be product-driven, organizations need to focus on what they’re building, meaning the product has to be central to everything they do.
How to build a strong product culture?
In their book How Google Works, Eric Schmidt and Jonathan Rosenberg (the former head of product at Google) describe what it steps they find most important to build a strong product culture:
- the importance of hiring and developing very strong people
- building and nurturing strong, cross-functional, co-located, empowered product teams
- giving those product teams clear KPI’s (OKR’s)
- focusing innovation on technology-enabled solutions (key technical insights)
- the strong use of data
- relentless focus on the customer experience
Other examples of product culture playbooks:
- Hubspot’s product culture focuses on empowerment and growth
- Spotify’s product culture involves small “squads” or empowered teams
- Yelp’s product culture focuses on empowering product and execution teams
Prioritize customer centricity
Successful product organizations are customer-centric, with a focus on understanding the needs of the customer. This approach is critical for developing products that meet the needs of the customer and are able to compete in the market. It is important for the organization to have a deep understanding of the customer and their needs, which can be achieved through customer research, market analysis, and feedback from the customer.
Customer-focused approach to creating a product-driven culture will help ensure that the organization's products and services are designed with the customer in mind.
Value proposition and business model
A shared understanding of your business’ value proposition and business model is a clear sign of a good product culture. Alignment around the value you’re aiming to provide to your customers — combined with an awareness of who those customers are — is a critical part of a strong product culture, as it underpins the products and services that you put out there.
A very effective exercise is a value proposition workshop that helps companies identify and refine their value proposition - the unique benefit they offer to their customers. The workshop involves a cross-functional team of stakeholders from various departments such as marketing, sales, product, and customer service. The workshop begins by defining the target audience and understanding their needs, goals, and pain points. This helps the team gain a customer-focused perspective and ensures that the value proposition resonates with the customers.
Build a culture of experimentation
Building a strong product culture requires a willingness to take risks and try new things. Leaders should foster a culture of experimentation where employees are encouraged to try new ideas and approaches. Provide resources for testing and prototyping, and make it easy for teams to experiment with new ideas.
- Promote learning: Emphasize that failures are opportunities to learn. Encourage teams to approach challenges with curiosity and a willingness to explore new possibilities.
- Celebrate small wins: Recognize and reward not just successes but also the efforts and learning from experiments, even if they don’t result in immediate success.
- Open communication: Encourage open discussions about what works and what doesn’t. Regularly review experiments in team meetings and share insights across the organization.
- Leadership: Leaders should actively participate in experimentation, whether by sharing their own experimentation stories, or simply encouraging the mindset across the team.
- Transparency: Share both the successes and failures of experiments at all levels of the organization to reinforce that experimentation is valued.
By integrating these practices, you can build a product culture that embraces experimentation, leading to innovative products, a more engaged team, and ultimately, a stronger organization.
Create cross-functional teams
Build cross-functional teams that include product managers, designers, engineers, and other stakeholders, establishing proper interaction between different departments. It may seem that a product manager and a development team are enough to develop a product. However, behind all this, there is often a huge amount of built-up cooperation with departments of product, engineering, marketing, sales, customer support, etc. Encourage collaboration and communication across teams and departments.
Invest in employees training and development
Building a strong product culture requires ongoing learning and sharing knowledge inside the team. Leaders should invest in training and development programs that help employees improve their skills and stay up-to-date with industry trends and best practices. This will help employees feel valued and empowered, and will also help the organization stay competitive in a rapidly changing market.
- Internal knowledge sharing: Encourage employees to share their expertise with the team through lunch-and-learn sessions, internal blogs, or presentations. This not only spreads knowledge but also reinforces learning.
- Peer mentoring programs: Establish mentoring relationships where experienced employees can guide and support the development of newer or less experienced team members.
- Feedback loops: Create feedback loops where employees can share their experiences and suggest improvements to the training and development programs. This ensures that the programs remain relevant and valuable.
Building product culture in large organizations requires focusing on cross-functional collaboration, fostering a strong customer-centric mindset, and promoting data-driven decision-making. It is important to empower teams to own their product areas and supporting continuous learning and experimentation. Leadership plays a crucial role in setting the vision and creating an environment where teams can innovate, take risks, and learn from failures.
