[Part 1] Why Jon Snow could have been a great product manager?
The PM Fallacy: Makability vs. Buildability
TL;DR
“A complex product is impossible to build, but one might be able to make a complex product”
Introduction
Introduction TL;DR: This post is a summary of my experience working with a struggling startup team about 3 years ago (VC backed, Series A, software startup), which resulted in an interesting insight. Also, this post has multiple parts — you’ve been warned.
About 3 years a ago, a close friend of mine raised a Series A, and offered me to join as the first product manager of the company. Since I just got accepted to MIT, I had to decline. However, he kept me as an unofficial external “advisor”.
I witnessed this startup doing everything right. Scaling quickly, attracting top talent, focusing on the customer, investing in their core capabilities and implementing the best Lean and Agile methodologies known to man.
Suddenly, we all started to feel that something just wasn’t right. The company still had enough momentum to keep going for several more years, but it seemed like the culture or maybe the soul of the company has been lost. Everybody was busy working, but significant positive results seem to come slower than ever (if at all).
Then something happened that changed everything. Some kind of realization. This post is about this “Core Insight”. In fact, this post started as a short email, trying to share my experience with another group of founders. Bloating to a monstrous email chain, I realize it might be wiser to use a different format.
Part I: Why do startups succeed?
Startups are different from each other, and there are many reasons why startups succeed. However, looking from the perspective of professional product management, I think it all boils down to one simple Core Insight:
“A complex product is impossible to build, but one might be able to make a complex product”
Definitions — Hooray!
First of all, we have to define “to build”, “to make”, “product” and even “complex product”. My apologies, please bear with me here.
What is “to build” or “buildability”?
I’ve found a very good definition of Buildabilty (Business Dictionary):
“Degree to which the design of a planned building facilitates its construction and utilization”
Wikipedia also offers an interesting point of view:
“Constructability (or buildability) is a project management technique to review construction processes from start to finish during pre-construction phase.”
In my opinion, “buildability” means that we have all the parts we need, and also access to the complete knowledge of how we should arrange the different parts in the right places. We also can predict where each part will be located at the end, and can repeat the process over and over again with identical results.
For example: an IKEA furniture is highly buildable (at least most of the time). It might take some time and effort, but generally, everything we need (parts and knowledge) is easily accessible inside an IKEA flat pack. It also means that it is a predictable and repeatable process. We can buy 10 IKEA closets of the same type, and probably can follow the same process and get exactly the same results.
What is “to make” or “makability”?
Makability might be defined as creating something indirectly, by arranging the conditions allowing it to order itself.
A great example, which is well known to every chemist, is the way crystals are created in the lab. A chemist sets up the raw material, prepare the environment and make sure that nothing interferes with the delicate process. What chemist cannot do (at least as of today), is building a crystal by manually arranging its atoms at the right places.
Evolutionary processes are probably the most humbling examples of “makability”: biological evolution, development of languages, formation of culture and maybe even commerce. I am always amazed how the most complex order is not a result of human design or intention, but spontaneous, given that a delicate balance between outside forces and internal factors is somehow maintained. It is also worth mentioning that people’s attempt to build the end result of those processes, usually fails miserably.
To summarize, we can define “makability“ or “to make” as:
“Process of creation without any a-priori knowledge of the final product, or an ability to directly arrange the final product parts in the right place”
In other words, we might have all the building blocks, but there is no user manual, so we don’t know what to do with them yet.
In the world of product management, it means shifting the focus from the end result (or the final product), to the process itself, focusing on continuous improvement. As an example, different iterative approaches (like the famous Lean Startup approach), advocate exactly that.
What is a “product”
Defining a product was surprisingly hard. I decided to pick a somewhat naive definition, which is probably highly flawed, but serves our purpose:
“A product is anything (product or service) that people pay for in a recurring fashion.”
Meaning, a product generates some kind of revenue stream (from existing customers, new customers, advertisement, donations, government support etc.).
It means that if you don’t generate revenue you don’t have a product. It might be a bit broad, but I think it fits our purpose. However, it begs the question “why revenue?”
Why revenue? Revenue as a signal
“Making money” is definitely not the #1 mission of great tech companies, at least those that most people want to work for, myself included. When we join a company, we do so because we passionate about something other than making a giant pile of $$$.
Smart and accomplished people have talked about product creation as a process of discovery. Which, in my opinion, implies that the actual challenge is not to use the information we currently have, but to discover a valuable information that would help under the current conditions. To make matters worse, needed information is fragmented and distributed among many people that we don’t know, and those people might not even be aware that they hold this kind of information.
Revenue is a strong signal, information we get from other people, whom some of them we never met before. I think there is something extremely humbling when someone gives us her/his hard earned money in exchange for something we created. It means that we might have created something of a real value.
In addition, revenue is relatively easy to understand and measure, and usually hard to fake or manipulate. Also, with the right metrics and tools, it’s difficult to deceive ourselves about revenue. In other words, it keeps us honest.
In conclusion, I would argue that the only way to know if we actually have a product, is to test it in the market. If someone gives us money for it, we got a product. If the money stops flowing in, we might not have a product anymore. The key point is that the market is the only medium, which contains this kind of information. Moreover, the way the market transmits this information, is what we eventually call “revenue”.
A few words about “profit”
Profit = Revenue — Cost. Yep.
I think Clayton Christensen best summarized it, advising to be “patient for growth, and impatient for profits.”.
Cost is also a great signal, and combined with revenue it gives us an indication whether we actually create more value than we “consume” (at least when dealing with commercial products). I also believe that profit is more complicated than mere revenue, since it may be a measurement of an organization as a whole. To keep our case somewhat simple, I am going to ignore profit for now.
What do you mean by “complex” product?
I am going to cheat a bit and say that for our purpose all products are complex.
By definition, startups are trying to do things in a way no one else have attempted before (including those that work for those very startups). It might be a novel technology, alternative business case, new way to serve customers or all of the above.
What’s next?
Finally, we are ready to discuss the validity of the Core Insight: “Complex products are impossible to build, but one might be able to make complex products”. The discussion will take place in the next parts.
EDIT: Click here for Part II
