FUNDAMENTALS OF PRODUCT MANAGEMENT: THE PROCESSES
Product discovery at established, large-scale, and risk-averse organizations
The nature of product discovery at large organizations is different from that of startups, and eventually, every startup becomes a risk-averse organization. To continually innovate and survive, organizations need a combination of dedicated innovation labs and a culture of incremental and continuous product discovery
One major advantage of experimenting with product discovery at startups is that there isn’t a legacy system to drag down your velocity, no revenue pressures, and no brands to protect. While a startup’s main challenge is survival, product discovery can be done quickly without significant downsides.
However, once a startup has reached product-market fit and found a sustainable business model, then the organization gradually becomes risk averse and the dynamics of its product discovery also change. In other words, it looks like what an established company with legacy systems looks like.
However, what most organizations know is that if they stop innovating, and continually engage in optimizing current technologies and solutions, they will sooner or later die. Therefore they came up with three tactics to innovate:
- Establish corporate innovation labs
- Institutionalize product discovery and innovation
- A combination of innovation labs and a culture for continuous discovery
Option 1: corporate innovation labs
With product discovery efforts slowing down, one option that many large organizations such as GM, Samsung, GE, etc. (mainly hardware companies) utilize is to curve out protected innovation teams/hubs that get some leeway to uncover innovation with little repercussions compared to other business units.
A major advantage of innovation labs is having dedicated teams with a focus on innovation that can be categorized as a “disruption”. This dedication can be helpful in attaining large and meaningful product improvements and change. For example, a traditional media company such as the New York Times that intends to launch new digital social platforms will benefit from having an innovation lab.
However, innovation labs are not that impactful when the intention is minor product improvements as the dedicated team will feel they are lifting small weights. Furthermore, innovation labs as the only innovation option in the organization, make current product teams feel neglected and disempowered, and most often when breakthroughs are found through such labs, product teams become resistant to implementation and change.
Option 2: institutionalized discovery and innovation
Great product companies such as Microsoft, Google, Amazon, Facebook, Apple, etc. have cultures wherein product innovation is institutionalized. This means that innovation isn’t the sole responsibility of a specific group or team but that of everyone to conduct rapid testing and experimentation for product discovery and innovation.
However, this freedom given to all is guided to be executed in a responsible manner, by protecting revenues, brand assets, and key stakeholders.
Protecting revenues and brand assets
In an established organization it’s the responsibility of a product team seeking innovation to protect the revenue streams and reputation that the business has built. While many efforts will not undermine revenues or brands, for those that do, we can test the marketplace by continuously experimenting with new low-cost and low-risk prototypes.
To be even more conservative, we can control the test group to be only 1% of current customers, through invite-only live-data test, or have them sign NDAs
Protecting key stakeholders: employees and customers
Rapid experimentation and change at big companies can catch customer-facing functions such as support and/or sales off guard and make their daily lives difficult. Additionally, customers who continuously need to learn and adapt to a changing product will be unhappy.
To overcome these burdens continuous but minor deployments that have assessed stakeholder impact should protect the business against potential risks. And this proactivity to measure impact and sensitivity to change is the responsibility of the product managers.
Option 3: all the above
Depending on the size of the organization, it makes sense to have dedicated innovation labs with a focus on high-risk and high-growth areas of product innovation while simultaneously building a culture of incremental and continuous across current product lines to ensure maximal gain.
Furthermore, it makes sense to have a Corporate Venture Capital unit (independently or built into the innovation) to search, filter, and identify potential startups and entrepreneurs to purchase and bring into the company to further help with product innovation.
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