Is Being Product-Centric Right for You?

While most company founders can clearly state what their company does (elevator pitch), and some may be able to articulate why (purpose), many struggle with or completely ignore the question of who. I’m not talking about the slide or web page with pictures of smiling team members, but deeper questions related to company identity. What makes the company tick? How are priorities set? How does the company evaluate its own success? What will propel it forward on its journey?

Many entrepreneurs will likely discount this as navel-gazing; they’ll say they’re too busy hustling to waste time on such abstract notions.

I think they’re wrong.

As a technology startup founder, making sure your whole company is aligned is one of the most important tasks. If that’s not clear, as soon as the company grows beyond the first handful of people, they will start to diverge. At best, that will make your organization inefficient; at worst, it will create internal conflict, politics and fiefdoms.

There are many approaches to ensuring alignment. Today, I wanted to help you explore at the highest level what kind of company you want to build. I’ll propose a model with 3 alternatives: your company can be product-centric, service-centric or sales-centric. (1)

None of these is fundamentally better or worse than the others, but getting clarity on which one is right for your company will help decide, how and whom to hire, promote and let go; how internal decisions are made; what work gets prioritized; and how you pitch to customers and investors.

Before we dive into each of them, let’s get the commonalities out of the way: for-profit companies exist to make money (or “maximize shareholder value”, as you might see in the most boring mission statements), and for that they need customers. They generally want their customers to be happy, so they will become sticky and keep buying/renewing. To make customers happy, companies must offer something that customers will want to buy, whether it’s a product, a service or something in between like SaaS. The question then becomes, how to go about achieving that.

Sales-centric

At sales-centric companies, closing deals and driving revenue trumps everything else.

I’ve worked at companies where sales people were the stars. In one case, the CEO was an experienced sales person who had risen through the ranks at traditional sales-centric companies; he had also played (American) football in college, so there was a lot of talk about “quarterbacking the deal”, “pushing through the obstacles”, etc.

For sales-centric companies, the product is often just a starting point for a conversation with customers. Sales teams have plenty of leeway to do “whatever it takes” to land a deal, even if that means stretching things well beyond current capabilities. Then once the deal is closed, it will be another team’s job (typically product, engineering or professional services) to live up to the terms of the deal.

At such companies, deals and sales people are celebrated. The best companies have amazing (pre-)sales engineers, who can create a credible demo that addresses the customer needs, in spite of any product shortcomings. Company KPIs are almost exclusively related to revenue.

Service-centric

At service-centric companies, competing projects in time/on budget is the top priority.

This is the classic embodiment of the phrase “the customer is always right”. You can usually tell that you work at a service-centric company if you hear the words “client”, “project” and “scope” several times per day … or per hour. Another hint: at these companies, “the PM” usually refers to a project manager rather than a product manager.

I’ve worked closely with outsourcing companies that augment the internal staff at their clients. They add a ton of value by increasing the execution and implementation capability. While some will partner at the strategic level, it is much more common for service-centric companies to be handed a detailed scope.

One huge difference is that these companies are usually output-focused and “shipping” becomes. Delivery of the scope that was promised, or in some cases just having X people with a specific set of skills working on a project, is what matters most. Company KPIs are usually around “resource allocation”.

Product-centric

At product-centric companies, creating value at scale is the main reason for existence.

Mark Andreesen captured this succinctly: the only thing that matters is product-market fit. Product-centric companies interact with customers primarily through our product — this is often referred to as product-led growth, which is a go-to-market strategy. However, being product-centric goes well beyond GTM. It is the “why” and the “how” of the whole company.

At InOrbit, we self-identify as product-centric. This has influenced our values (eg “People not resources” and “Builders first”), our team structure, how we align around priorities and how we talk about our company. This doesn’t mean that we don’t care about sales, relationships or execution; those are all critical, but are seen through the lens of creating value at scale.

This adds a level of indirection, so we need guiding principles on how we interpret signals from customers. If an individual customer requests feature X, being sales- or service-centric could lead us to get to work on that right away. However, working on X comes at the expense of not working on something else that could create more value for all our other customers.

In a supremely geeky comment that a select few may appreciate and the rest of you may happily ignore, I like to say that if we could calculate the value of each feature for each customer, our goal should be to maximize the integral of value across all our customers.

As a product-centric organization, your focus should be on addressing the most important needs for our growing community of users. Needs differ from wants and solutions; customers often request a feature or UI change, which would be easy to satisfy, but a true product-centric organization goes beyond that to understand the underlying business need. Product-centric teams should fall in love with the problem, not the solution.

By contrast, to sales deals, which can be “closed”, or projects, which can be “delivered”, the work in a product-centric is never “done”, as there is always additional value to be created for customers. Company KPIs are likely to include metrics for adoption, engagement and task completion.

Wrapping up, finding the right approach for your company, communicating it clearly and frequently to current and future team members, and using it as a touchstone whenever hard trade-offs need to be made is a critical, foundational choice for startup founders.

Which one is right for you?

Originally published at https://www.linkedin.com.