Below Water Level

Prioritization conflicts are exactly the situations when Product Managers must step away from traditionally accepted management tools and frameworks and look deeper into Purpose.

In 2005 when I went to Australia to study, my parents had to finance the tuition and the living expenses with a student loan. Then it took us about 4 years to repay it. While I was repaying it, I had a very specific target for the payback period. To squeeze out every single cent from the salary I kept diligent and detailed track of my expenses in a spreadsheet. Every time I received my salary, I updated the spreadsheet, the moment I spent anything I updated it at the end of the day. Every month I set aside funds for rent, food, etc., not touching those funds, while experimenting with lower and lower allocation to expenses to see how much more I could repay in a month.

The spreadsheet was a useful tool to tell me where I stood. But, it could not tell me where to spend, when and most importantly why. Decisions of spending habits were not driven by a mechanical spreadsheet but by an over-arching purpose. While a spreadsheet would tell me that this month it is within budget to spend 5 AUD to have a beer, my purpose guided me to save that 5 AUD and channel it to repay the debt as soon as I could.

My purpose taught me to constantly ask “Why?”. Why do I need to spend on X? Why today? How does it help me achieve my goals? How badly do I need X? Is this a need or a want? What alternatives exist to satisfy this need? What am I here for? This phase of my life required immense discipline and focus. It reinforced frugality, common sense and goal-orientation.

Today, I see a direct connection between the decisions I was trying to make on a daily basis back then and the decisions I have to make as a Product Manager. Decisions on what to spend on and where, are about Prioritization. At the heart of it, Prioritization is a question of where do we invest our time and resources for the most impact. What problems should we address first and which ones to address later? It is an exercise in comparing the options available and an exercise in creation of new options.

Prioritization in a very simplistic sense, requires that we bring together a list and then use that list to decide which problems or opportunities are addressed first and which later. In order to perform such an ordering, we need to discriminate between items. Such a discrimination could be using a single dimension or a parameter, for eg. Expected NPS Increase or ARR Increase or the items could be compared against many different discriminators. In a B2B setting, these parameters could be ACV Potential, TAM Potential, Marquee or Logo customer, Contract or Payback Period, Investment Needed or Effort Estimates, Customer Impact on Key KPIs, Adoption-Blocker, Churn Risk, Sales Blocker, etc.

Relying on such a “score-card” style prioritization certainly provides teams the comfort of being scientific and systematic in performing comparisons. Certainly, it is a better approach than using only instincts of a PM or an Executive. For sure, it helps bring together disparate teams which can discuss investments using a common point-of-reference in the score-card. At the least, such a method will help a start-up survive yet another quarter where opportunities in a growing market are coming to them from many different directions.

In reality, however, such an approach only exacerbates challenges in the business. The score-card will mask problems in the team’s analysis, such as comparing options as if they were perfectly comparable. How can a feature that is a sales-blocker be compared to a feature that will unlock increase in ACV? Is this really an apples-to-apples comparison?

More interestingly, if the team has climbed the ladder of maturity, throwing all those discriminators together will throw open yet another pandora’s box for them. They will instantly recognize that the scorecard assumes all the criteria are equal but in reality they are not. In a quarter where the business may be struggling with churn due to product quality, something like performance improvements and NPS would take much higher weightage than a Sales-Blocker criteria. This is when teams start getting real fancy by adding weights so as to have the scorecard “tell us” what we should prioritize. There are two problems here. Firstly, of PMs leaving their brains behind and expecting the spreadsheet to tell them what to prioritize. Secondly, we are now ignoring that the weighted priorities themselves have no potential of being over-ridden via executive diktat or individual biases or favourites. Why are we deluding ourselves?

In more complex organizations, the criteria can weigh differently on the minds of different individuals and executives, who may have different goals and KPIs they are optimizing for. Such a system throws wide open the problem of alignment-building and stakeholder management, with Product Managers spending countless hours in “managing internally” and “building for the stakeholder” rather than being motivated by strategy and customers.

Finally, a score-card style approach assumes, these “measurable” discriminators are the only things that matter. We ignore, at our own peril, that which cannot be measured or represented on a neat spreadsheet.

Running prioritization this way has a widespread impact that is not always visible, unless one is looking at things through a system-wide perspective. The alignment-building, the stakeholder interests leads to building the product inside out rather than bringing the insights and customer knowledge from the outside in. Without having a simple, clear rubric for daily use, teams end up waiting for such expensive prioritization exercises from above, resulting in a loss of agility and nimbleness. It also causes demotivation and learned helplessness.

Just consider the amount of time and effort that goes into gathering data. Getting the meaning of numbers correct, aligning interpretations and implications, agreeing on priorities, resolving conflicts at each of those stages.

Having to prioritize and satisfy a complex matrix of discriminators makes the offering’s narrative lose coherence. When communicating it to customers and the market, GTM teams find it hard to grasp a simple and compelling way to pitch the offering. This requires further investment in training, re-training and awareness building throughout the company, increasing the cost of operating the team and reducing agility further. Ultimately, when all this comes to executives, they have to refocus their attention almost exclusively on managing internally.

We choose to prioritize using a paint-by-numbers approach because it is easy to make things visible. It is easy to show where we stand, where we need to be and the gap that needs to be bridged. But the numbers and the score-cards are a trap. Many times they are also an addiction for teams looking for the dopamine hit from having moved a number. It’s a slippery slope because in many instances measuring our progress quantitatively makes perfect sense. The challenge is in those instances where we fail to recognize the real nature of the numbers. Numbers, after all, are a proxy for the eventual human goals, which cannot always be decomposed into KPIs and scorecards.

When we take this paint-by-numbers approach too far, we forget why the product and business exists at all. We forget, or worse, never articulate our purpose, the reason for existence of the business and the product. Purpose is a way to re-affirm and reinforce why we come to work every day. When Product teams are guided by purpose, the most difficult and contentious priority conflicts fade away and the interpersonal tensions melt.

Putting purpose into the heart of strategy is about stepping away from analytical frameworks and quantitative measures for formulating where and how a company will play. Before we can consider analytical and quantitative aspects, we need to consider what is our reason for existence. This requires answering who do we serve, what struggles do we help them overcome, what might be some of the boundaries of our existence, how will that purpose translate into daily improvements for employees.

Being purposeful is also the secret to agility. Purpose can help move faster and in times of crisis, rally the team together. It helps avoid analysis paralysis and avoid the delays inherent in waiting for numbers to emerge before taking a decision. When employees are in a quandary due to a fork in the road, purpose can guide them to choose which way to move without escalating up the hierarchy or awaiting further direction from their hierarchy. In situations where it really matters, we tend to become data driven when we should be doing the opposite, pause and then reflect on why the business or product exists.

Purpose is at the core of his argument, when Jeff Bezos spoke about considering, “what does not change in the next ten years?.”

Yet another example of purpose is from Shishir Mehrotra, Founder of Coda, who explains the concept of Eigen Questions and how they’ve helped him frame a higher purpose during strategy exercises.

Another study reported in HBR showed how purpose allows companies to navigate, refresh and reprioritize resources when times are tough or uncertain.

Acting with purpose helps in many ways but there is a price to purpose. It is not the easier route. It requires massive emotional self-regulation and strong judgment, which comes from character, which comes from a life of struggle, past failures and bounce-backs. With purpose, one has to be willing to sacrifice. One has to be willing to say No and do so without burning bridges or damaging relationships.

In Australia, I eventually paid off the loan and shifted my life into an orbit where I did not have to maintain a spreadsheet. The lessons and the muscle to be purposeful has remained with me ever since. I try to bring it to my work everyday by helping people work through their challenges by first articulating our personal “Why”s.