It happens with software. It happens with hardware. It happens with retail products. It happens with consumer services.
At some point, your product or service reaches a state of perfection — a point at which it is at its most robust, most elegant and most beautiful (for this version, at least). This is a moment of joy.
But when released, after all the fanfare, the numbers start slipping. Suddenly, you realize that the actual demand for your fine-tuned offering is not quite as rosy as the projections you based off of demand for the patchwork offering it replaced.
That’s when you realize you’ve got too much product management and not enough business management. Before this happens to you, ask yourself: Where is your product’s general manager?
As I write this post, Peloton is allegedly stopping production on three of its groundbreaking products. It appears demand “suddenly” fell off a cliff.
This case is probably more post-lockdown-related than anything else, but the end result is the same. It’s definitely a far cry from where Peloton was just 12 months ago, when the share price was four times higher and they couldn’t make bikes and treadmills fast enough to meet demand — including instances where some product was recalled after customer injuries.
I’d call that an imperfect product.
“Peloton has essentially guessed wrong about how many people would be buying its products, after so much demand was pulled forward during the coronavirus pandemic,” writes Lauren Thomas for CNBC. “It’s now left with thousands of cycles and treadmills sitting in warehouses or on cargo ships, and it needs to reset its inventory levels.”
In my view, the pandemic-pullback — which seems like a no-brainer in hindsight — is immaterial. Again, I’ll ask: Where was the GM when warehouses were filling to the roof with treadmills?
A “no-brainer” in hindsight is rarely rocket science in real time.
Hardware is an intriguing, high-profile business, one where robustness and elegance of the product are paramount and the words “recall” and “inventory reset” can destroy everything. Forecasting software demand is far less risky, but all software demand eventually plateaus — usually faster and more frequently, to boot.
At the same time the news about Peloton was leaking, Netflix proceeded to throw up all over its quarterly earnings report when it missed subscriber growth expectations (shortly after announcing a price increase).
Netflix has been in a state of perfect product for years, so where did those expectations come from? Certainly, a price increase implies the increasing value of a product, which in Netflix’s case, is a combination of content, access and delivery of entertainment.
Netflix has loads of GMs, who manage everything from “experiences” to “innovation.” How many of them were focused on the fact that there are only so many people in the world hungry for on-demand entertainment and that Disney and Apple are no longer bleeping around?
If Netflix can miss a no-brainer cratering in demand, you can, too.
While every business risks getting caught in a perfect-product cycle, the impact is harshest for startups. Unlike mature companies, startups usually haven’t built up enough of a cushion to fall back on when the rug gets pulled out from under their single flagship product.
I’ve been down that path. I’ve made grand changes to harden and beautify a product only to see revenue drop. That’s when I learned to become a product leader on the business side as well as the build side.
It still happens today: with my own startups, with those I work for that are usually far more mature and with those I advise that usually fall somewhere in between. But now I’m ready for it — if not expecting it.
In each case, I’ve found that whether the product GM is an individual role or just part of another role in the organization, these are the top causes for slippage in your “perfect product’s” revenue. Here’s what your GM should be doing to prevent them.
We often see successful artists — musicians, writers, filmmakers — find traction with a project and then spend a lot of time and money working on their magnum opus. The details are kept under wraps until release. Sometimes that release is heralded, and other times it’s ignored, or worse, savaged.
Don’t be an artist. Oftentimes, we can’t help but guess at what the customer will love next and conspire to give them at least a taste of that direction in the next release. Then that nugget of “next” turns into new use cases or new features, maybe even a whole new version. Your GM should never let items skip to the front of the roadmap just because there’s a release on the calendar.
People blame poor UI (look) for poor UX (function), and they’re usually loud about it.
Everyone is vulnerable to feedback, especially about something they’ve created. As a result, we entrepreneurs are inclined to over-polish a product to deflect that criticism. But what I’ve found is that UI detractors are usually a small (but very vocal) group.
I’ve also found that the Wikipedia/Craigslist effect still holds true: People will use an ugly but highly functional product over a pretty product that doesn’t work.
When you first release a product, you will likely leave a lot of hacks and workarounds on the company side. We all know that these hacks need to be revisited in order for the company to scale.
But every minute you take to harden a product is a minute you’re taking away from growing your market share. Your GM Is in charge of the balance of time in both areas.
Building is exciting. Managing is dull. Both are necessary.
The build of your product leads to quantitative results, and you get to see your work take shape in the real world. On the other hand, business-management success is defined by the aggregation of many incremental gains. The line, “I didn’t let the company do anything stupid and kill itself,” doesn’t work on a resume.
The perfect product state is almost always a goal for the company, rarely for the customer. And this is how it should be, especially at the startup stage. But even after transitioning from minimum viable product to fully functional product, it’s almost impossible to both prepare to scale and actually scale at the same time.
The relationship between product management and general management is critical to achieve the right balance. Don’t ignore the side that always gets ignored. Hire or become your product’s GM now.
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Author: Joe Procopio