Melissa kicks off the Product Thinking podcast with Barry, an incredible entrepreneur, business advisor, and bestselling author of two product management books we swear by. We compare notes on how we each define strategy, why good strategy means saying no, what a strong product strategy actually looks like, and so much more.
Show Notes
Creating great products is about the systems, processes and culture in place that help companies deliver value to their customers. On the Product Thinking Podcast, host Melissa Perri interviews the thought leaders in product development and answers your pressing questions to help you think like a great product leader.
This episode is all about strategy: what it is vs what it isn’t, and how to create a good one. The expert Melissa turns to for strategy advice is Barry O’Reilly, entrepreneur and business strategist who has “pioneered the intersection of business model innovation, product development, organizational design and culture transformation.” Barry is also the author of two seminal books on product strategy and development - Unlearned: Let Go of Past Success to Achieve Extraordinary Results, and The Lean Enterprise: How High Performance Organizations Innovate at Scale.
These are some highlights from Melissa and Barry’s conversation:
Learn about the pitfalls that growing companies often experience when they lack clear strategy.
Strategy is making choices. Barry and Melissa talk about defining your expectations for the outcome, and how to measure the effectiveness of your decisions.
Bad strategy sounds like fluff, so Barry shares what makes a strategy great.
Strategy evolves over time - you make choices, execute, evaluate and iterate based on what you learn.
Barry explains why cross-functional teams are the best way to approach creating strategy.
Product management is a creative skill. Melissa and Barry discuss why making space for thinking is important for product leaders.
Resources BarryOReilly.com Barry O’Reilly on LinkedIn | Twitter | YouTube Unlearn: Let Go of Past Success to Achieve Extraordinary Results The Lean Enterprise: How High Performance Organizations Innovate at Scale
Episode Transcript
Melissa Perri: Creating great products isn't just about product managers and their day-to-day interactions with developers. It's about how an organization supports products as a whole. The systems, the processes, and cultures in place that help companies deliver value to their customers. With the help of some boundary-pushing guests and inspiration from your most pressing product questions, we'll dive into this system from every angle and help you think like a great product leader. This is the Product Thinking Podcast. Here's your host, Melissa Perry.
Melissa Perri: Hey, listeners. This week on the Product Thinking Podcast, we're talking all about strategy. Over the last few years, I've been hunting around trying to find the best framework for creating product strategies, for deploying company strategies, and it's led me on a really wild journey. I get this question most often.
How do I create a great product strategy? What does a strategy even look like? How can I get my leaders to create a strategy? Which makes you really think, what is everybody doing wrong when it comes to strategy? How do we get into this position where there's so much confusion about what that really is?
So today, I wanted to invite my friend Barry O'Reilly onto the podcast to talk about all things strategy. Barry's been a friend of mine for the past few years, and he's the person I turn to when I try to figure out, am I on the right track with these frameworks for strategy? Am I explaining this correctly?
And am I crazy for thinking this way? So he's a great person to learn from. Barry is a business advisor, entrepreneur, and author who has pioneered the intersection of business model innovation, product development, organizational design, and culture transformation. And he wrote two essential books if you are trying to understand strategy or be a leader in technology.
He wrote Unlearn, Let Go of Past Success to Achieve Extraordinary Results and The Lean Enterprise, How High-Performance Organizations Innovate at Scale. Those are two books I swear by and I'm a great human to everybody I work with. So I'm excited for you to learn directly from Barry today and listen in on our conversation about strategy and why so many people get it wrong.
Welcome, Barry. Thanks so much for being on the show.
Barry O'Reilly: And delighted to be here. Yeah, it's always fun hanging out and debating ideas. So it's gonna look forward to doing this.
Melissa Perri: Yeah, and I think we talk about this topic that I want to get into today a lot, which is strategy. And I love your thoughts on strategy, and that's why I'm very excited to have you on the show. So first to kick it off, I want to run a question by you that I got through our Dear Melissa website. So this question, dear Melissa, I'm in a company where strategy is just a word that gets thrown around.
Honestly, I don't even know what strategy means these days. Our CEO says that the strategy is our vision. The team thinks it's a list of features. There doesn't seem to be a clear path for us to achieve our goals. Heck, I'm not even sure we have goals. I'm confused. What is strategy and how do we do it well?
I think this is a question I get a lot and you probably get a lot too, right? What is strategy? What is this concept of strategy? So I'm curious, how do you define strategy?
Barry O'Reilly: Yeah, so definitely my favorite book that I've read on strategy is Good Strategy, Bad Strategy. By far and away, I think it's, also it's comparison contrasts what good looks like and what bad looks like, which is always helpful when people are trying to understand things. But Rumple's description of that is strategy is designed to tackle a very specific challenge.
So you need to have a challenge that needs to be overcome and then design a path about how you will do that. And he talks very much about this idea of a kernel of a strategy where there's a diagnosis, guiding sets of policies and coherent action to achieve it. And I think the most important part of all of this is this diagnosis.
Like what is a problem that you can actually see either in your business or in the market that you can really diagnose well and then figure out a set of steps that you can take that's unique to your business. It's strengths, it's differentiation points to sort of tackle it and then take action to find out if it works or not by having good measures that tell you if the steps you're taking are working or not. Now, most people I don't think ever get to that stage.
They just sort of talk about strategy as something that they're doing, but they don't put the rigor in place to actually diagnose a challenge, make choices about what they will do and won't do to get there and then have good measures in place to sort of show them if it's working or not. And there's a bunch of examples that we can probably dive into and I can talk about of companies I'm helping do that. But I think that's sort of the fundamental part for me.
Melissa Perri: Yeah, I agree. I love what you said too about, strategy is really tackling a challenge. And I think that goes back to how I first started learning about strategy as well through Toyota Cata and then how do we really outline, what is our vision? What is the challenge we're trying to tackle? Is that problem?
And then what do we do to get there? How do we run a series of small experiments to build our way up to tackling that challenge and overcoming it and reaching our goals? And you're right. I don't see a lot of people really approach strategy that way. I think it's interesting. I see this common thread with a lot of companies that I work with.
And I wonder if you see it too. I work with a ton of growth stage companies, right? They have been scaling really, really fast. And what happens is they start off, they find some product market fit, and then they build, build, build, build. And their strategy is working. They're going gangbusters, right?
They're getting to $20 million and $30 million ARR all within the matter of like two to three years. And then all of a sudden they hit this wall where things aren't working anymore. And that's usually where, I've come in before and I said, well, you need a strategy. But the leadership team goes, no, but what we've been doing has been working, right?
Like we just spent three years building all of this stuff and we're gonna just keep doing it that way and it should be fine. And it's interesting. You have to really, I feel like pull them back and try to convince them that they need a strategy here. And that's what's gonna unlock future growth. Have you ever seen those issues before?
Barry O'Reilly: Yeah, well, I think one example that's top of mind for me and many, many people at the moment is I've been working with 18F, who are the government digital services for the United States government. And 18F have a really sort of interesting and colorful sort of history. They were born out of this sort of catastrophe of healthcare.gov, which was, some people say, potentially the most expensive failure product of all time where tried to create a platform where people could access healthcare in the US.
And it was a classic build where they outsourced all the development to 25 different suppliers. Everybody had their fixed roadmap that they were working on, all executing independently of one another, really all waiting for someone to say that they weren't gonna deliver on time. Nobody did, nobody blinks, the site launched and was an absolute catastrophic failure.
And on the back of that, that sort of actually a strategy to even build software, which was big build, big roadmaps, fixed dates on time, on budget, on scope, all output based sort of supplier stuff. And a small group of people who were working in technology companies left those companies and were commandeered by the CTO of the US government to actually start building and trying to get the site standing up. And this team took a very different development strategy actually.
They recognized the challenge was that they weren't shipping, that the site was falling. So the choice that they made is, instead of trying to fix everything, they were gonna fix just small little components that were important, to start shipping and releasing and getting some people, a very small group of people, actually on board and onto the platform and getting things working end to end. So that's even just an example of a different development strategy.
Rather than think big, build big, big roadmaps, they chose to actually think big about what they wanna build, but start small and ship smaller increments to smaller sets of customers and then build out the product. That's a good example of different choices. Strategy is choices, and you can build big or you can ship small to smaller teams and grow.
So they started from that. And 18F then literally became this sort of very unique culture inside government services where you had this very small group of people who were almost agitators, innovators, going into these different departments in the government and sort of shaking things up, high energy, cross-functional teams, thinking about just showing different ways of working and sort of roll forward five years and they're hitting this wall that you've sort of described. They've sort of been through most of the agencies.
They've applied this sort of get something started, but now agencies are saying, well, that's great that we're started, but we actually need long-term growth. We actually need to institute these capabilities into our company. We need to upscale our people. But if you're just sort of dropping in for a couple of weeks to help us get started, that's not the kind of business partnerships we need to have internally, right?
So the thing that has made them successful to date is now becoming their accolades. Heel to your point. And that's a hard moment for many leaders to admit to, right? I think to your point, when you see this in high growth stage startups, everybody's partying when the metrics are going the way that you want.
If you have even metrics in place to tell you if what you're doing is working, it's just when you hit the plateaus or things start to go off a little bit, or it doesn't feel as vibrant and people are sort of looking around at each other. I think it takes great leadership to own that what you're doing is not working or start asking yourself how you're executing. Have you really made some deliberate choices and defined success measures to tell you if those choices are working?
I think when you really interrogate a lot of companies, and I'm sure you've tons of examples from the growth stage companies you work with too, I don't think that discipline's there in many companies. It's easy to ride the wave when things are growing and it hides the suboptimal. It hides the poor discipline that's in place.
It hides that there actually is really a vision. It's just many companies often, I think, get lucky, good timing. They're just the right place at the right time and your product explodes. But if you're not controlling that growth or aware of how it's happening, or you deliberately made those choices, I think people sort of get stuck.
But what about yourself? What are some of the signals that you see in that space?
Melissa Perri: Yeah, I have seen a lot of companies in a similar position. I do agree. I feel like sometimes it starts with a little bit of luck, maybe a good single product strategy and a little bit of luck to get it going in the right direction. And then usually you just kind of tap it out or you grew too big for what you can actually handle, right?
You tackled one market but you never thought about what's the next market? What's the next problem that we can actually solve? How do we expand from there? And I think it's really interesting, especially for companies that take VC money too because they have expectations that if you're at 20 million, you'll get to 150 within three years.
But a lot of companies don't plan for that when they start off at 2 million or zero. So I think it's interesting. I see this problem a lot where we're just not measuring success based on anything more than, oh, we made a bunch of money last year. And one of the things that I've been doing over the last couple of years when I worked very closely with companies is diving in and looking at this data and trying to figure out, are we well-balanced?
Are we investing in the right product areas? Are we spending too much money? And also who are we spending it on with companies as well? And you see a big thing too when companies don't have a very clear strategy for how they're going to reach things that sometimes a lot of that money is coming from like one client.
And it was like, okay, we're going to build this thing. We'll find one partner. And then they stay with that partner for years. And that partner or that company becomes 90% of their revenue. And they start demanding more and more things, but there's no clear strategy about how do we take this product and how do we evolve it that they start relying on that company and they just build whatever they want.
And that doesn't necessarily mean that it goes for everybody, right? Like it doesn't necessarily mean it's going to work for everybody across the board. So that lack of vision, right? Like that lack of focus of, you know, where do we go from here? Or what's next? Without thinking about that upfront, it's really easy to get yourself into a situation where you just build and build and build for whoever is yelling the loudest.
Barry O'Reilly: Yeah, so I think I see this a huge amount, right? One of the examples I can pull a little bit from 18F as well, right? This is all, good thing about working with government services is all the information is available to the U.S. General public, right? You can even go and look at the Zoom meeting that we had as a leadership team because it's transparent public information.
It's awesome, right? But I'll give you an example of one of the things that worked for them. And then is a question of a choice they have to make now. So when you're working in government services, there's a huge value put on understanding the domain, right? So if you're working with immigration or judiciary or these people have spent 20, 30 years in a very complex domain.
So they value people that understand the domain that can ramp up quickly and sort of get to the heart of some of these challenging issues. So one of the strategies that 18F developed was that they would have this notion of portfolios where they were very specific people with great expertise in a specific domain that could work really well, right? So when a judiciary called, there was people who had great expertise in that domain and they could ramp up quickly and deliver, right?
Now, at some point you have a certain amount of people in your company and you can only have a certain amount of domain experts, which also limits the amount of companies or agencies that you could potentially work with like customers that you could have, right? So you're trading off here. Again, this is a classic.
I'm trading off what type of customers are gonna help us grow our business. Do we invest in vertical domains or do we have horizontal flexibility and how we can just go into? This is strategy, making a choice about why you might go with domain expertise versus why you would have more flexible people because you can offer different services to a broader set of customers or really specific customer services to a very smaller market.
That is a strategy, right? And you have to make a choice because one choice is gonna upset other people. These are the signals that I think how you start knowing you have a good strategy. And then when you make this choice, you have to define outcomes to say, is this choice working as we expect? So if we go narrow, will we see a 50% increase in business with the judiciary service, as an example?
At the cost of sacrificing other customers because we're not gonna be able to work with aviation, you pick a different, right? Because you're trading off. You're saying we will do this and not that. But we have to know the choice we make is growing our business, giving us the opportunities we want. And regularly having a practice in place where you're reviewing those outcomes.
I recommend every month that you're saying, right, we think making this choice will grow our business by 50% in the next six months, right? We better check that every month. And I don't think that discipline is really there in many companies. It's very anecdotal, haphazard, opportunistic, as you've described.
And I think, again, this is the sort of, why I love the sort of good strategy, bad strategy book. It's the diagnosis. Like when you're sick, a great diagnosis means that you'll come up with a great way to solve the problem. And you have to be specific about that problem. AT&F recognized that deep domain expertise was a diagnosis that they made that they needed to differentiate themselves from.
It's a competitive marketplace for offering services to the government. What's gonna differentiate you? What's the skills you have that think that you can win in that space as opposed to your competitors? And I think that's when you start to correlate these sort of choices based on your strength, your positioning, your insight, that your ability to execute.
That's how you win. But you have to have the sort of mechanisms in place.
Melissa Perri: Yeah. One of the things that just stood out to me while you were talking, right, is that in order to make those choices, you also have to say no to things is what you're alluding to, right? So sometimes you're gonna have to say, no, we're gonna forgo money over here, which might be easier to get for our long-term strategy. It's gotta be a hard decision, right? Like how do you make that decision easier? Where do you see people struggle with that?
Barry O'Reilly: Well, this is why I think good strategy means you're saying no. Because if you're not saying no, there is no strategy. And that's another signal, right? Like if every customer that comes to your business, you're saying yes to, you do not have a strategy. I'm sorry. It's the biggest lie in the world.
I've learned this both in my own business and businesses that I work with, right? Like if you're not very specific about who you think the future of your company is, who are the customers that are gonna help you grow in the way that you wanna grow, you've no hope. You're just gonna take everybody. Or what happens is the example that you just described earlier, where companies get trapped or wedded to like one or two big customers who then basically end up owning them, owning their roadmap, because we've got to keep global core pappy. 70% of our revenue comes through that.
So our strategy is keep global core pappy. It's not to own your product roadmap. It's just to be an outsourcing department for some of these massive organizations, right? I think that's where you've got to own where you wanna go and recognize that you're gonna have to say no to customers to actually grow the business that you wanna grow.
And I think so many people are afraid of that. They're afraid to commit to saying no, that no, you're not the right customer. And I empathize because I've been in that position in my own business, right? Like company comes along, that they're offering this sort of, can you do this sort of work with us?
It might be financially very exciting, but I know they're not aligned to my values. I know that I want to experiment, to test, that things we're gonna try are not gonna work, but they want guaranteed results and everything delivered on time on the specific three year sort of roadmap. That's not my customer.
Sorry, goodbye. I don't care how much money you're gonna wave at me. You're not gonna help me grow my business the way I want. And it's taken me time to have confidence to say that to people, but that's what good product vision, business vision is about. Here's where we're trying to go. We'll go there faster with the people who have the same values, beliefs as us, rather than trying to shoehorn these sort of financially shiny sort of customers in.
And I'd say for listeners, that's another great question. When's the last time you said no to a customer? Great question. Because it wasn't aligned to what you were trying to do in your strategy, how, the choices you've made, how you want to try and grow your product. And then, yeah, because anytime I hear like, who's your customer?
Everybody, warning signal. And when's the last time you said no to a customer? Never, warning signal, right? How do you know that the choices that you made in the last month are actually performing as you expect? We're making more money, warning signal. Literally, these are the things to start asking yourself, I think, to help you think, do we have some robust strategy?
Like, what are we saying no to? What could we do? What should we do? And what are we doing? All different questions, but definitely the things I start asking when I've shown up with some companies.
Melissa Perri: Yep, I think those are great questions. I get this question a lot from other people too, where they say, you know, I'm in this organization. Their leadership didn't put the strategy together and now I've got to figure out how to get people to start thinking about a strategy or actually like just evaluate what I'm working on is the thing that I'm working on even worth it.
And that's usually my advice for where to start. I think a lot of people come in and say, hey, I'm gonna shake up everything in our organization. You know, I could be a product manager on one of 40 teams and I wanna change everything. I wanna shake up the organization. Having been that person before, I can tell you it doesn't work that easily.
So my advice for people to just start a conversation about whether we have strategy or not without, you know, blowing everything up and going to management being like, you're all wrong, you're doing this wrong. You're not doing the right thing. It's just ask them, okay, when I ship this, what do we expect to happen?
Right, like when I ship my feature, what do you expect to happen? And a lot of times people just don't know and that shows me that there is no framework, right? There is no strategy framework whatsoever. There's no success metrics. There's no goals really written down because we're just building and building and building and we're in the build trap, right?
We're not actually thinking through it. So I like that. I love that series of questions, right? If you ask yourself, are we saying no to things? Are we saying no to things that might be financially awesome for us, but it's not aligned with our vision? Are we actually saying when we ship this, we know what's gonna happen or we expect something to happen?
To me, those are all like signs of having a strategy and if you can't answer those questions or if you're not actually putting those down, it's telling me that you don't have a strategy. Right on.
Melissa Perri: Cool. So now that we've talked about how do we know if you have a strategy or not, right? Or what are signs that you don't have a strategy? What is a good strategy actually look like? Do you have an example of one? Like I hear a lot of people go, I've actually had a company say this to me not too long ago, maybe three months ago.
I said, what is your strategy? And I said, to make more money. I'm like, great, we all want that. How does that differentiate you from anybody? All right, make more money. Cool. So if that's not a good strategy, yeah, I guarantee you that is a lot of people's strategy. What does a good strategy look like, right?
How do you put it together? Where do you start and what's a good strategy?
Barry O'Reilly: Yeah, so let's just start off with like what's a bad strategy, right? Like, and the short answer is like fluff. If you read it, a strategy says, be the most best company in the world with the happiest customers in the world, blah, blah, blah, blah, blah, blah, blah, rubbish, okay? If there's nothing there that you say is unique or different to what you're trying to do, that's rubbish.
I think also people mistake outcomes as actually a strategy. Like make more money is not a strategy. Go and win the game is not a strategy. Win by two goals, not a strategy. It's a good place to start from working backwards from a strategy, but just win or be better or make more money is not a strategy, right?
But it's a good place to start maybe a diagnosis to say, well, if we need to grow our company by 25%, how might we do that? Now we can start asking how, but what could we do? We could go to new markets. We could focus actually on a very specific type of customer. We could stop just being a feature factory.
So these are all choices that you start to lay out, right? And what's the pros and cons of these choices? Like, should we go to a new market? Well, do we have any skills in that market? And do we understand how to set up businesses in a different country? The legal implications, the hiring implications, should we actually double down on a very specific market segment?
What are we seeing from our data? Is there a specific type of customer who we really understand well, that's easy for us to serve, that we can do things that is hard for other people to copy? Let's ask those questions, right? And this is where you start formulating these ideas of making these diagnosis.
So it's good to have the objective maybe to start from, but that might just tell you whatever choice you make, has it worked? So that's why I always keep like working back to start making some of these decisions, these trade-offs about how you're gonna try and get there. And a great strategy is when you're aligning what's very unique to your business, to your competencies, it means you're gonna beat the competition.
Now, just to give sort of like the 101 sort of example that every single person listening to this show should be aware of. And I often when I'm on exec camp, I show this video of 1999, where Jeff Bezos is talking about Amazon's strategy, which is have the most availability of products for people, make it very transparent about all your policies. Like we have a 30 day return policy for all new toys.
This is what he says. We believe if we give customers all the information related to the product in a timely fashion and where they can make a decision based on customer reviews, our own reviews, that they'll purchase these products. And then it's really funny. The interviewer goes to him, well, that's the exact same strategy Walmart could have.
And his reply is that's correct because it's the best strategy, right? And this is sort of the fun part because there's the formulation of strategy, like making these things that are gonna be unique to you. And then there's the execution of your strategy, right? And I think what has been the huge differentiator for say an Amazon is that they formulated this idea that if they give customers all the power, if they give them all the information that they could possibly want, if they have a great customer service, great returns policy, and then that's the formulation.
And then their execution of that strategy has also been absolutely excellent. That's why they're winning. And a simple example for us that happened quite recently, we bought a new monitor during the COVID fun times. And we thought, well, instead of buying it on Amazon, why don't we just buy it directly from Hewlett Packard?
Because surely if we buy it directly from them, not only will we get a better price, we'll also, we're going direct to the manufacturer. And straight away, probably about 30 days in, I think it's like 20 days in, the monitor starts flickering. And we're like, oh, well, this is a dead monitor. Okay, well, so let's just return it.
Now, first of all, for all listeners out there, just go onto HP's website. That's an experience in itself, right? But like we're digging around, like looking for this, like, who do we contact? How can we tell people that the product we just bought, like 12 days ago is broken? You know, and so this is a myriad in itself where you've literally got to write a letter and they'll reply to you in six or seven days.
And then the reply is, well, if you want to send this broken monitor back, first of all, you have to pay for the shipping. That's 50 bucks. Or you can drop it off at this warehouse that's like 25 miles away.
Melissa Perri: You're making me so anxious just looking at this.
Barry O'Reilly: Right, but it's sort of like, you're laughing because, and me too, because this is the difference between great, like a truly customer-centric strategy and an execution of that. Because with Amazon, if that had happened, I literally was like, I go to the website, click a button, things broken, drop it to the nearest UPS, which is often less than like a mile away. Like I can walk there with the thing. I can have my money back straight away. I can have a new thing shipped out to me, right? This is sort of like the worlds of contrast that we're in. You know, I try to shy away from just sharing like Amazon examples, but I just think it's such a-
Melissa Perri: They're good.
Barry O'Reilly: It crystallizes the difference between how these businesses are operating. When you hear what customer-centricity or be the most customer-centric business in the world means as a vision, but it comes to life.
Melissa Perri: I actually don't know what HP's mission statement is. We should look it up for fun. Maybe it's like, make sure people have to drive 20 miles to drop off our products and pay to return them.
Barry O'Reilly: They are living their values if that's their mission statement for sure.
Melissa Perri: It would be very in line with their mission for what they're making you do. That's insane. And it's funny, yeah, you're right. Like I'm laughing because I would never want to buy from anybody who does that. And it seems like such a simple thing, right? Just free returns. Like, it seems like that should be table stakes.
Barry O'Reilly: Yeah, a lot of people haven't caught up to Amazon yet. And that's still why they win in so many cases.
Melissa Perri: I think it's also funny. I have so many clients who are banks and larger enterprises, and they always get so upset when I use Amazon as an example, because they're like, oh, well, we don't have the same capabilities as Amazon. Like, we can't do it that way. And you know what? You could do it that way if you really focused, right?
Like if leadership came together and said, we truly want to be customer centric. And you think of all the strategies that you could do to do that. And you put them first. I believe everybody could operate that way. I just think it's a matter of, you know, discomfort sometimes from changing the way that we've always done things, right?
And I think that's one of the biggest downfalls for companies is that they're free to change.
Barry O'Reilly: Well, right on.
Melissa Perri: Did you know I have a course for product managers that you could take? It's called Product Institute. Over the past seven years, I've been working with individuals, teams, and companies to upscale their product chops through my fully online school. We have an ever-growing list of courses to help you work through your current product dilemma. Visit productinstitute.com and learn to think like a great product manager. Use code THINKING to save $200 at checkout on our premier course, Product Management Foundations.
Barry O'Reilly: Again, I think it comes to this, make choices. It's easy to push back and go, oh, that's Amazon, oh, we're highly regulated. I can give you tons of examples of companies that I work with in highly regulated industries. 18F. 18F, right, spot on, right? And this is a company of a couple of hundred people.
They have finite resources, right? So they have to make choices about how to deploy those people. Where can they win versus going up against, you know, because they don't want to compete on price. You can imagine the big consultancies just undercut, undercut, undercut, undercut, but that's not what they believe in.
They want to build quality. You make choices. Maybe we stick with what our price is, but we're going to have very specific domain expertise in these four segments. Maybe we're going to offer a very specific service or program that nobody else can offer to help you be successful. It's choices. Amazon made the choice to have a 30-day return policy and it over time.
And I think most people are just afraid to make choices. And when they make choices, they don't put the mechanisms in place to know if that is a good decision that's working or not and back out the choice that they made. And this is why, you know, these questions of like, what is the outcome we're aiming for?
What could we do? What should we do? What will we do? We've picked what we are going to do. How will we know that decision is working well in 30 days, 60 days, 90 days? Let's write those things down. So then as you start to execute on that choice, the feedback mechanisms are in place to tell you, is it working or not?
Is it growing us in the way we want it to? Is it simplifying the way we want to work? Is it getting us more focused on these customers? Just those basic sort of, what I would call like hygiene factors in a way, they're just not in place for so many companies or they don't know those behaviors, right?
They just know, have an idea, build a three-year plan, execute three-year plan. Did we deliver on time? All right, now let's ask if anyone's using the thing. That is not going to help you iterate, understand what works and what doesn't. Good strategy will evolve. It's a hypothesis. You have to exercise that choice to see if it's a good one or not.
So you need the mechanisms in place to tell you if it's working or not, to stop it, to change it. And to your question from the person before about people just being handed down stuff to execute and not knowing what good or bad is. Again, classic example that someone made a choice and didn't put the mechanisms in place to say if that choice was working or not working.
It was just executed. And that is just setting yourself up to the bill trap as you described so well in your book.
Melissa Perri: Yeah, I think what you're getting at too really comes back to an issue that I see too with where people misunderstand strategy. We're talking a lot about strategy creation and strategy deployment. So they're two different things, right? You create the strategy and then you deploy it and then you make sure that it's actually working and you revisit it and iterate it.
When I see a lot of people set strategy or a lot of leadership teams set strategy, they like lock themselves in a room for a week in November. And then they come out and they're like, cool, we solved all the problems in the world. This is what we're gonna do next year. And then they just roll it out and they never go back and revisit it.
My question for you is how do you set, what are the motions that you should be going through in a company to set the strategy, to deploy the strategy and then come back and actually look at it? What do you suggest people do to get started there?
Barry O'Reilly: Yeah, and that's a great question. So all of these things should be living. There's no two ways about it, right? And it's good to have a cadence to look at what you're trying to achieve for the year. I always sort of say, have a three-year idea, have a one-year idea, six months and like three months.
Think about what you're trying to achieve over those various different time horizons I think is very important and review on a monthly basis. That's where I get them, that's just your mechanism. Just like, let's check what we're doing. Strategy formulation is hard, right? Because it's this notion again of good strategy, bad strategy, the diagnosis.
Diagnosis are hard to like really understand what is a problem that's out there that is not solved or not solved well or that you can solve better than somebody else. That's hard, right? Like you go to the doctor, it takes them a while sometimes to diagnose you. It's just not an easy thing. There's rigor that needs to be done.
And this is when these tactics, like looking externally to what the market is doing, market insights so you can gather internally, how your business is performing, what capabilities do you have? What's unique about what you're doing? Customer insight demand, what are they asking for? You're going to have opposite information.
You're going to have the market saying that, oh, we need to have AI everything. And then internally you're like, well, I don't have anybody who can do that. And then customers think that they need it but they're not ready to invest in it because it's still an immature technology, right? These are the sort of moments that you're in.
And I think that's where the leadership part comes in where somebody has to make a choice to say, do we believe in this technology, what it can bring to our product? Do we want to grow that skillset in our company because we think it could differentiate us in two to three years time? That's the leadership choice that needs to happen.
And it's not to sort of go up to the mountain, close your eyes and then, you know, suddenly I'm going to build the most customer centric business in the world, right? And all of this is the trade-offs, right? And asking these questions about what the market wants externally, what your customer needs are, what capabilities you have.
It's a melting pot, right? And ultimately you have to sort of say, this is how we think we can win, where we want to play and where we think we can win. And that's the choice you start making. And into the 18F example, at that time they chose to go deep on portfolios because they thought they could win, right?
And grow the business. And what were in place then were measures to say, is that working? Like, are they winning a certain percentage of deals that they would have lost previously? And are they actually seeing further retention or extension of contracts that they probably wouldn't have seen before? Are the teams actually more effective and happier when they're focused on the domain for a longer period of time?
Like those are the measures that are in place and we're reviewing those like every month. Are we seeing the behaviors we thought we would see from choosing this approach? And if we're not, okay, what's our next best idea based on what we've learned? Let's take a different approach. And I think that systemic sort of thinking and action is just not there in many companies.
But you know, that's what keeps you and me busy, Melissa. What you've heard today resonates with something you think you need. We're always happy to help, as you say.
Melissa Perri: Yeah, this is what we're here for. So here's a question too. The cadences that you described at 18F and the reviewing it, like whose job is that to put that all together? Who do you see kind of taking the reins on that and making sure we get back together to review strategy and making sure we get a strategy going? Because you know, one of the things I see is that everybody goes, yeah, yeah, we should do that. But then nobody takes responsibility to actually do it. So like, who ultimately is in charge? Who's gotta own this? If they're listening, they gotta take these reins.
Barry O'Reilly: Yeah, so let me give you some things to look out for, first of all. Number one, it's not the CEO's job, right? Like everything, every problem bubbles up to the CEO. Why haven't you dreamt all this up on your own? Just unrealistic, never gonna happen. It's one of the reasons, I think, why having cross-functional leadership teams is so important, right?
You need the diversity of thinking. You need the marketing team to be listening to the market. You need the operations team to know what capabilities you have to execute. Finance, what budgets involved. A product thinking about what the customers are about. So what I always try to do is create a small team somewhere between four to six at max that are very specific on just doing the formulation work, right, and presenting that back to the rest of the leadership team to be challenged.
To do the sort of back and forth and say, are some of these choices resilient or not? It's important to gather people's input from the front lines. But that's part of that smaller team's job, is to go and another example I can talk to now because we've passed the IP area is working with Capital One and helping them understand their geography strategy.
Like where did leadership want to open businesses? Should they have product and engineering co-located in different areas? That was a question that the leadership team need to answer. They didn't want to make a choice. They wanted to understand what created high performance teams? Were they co-located?
Did they have to move all their retail banking to the West Coast? Did they have to move all their business banking to the East Coast? These were the sort of choices they had to think about. So the way that small team started is actually the HR leader, finance leader, and the person who was head of customer or product by de facto, they started running like internal interviews where they started interviewing all the teams to ask them, what are the key components you have to have in place to create or be able to create really high performance teams?
And the leadership team's notion was they were starting from the hypothesis that everyone had to be co-located. But actually even just through those interviews, the feedback they got was totally opposite. All people wanted, it was that the product leader and the technical leader were in the same time zone so they could rapidly sort of collaborate very quickly and then drive that into the teams.
So that's how they decided on a geography strategy for how they would actually formulate their teams. They started by doing these ground up interviews and that was just one component of it, right? So you have to do the work. I think the people designing, formulating the strategy have to do the work and it's internal factors, it's external factors and customer factors, create that melting pot and then you just got to make some choices and then put in the mechanisms to say are those choices working or not and review them.
Melissa Perri: And I think that's one of the things that I, I don't see people do or leaders do. They're like, oh, I don't have time to do strategy, but it's your job. And one of the things you just said is, I don't think anybody gets comfortable with is, hey, as leaders, you need to work as your own team together, right?
Like it's not just the marketing silo, it's not the product silo, but there is not the tech silo. Like you're not just beholden to it, you're not just the product silo, you're not just the product silo, you're not just the product silo, you're not just beholden to the people who report to you, you have to work together as a leadership team to get that done. And I don't think any company can get that done without seeing each other as a team, right?
At that leadership spot.
Barry O'Reilly: So you know what resonates so much, what you just said there with me, is that people don't make time for it. And do you know what the funny thing I think is, is that they're spending their time on other things. And I think the danger as well, like you ask any exec, what split would you like to have of strategic thinking versus day to day?
You know, and they'll always say, oh, 50-50, something like this. And you ask them what the reality is, and they'll say 95% of their day is in the weeds, solving these very like problems in front of their nose. And that's where the time gets sucked up. So I think it's a real challenge for listeners to sort of say, how do you get yourself out of the weeds?
Because if you've created a company that as a leader, you have to be prioritizing user stories. You've not built, and you're not leveraging the people you have in the way. And to your point, which I couldn't agree more with, is you have to make time for this stuff. You know, one of the execs I remember at HSBC is he used to block an hour in his day where he would just go out and walk around, literally walk around Central Park in New York, just so he could percolate.
And just like forcing himself to do that, so he could think. Just go and thinking is an activity. And it's even more important for leaders to be, like sit in the sort of melting pot and think about these options. Because if you're just in a day be execute, execute, execute, execute mode, again, as you know, you'll just end up in the bill trap, right?
Just like- Oh, for sure.
Melissa Perri: Yeah. Yeah, and I can agree with that more. I found myself in that kind of position for the last year or two. I booked my calendar super solid with just tactical meetings, right? Like contract negotiations, sales meetings. And I had no time for creative thinking. And I hated it. Like, I just, I hate it.
And I don't think it's easy to make time for it. I hear it as one of the number one complaints from leaders, from product managers. Like, I just don't have time for this. But that was something that I personally did very deliberately this year. As I said, I'm not gonna have meetings two days a week.
I'm not talking to anybody because I wanna write. I wanna create more things. I wanna strategically think about Product Institute and CPL Accelerator and figure out what I wanna do with them. I wanna create better classes. I wanna teach my students better. And you have to make time for that. You have to make time for that.
So I just rearranged my entire calendar and I said, okay, Fridays, I'm not talking to anybody. And I started to think about it. And in the past, when I was working as a product manager, that was the only way I could get things done as well. I remember my boss telling me this. We had this kind of conversation and his name was Chris.
I was getting so frustrated over this UX design that I was trying to do and I could not get it right. And he asked me, we had a one-on-one. He was like, how's it going? I was like, I'm so frustrated. I've been looking at this thing for 10 hours. I can't figure it out. And he's like, go home. I was like, what do you mean go home?
It's like one o'clock in the afternoon. He's like, go home. And he's like, get out, go like walk, go do something. He's like, you're just killing yourself. And he's like, product management is a creative atmosphere. It's a creative skill and especially design. And you need to go give yourself a brain break and it will come to you.
And I did, I went home, I binge watched TV. I took a walk, I ate, I exercised, I did things. I came back the next day and I fixed it. I did exactly what I needed to do. And he was so right about that. And I feel like I lose sight of that. And I see other people lose sight of that all the time. And when I started making space as like a regular product manager, just I would put like dummy meetings on my calendar just to block it, right?
Like I was like, oh, this is a meeting with the CEO and the CEO like sat behind me and everybody could see we're not meeting. I just like protected that space and I did whatever I had to. And I felt like that was the times I was most successful. Those were the times I could actually be more strategic.
And I think you have to ruthlessly just block those things. But that's what I found worked for me. What do you do to make sure you're keeping space for being strategic, making sure that you're reflecting on it? Like what types of things do you do?
Barry O'Reilly: Yeah, well, and I also certainly, I think what you're also saying in here is saying no to things, right? And one of our other great friends, Teresa Torres, inspired me a few years ago when she wrote this blog about what I'm saying no to. And that was another great sort of forcing function for me to sort of start thinking about that too as well.
And one of the things I do and I have this notion of a personal board of directors where people inspire me or I just value their opinion. I just sort of share them what I'm working on or my strategy and you're someone who is in that sort of circle for me, right? And so I share this letter that I sort of write to myself of things I tried last year, what worked, what didn't, where I'm spending my time, what I wanna do less of, more of.
And I've learned over time the things that I enjoy and give me energy. And I think you and I have talked about this mythical sort of energy metric. Like how much energy do I get from doing this activity? Which I think is a really great sort of sensing mechanism. And for me, again, I've learned that what I enjoy the most is working with leadership teams as they try to find new ways to grow their business with products, ways of working, love that.
Love doing programs where we're building new products. Love doing advisory work on startups and don't love doing actual public workshops. I find they don't give me this massive energy, right? And I've definitely found speaking during this pandemic. You know, like doing talks virtually. I love doing them in person because there's a rapport, there's energy.
But it's also like not how I plan to grow my business through speak. That's not what I'm going to do, right? So I say no to things all the time. Like people ask, hey, we come and speak at this event. I'm like, no, sorry. That's not what I'm focused on right now. And you know, people sometimes are shocked when they say, hey, would you come on this webinar?
Would you be on this show or whatever? And I say no. And they're like, why, why? This is free marketing, Barry. And I'm like, well, no, it's time, you know? And where I'm investing my time is in doing this consulting work or running these programs. And that's my strategy for how I want to not only grow my business but enjoy my business.
And it's not that I don't like the people or I don't want to do the opportunity. It's very humbling to be invited sometimes to things, but it's just not the path I'm going. And that's saying no. I try to be open with people about that. I try to write a letter similar to Teresa wrote about it. But again, that's the choices we have to make.
And it's giving me more energy. I'm more excited and thrown into the work I do. And I have more time to go just, as you say, this creative pursuit that we have of entrepreneurism and product thinking is you need time to just think about stuff. It's not all just execution, you know? And it's taken me sort of five years to figure that out.
And I still have loads more to figure out, but that's currently where my head is at with all of this.
Melissa Perri: So, yeah, I love that concept of, you know, having a personal board of directors really holding yourself accountable to these metrics, staying no. Works for a strategy for a company. It works for a strategy for yourself. I think companies need to find energy the same way that we need to find energy as people, right?
And their energy might be making more money or growing or something like that, but it's those metrics that you hold yourself accountable to and those outcomes that you want to reach. So for us, right, our outcomes are, I get excited about the work I do every day. And for companies, those outcomes could be, you know, making more money or hitting different goals or reaching more people.
Whatever they want to make it. So I think the key lessons there that I'm hearing from you is really figure out what your strategy should be and that strategy should be something that's defined and not just generic. It's something that you can say no to. It's not, you're just saying yes to everything.
Making sure that everybody understands it, taking the time to put that together. And then really figuring out what those success metrics are, going back and seeing if we hit them. And if not, figure out what we got to do next and really, really find out what is our right path. So.
Barry O'Reilly: If anyone's interested, I recently just did a live stream with Gibson Biddle who used to run product for Netflix, where we sort of did this, much like you and I are doing right now, sort of in the opens. So if you want to see what that looks like, you know, check it out on my YouTube channel. But awesome, as ever speaking with you today, Melissa, always so much fun. Always leave with so much energy. So thank you very much for inviting me to share some stories with you and your audience. It's awesome.
Melissa Perri: Thanks for being on the show, Barry. I really appreciate it.
