Many people accept the idea that competition between firms yields higher quality products and services in macro markets. It’s less common to apply the same thinking to a company’s internal or micro-market. But think about the product roadmap for a particular company. It seems to me that the best product roadmaps come from vigorous internal competition for time and talent from engineering, design, marketing. But how do you build a competitive internal market for product ideas without giving up the benefits of aligning the whole team behind a strategy? I think there are a couple of practices that founders can implement to get the benefits of competition *and* alignment in product process.
1. Start with a sharply v-shaped funnel of ideas. A wide open top of the funnel for new product ideas gives you a large number of options from a diversity of sources. The quality of the “above the line” (i.e. the funded) investments is driven partly by the number of alternatives vying for resources. It’s also partly driven by tapping the creativity and perspective of all the members of the team, not just a priesthood of product people who are permitted to contribute ideas. Giving any one person or group a royal monopoly on new product ideas weakens a product team by not exposing them to internal competition from other functions. And it keeps the extended, non-product team out of the most exciting and creative aspect of building a business, narrowing their view like an assembly line worker.
2. Editor-in-chief. At the bottom of the v-shaped funnel, there is the editor-in-chief. She or he — it really should be one person — puts some products above the line and others, below it. The most impressive and effective EIC’s I know use a combination of quantitative and qualitative judgment to sort the list. Quantitative considerations might include the return on investment of a project (whether you are focused on IRR, NPV, or some other measure). Qualitative considerations might include strategic positioning versus competitors or the gut intuition of the founder. (It would be nice if everything could be quantified, but we are humans, not robots. Some allowance must be made for judgment as long as it doesn’t become an excuse for lack of financial or operating rigor.)
3. Compost “below the line” ideas publicly. Imagine an exhaust pipe coming off the v-shaped funnel. Not the part where the good stuff drips out — that’s the product roadmap. I mean the part where the stuff that didn’t make it goes. If the funnel is going to teach, the stuff that goes in the exhaust pipe can get reformulated and put back in the top of the funnel; it can get composted into component ideas and insights to fertilize other product ideas; it can become the seed of an entirely new business (inside or outside the firm where it was born). Showing people what’s in the compost pile, explaining why it’s there, and allowing it to recirculate in the micro-market is better for the environment. BTW, the piles of composted ideas can often be Exhibit A in the argument for expanding faster on the engineering and product side. When the compost pile is full of unrefined gold, the opportunity cost of not building that stuff becomes unbearable and the internal market will direct resources to eng and product.
4. Put the roadmap where everyone can see it. Similar to #3 above, putting the entire roadmap where everyone can see it is one of the most powerful actions a founder can take. Sharing a detailed product roadmap is a great complement to sharing high-level business strategy so that people can see exactly where the most precious resources of the company — time and cash — are being invested. It keeps the leadership team honest on how investment choices are made; it trains the members of the team — many of whom will want to advance their skills and careers — how to think about product roadmaps and investing scarce resources. (BTW #3 and #4 are based on the assumption that the disappointment felt by people who championed “below the line” or composted ideas is thoroughly unavoidable and that these feelings are best dealt with by transparency rather than by denial. It is to be expected that people who care about what they work on are disappointed when something doesn’t work out the way they wanted. The approach above arms them with the information they need to make sense of the disappointment and to improve the probability that their next ideas will get funded.)
Can you apply competitive-micro-market thinking to the daily life of an individual? I am going to think about that…