Constraints

This is a guest post by Matt Wensing, a good friend and someone I admire. Matt is the CEO of StormPulse, an incredible service that helps customers plan better against weather risks and protect their assets, employees and maintain business continuity. I am happy to start this guest writer series with a post by Matt (twitter: @mattwensing).  Have you written yours yet? As an aside, you can see Matt’s stand on value creation and pricing in GigaOm.


Stormpulse in action at the White House

As an entrepreneur, I’m used to working under constraints. The best definition of entrepreneurship I’ve ever heard is “the pursuit of opportunity without regard to resources currently controlled” (Howard Stevenson, HBS). I like how the usage of “without regard” leaves you wondering if the entrepreneur is noble and brave or mentally deranged.

My friend and I bootstrapped Stormpulse for 5 years (2007-2012), making ends meet with a smattering of friends and family money and customer payments. In late 2012, we finally succeeded at raising capital from professional investors. The bootstrapped years were a long and difficult road, but most would argue that those years made us stronger.

Did they? With confidence, I can say that we became accustomed to constraints. The good kind (the kind that force creative solutions), the bad kind (which limit you for ‘no good reason’), and the ugly (which force you to choose between cutting off your right arm or your left leg).

So here is the riddle: how can you identify a good constraint or a bad constraint? And is that the purpose of fundraising, to remove constraints?

Removing constraints for the sake of removing them is a mistake. Some constraints are good because they reflect limitations which your business will certainly encounter eventually. Shielding yourself from those constraints by raising money could also prevent you from taking on the challenge of overcoming those constraints in a more profitable and innovative way.

On the other hand, some problems fit the old adages such as “the cost of doing business” or “you gotta have money to make money.” Sometimes you need to place a bet, but you can’t afford the table stakes. This prevents you from being able to validate aspects of your business model.

And therein lies my answer—for now. Constraints are good when they embody a limitation that must be overcome for your business to scale. “Buying success” (removing the constraint through fundraising) will ease the short-term but may introduce a crippling flaw that will limit you later.

Constraints are bad (some also call them “artificial”) when they originate from a lack of resources that doesn’t reflect the market’s challenges. You simply don’t have money because you are a poor entrepreneur with only a vision. Wrong time, wrong place, no believers. You must, through no fault of your own, start from zero, comparative to certain peers.

That is a constraint in the psychologically-hardest sense, because it is very unfair and uncaring. It will only be considered good in hindsight if it’s overcome. If it isn’t, you will die unnoticed, and it is likely that no one will even care to tell your tale.

Can you handle it?

As Coroner I Must Aver …

A lot of people most likely do not understand what a coroner does.  I did not. For instance did you know that

  1. Coroners do not need medical degrees or understand pathology?
  2. Coroners do not need any training – medical or otherwise?
  3. Coroners do not perform autopsies?
  4. Coroners are appointed or elected by voters?
  5. To get the job they only need to be of legal age and have no felony convictions?

An year long investigative report by NPR goes into the details of the history and job of coroners and tells us what this job is about.

Once a person meets the basic age and criminal record …

“Basically, to be a coroner, you just have to be publicly popular. I guess it’s more of a popularity contest. Then you learn the job as you go.”

Actually there is no need to learn anything as well. They just need to pronounce people dead sign death certificates.

There are coroners everywhere you look in the management, marketing and social media world. They go by the name Gurus, Marketing ninjas and social media mavens  etc.  Just like a coroner these Gurus

  1. Don’t need any formal education
  2. Don’t need any training
  3. Don’t  have to run a business, met a payroll, struggled with product slips, market changes or internal IT systems
  4. Don’t need to look at a business anymore than what they see in newspapers  or their single visit to pronounce it dead (or alive)
  5. Don’t have to collect data, analyze or get second opinion
  6. Don’t need any basis in facts to pronounce you have reptilian brain, you are left brained, you need naps to kindle creativity, you get your best ideas in shower etc.
  7. They just need to be popular with enough people as followers who suspended their own curiosity and willingness to look for contradicting evidence

For all these factors the Gurus are just like coroners.

I see one difference though. I think coroners will get in trouble for pronouncing live people dead or dead people alive. On the other hand the coroners of management world, the Gurus, have no such worries. No one is going to call them out on their remarkable proclamations.

As coroner I must ever,

Blockbuster is not only merely dead but most sincerely dead!

Not the Product Manager you have in mind

When you think of best in class product managers, what companies come to mind?

All the valley companies? In fact don’t we have a label, “West Coast Product Management”? True or not sounds cool like NFL’s  West Coast Offense. If you were to do unaided recall survey among most in social media it is highly likely we will find these in the top of the list, (in no particular order)

  1. twitter
  2. facebook
  3. Dropbox
  4. Pinterest
  5. Square

When you think about what sets these top notch product managers apart, what traits come to your mind? There is a question in Quora that slices it even further,

What distinguishes the Top 1% of Product Managers from the Top 10%?

If we assume normal distribution of product manager quality levels,  this question asks what distinguishes those who are 2.34 sigma over mean from those who are merely 1.285 over mean.  That is some precision.

And the answer that received 2500 votes lists  a  long list key traits. I do not know how one can measure many of them objectively. And this most popular and long answer not once mentions the word, “customer”.  Other not so popular answers list customers and understanding customer needs.  But none of the answers take it to next step – from understanding and serving customer needs to getting fair share of value created by serving those needs.

Even my own survey (that used forced point allocation ) on product management skills, did not include aspects of customer value creation and value capture. If you think about it, all the traits listed in Quora (Design, Copywriting, …) or in my survey (Strategic thinking, Hustle, …) these are really secondary to the  True North function of a product manager.

  1. Understand customer needs – Analytic skills, Usability analysis, etc.
  2.  Decide on (prioritize) needs to serve based on value created and the share of value you  can get – strategic thinking, forecast and measure, …
  3. Build an offering, Maximally Valued Product,  that does it better than alternatives and in cost effective way – Simplify, Design, Hustle, Influence, make technical trade-offs
  4. Position it in the minds of customers  - Presentation skills, Copywriting and the rest
  5. Make it easy for customers to get it –  Sales enablement, Buying experience etc

After all, what is a product but a value delivery vehicle? And all those great design, frictionless UI and copywriting do not make a product until you define a set of customers whose needs you meet and who want to pay you for fulfilling that need.

Is that the product manager you have in mind?

 

Influence Skills – The Most Important Quality in a Product Manager -Product Management Series

Last time I wrote about the top 5 qualities to look for in hiring a product manager for your organization- enterprise or startup. The rankings are based on a survey of practitioners and recruiters, posed as a resource allocation question. The beauty of that question type is it requires them to make trade-offs, take a pick among many qualities when only limited points are available and also state how important each quality is relative to others.  Here is the quick summary of the rankings

  1. Influence Skills
  2. Strategic Thinking
  3. Hustle – Getting things done
  4. Analytical Skills
  5. Attention to Details

In this article let me discuss influence skills and how you can evaluate that in the people you are hiring for a product manager position.

First what influence is not.

It is not a parlor game, not charm effect, not magnetic personality, not salesmanship, not smooth talking, not big presence, not about greasing wheels etc.  Influence is not a one sided winner takes all zero-sum game and definitely not a single encounter game.

You may have read the book Influence by Bob Cialdini. It is a good book but it is a set of tactics that can come in handy but not foundation of Influence. For instance, you may ease into a new working relation if you were to show them your connection to them but not succeed repeatedly if you ignore the three main skills I list below.

Consider this for a moment – in any organization, why should anyone drop what they are doing and add your ask and prioritize it ahead of others? And do it not just once but over and over in multiple encounters? How does your ask align with their priorities and incentives? Why should they trust you?

You will recognize that strong influence skill starts with trust. If you are applying parlor games to get what you want you sure will win once but it is a multiple encounter game. Only if trust exist can you even communicate effectively the common value proposition and get them to see their share of the value created.

Influence is about showing others the mutual value  if they were to work with you and deliver what you are asking for. You have to show them how big the pie is without them, how big it will grow with them being part of the effort and most importantly what is their share of the bigger pie.

What is implied here is how effectively you can communicate that value and getting them to see for themselves. It is also important that you communicate their value realization after their task is completed -

  • show them mutual value,
  • work with them to realize it,
  • show them again what you two accomplished.

Evaluating Influence Skills

When evaluating influence skills you need to explore their understanding of what influence means. Anything that signals their view of this as one-sided game is a red flag. For instance if they use negative words to describe others they influenced that is an indication of seeing this as zero-sum game.

I would recommend starting the conversation not as a quiz but as a story telling session, asking them to pick a recent engagement and explain how they met a business objective working across boundaries and with multiple teams.

Here are things to evaluate in their story

  1. How big the impact was for the business? This needs no further explanation.
  2. Length of engagement – you do not want to hear a minor one-act play where they used tricks from Cialdini’s book to get someone to say yes. You want to hear a longer engagement based on trust and mutual value
  3. How detailed the story is  - after they start with a summary of Situation-Action-Result? One way to weed out canned stories is to dig deeper for details by asking, “How are he players?”, “What are their priorities?”, “What exactly was their push-back?”, “What exactly did you say to them?”

From the story you are looking to evaluate if their understanding of influence comes through, they show trust as key factor and see the need for effective communication.

Anything less, you know where they stand among the pool of candidates you have.

Leave it to Fast Company experts to find number one predictor of success

Fast Company has an FC Expert Blog. I do not know who these experts or what their qualifications are. They really are experts in declaring broad predictions, especially from reading few lines of some old academic paper. One of the experts write in their blog (the Fast Company says it is not responsible for their wisdom),

Grit: The Top Predictor of Success

Why do some companies consistently outperform their competition? Why do some people become champions while others fall short? What skills do you need to improve to reach your highest potential?

How ironic that a back-to-basics approach carries the day: It turns out that good old-fashioned grit is the number one indicator of high performance.

The experts, it turns out, did not read the details of the paper they quote. Nor do they seem to understand how predictability is measured in statistical terms and what it means. Needless to say they neglect to speak about omitted variable bias and other experimental errors.

What the paper says is grit, a trait defined by the authors, has an incremental R2 of 4%. That is when you add measure of Grit to whatever linear regression model they were building, the predictability of the model increased by 4%.

4%, just 4% increase after all other variables.

To go from here to “The Top Predictor of Success” is ludicrous.

Not just that, even the authors of the paper list severe limitations. The very definition of Grit is amorphous, it is highly correlated with the Big Five traits (classified in Psychology literature) and in their studies the authors measured it based on self-reporting by test participants.

From a study with such severe limitations (I am surprised it was even published), we get sage advice from Fast Company experts,

It doesn’t matter if you’re rich or poor, come from a good neighborhood, have a fancy-pants degree, or are good looking. We all have nearly limitless potential, and the opportunity to seize it is waiting for you.

Let old-school grit and determination serve as the catalyst to achieving your own personal greatness.  You don’t need another tech gadget; just the same killer app that has been foundation of success since the beginning of civilization.

The expert has filtered out gaping holes in the original study, ignored effect of lurking variables,  generalized a self-reported measurement of students to the entire population and urges us to show grit.

I grit my teeth!

Making a Case for Practicing Evidence Based Management

I am repurposing Pascal’s  wager in making a case for evidence based management over – intuitions, gut feel, “blink”, fads and conventional wisdom.

The net is – In the presence of uncertainties (I treat this as truism) the dominant strategy to pursue for a decision maker is to rely on hard evidence, experiments and analytics.  Nothing more to add to this argument over what Pascal had already said.

Pas