Crossing the Product Leadership Chasm

This article is for business executives of startups and scaleups considering moving to the Product Operating Model. It highlights the reasons why it often fails and  offers recommendations to navigate the transition.

As an executive in a late-stage B2C startup or scale-up, do any of these scenarios look familiar?

  • New features seem to take forever to ship, and when they finally do, they fail to have the anticipated impact.
  • There doesn’t seem to be the same level of innovative work that used to occur.
  • Outages have become more frequent and seem to leave teams perplexed as to how they happened.

Drawing from Geoffrey Moore’s ‘Crossing the Chasm,’ the company finds itself entering the Product Leadership Chasm. As in Moore’s book, the essential lesson is that the strategies which brought success until now will not be sufficient going forward. But unlike the original chasm, the transition into the Product Leadership Chasm occurs regardless of whether the company is creating a new product category.

Initially, a top C-level executive, often the CEO, is at the helm of the product, guiding its focused and simpler beginnings with a direct hand. At this early stage of the startup, this approach isn’t problematic. The roles of the product manager, UX designer and engineering lead are clear-cut: to bring the Product Leader’s vision to life. This task involves understanding what needs to be built, though not necessarily the underlying reasons. As this method seems to yield success, there’s no compelling reason to alter it, leading everyone to stick with the established approach as the team expands. With the formation of a second, then a third team, and possibly the introduction of a head of product, the foundational modus operandi persists. Leadership dictates what needs to be built, with success being quantified by the number of features released. 

As the company expands, the original C-level executive who has been making product decisions finds themselves increasingly strapped for time. Concurrently, the collective understanding of each product team about their specific areas now outstrips that of the individual overseeing the entire roadmap. This is particularly true for aspects like parts of the stack that are burdened with technical debt reaching critical levels. In response, product teams begin to gather requirements directly from various departments—sales, marketing, operations, finance, etc.—and attempt to prioritise them. This approach isn’t necessarily their preferred way of working but rather an extension of the existing model where ‘the business’ dictates the priorities.

This, in turn, creates the conditions described above:

  • New features seem to take forever to ship … there are too many of them or due to an excess of technical debt.
  • When they finally do, they fail to have the anticipated impact … the teams are focusing on delivering features not business results or because they were blindsided to the insight that led to requesting the feature and misunderstood what was needed in the first place.
  • There doesn’t seem to be the same level of innovative work that used to occur … teams are distracted with many small impact features, their scope is constrained or more likely, they haven’t built the muscle to discover innovative solutions since they’re usually told what to build.
  • Outages have become more frequent and seem to leave teams perplexed as to how they happened … after 6 or 7 years of pushing the technical stack to the limit, it is now at a breaking point.

How to build products at scale?

On the other hand, the best way to do things, or how it’s done at the most successful companies, is now clearly explained with terms like “product operating model” or “product leadership.” Embracing the principles championed by Marty Cagan and others, effective product teams are characterised by their cross-functional, collaborative nature, where engineers, designers, product managers, and often user experience researchers work closely together. Central to their approach is a deep focus on solving user problems and delivering real value, rather than merely ticking off features on a roadmap. These teams operate with a high degree of autonomy, empowered to make decisions based on their insights and understanding of customer needs. They prioritize outcome over output, measuring success by the impact of their solutions on the user experience and the business, rather than the quantity of features released. This agile, user-centric methodology enables them to innovate rapidly, adapt to changes swiftly, and consistently deliver products that customers love and that drive the business forward.

Like many things in life, the principles are easy to understand but really hard to put in practice. The real challenge is managing the transition.

Why transformations fail

It usually starts with hiring an ambitious product leader who sells a vision of empowered product teams, driven by high-level quantified objectives, promising a shift towards a more mature, self-sustaining product development process. And yet, six months down the line, this new product leader either departs or is let go. Here are a few reasons:

  1. Progress is often perceived as too slow. Transitioning to empowered product teams is a significant change that can take up to two years. This process doesn’t merely involve redefining how the members of the product team, specifically the Product Manager, Product Designer, and Engineering Lead, work together. They also need to be coached on how to effectively work in this new manner and find effective solutions collaboratively. The Product Manager must gain domain knowledge that wasn’t previously necessary, and then devise a strong product strategy. Product designers, who previously functioned like an internal agency, now need to learn to collaborate directly with engineers, moving beyond simply handing off designs.
  2. Stakeholder pushback. As previously discussed, transitioning to the product model moves the roadmap control from stakeholders to the product team, focusing on solving specific problems. This change often presents challenges for departments like sales or marketing, which were accustomed to directing the roadmap unchallenged, as it effectively represents a shift in power. The difficulty arises because, at this juncture, product teams are still developing their discovery skills and domain expertise necessary for making informed decisions. It isn’t long before a department head might escalate concerns to the CEO, claiming that their inability to meet budgeted figures is due to the product teams’ decisions. Resistance can also be more indirect, manifesting as obstruction through denying access to customers and/or data.
  3. Leading product strategy while building a new team. Leading product strategy while building a new team. Leading product as a VP of Product or CPO is inherently a full-time role. Driving the adoption of the product operating model at the same time becomes almost impossible. It’s the issue of building and operating at the same time.  This involves rigorously assessing existing Product Managers, coaching those who have the potential to step up to the new environment, replacing those who are unable to make the transition, and often recruiting additional talent that was already needed. All of this constitutes a full-time endeavour in itself, leaving the product leader, especially in the first six months, with limited bandwidth to fulfil the strategic leadership role that is the hallmark of their position.
  4. A distressed tech stack. A more profound, and often fatal, issue arises when the technology stack is on the brink of collapse. While technically not part of the product leadership chasm, it makes the gap much larger than in would otherwise be and is mentioned here because the 2 are usually seen together. In the initial year or two of a startup’s life, technical debt can seem inconsequential compared to the urgency of achieving product-market fit. However, beyond this phase, the approach must shift from rapid hacking to sustainable building. There can be a strong temptation to overrule the concerns of the CTO and continue to push their product and technology teams towards the next milestone, neglecting the crucial balance between product development and maintenance of the tech stack. The consequence is a system where even minor changes become disproportionately time-consuming, and unexpected bugs proliferate with each significant update. It’s akin to asking the newly hired product leader to compete in a race with a sports car that hasn’t been serviced in years.

Crossing the chasm

  • Start with just one team. If you find yourself at the brink of the product leadership chasm, having attempted to cross it a few times without success, consider one of Geoffrey Moore’s key recommendations from his follow-up book ‘Inside the tornado’: the power of focusing on a niche. For scale-ups struggling with product leadership, a winning strategy could be zeroing in on a particular part of the product and tech organisation. Start by selecting a team and give it with a distinct vision and strategy. This team should deeply engage with competition analysis, market trends, KPIs, and the economic context, all while employing innovative discovery techniques. The goal is to build this team as a beacon for others, creating a successful testbed. Once you have a refined approach, it can be iteratively rolled out to other teams, still one at a time, allowing you to develop a comprehensive playbook for the entire product and tech organisation. This focused strategy can help navigate the complexities of the product leadership chasm more effectively.
  • Transfer product strategy gradually. When a new leader joins the product team, there’s often a well-intentioned move to hand over the reins of the product strategy. This gesture is meant to empower the new leader, giving them a sense of ownership and autonomy early in their tenure. While the intention behind this is to instill confidence and drive, expecting them to establish their own vision within the first 6 to 9 months can be difficult given the focus on transformation. The alignment of the product strategy with the CEO’s overarching vision is critical, as it reflects the sum of lessons and insights accumulated since the business’s inception. Rather than an immediate handover, a gradual transition of the product strategy over the first year at least is more beneficial. This process allows the new product leader to absorb the company’s history, values, and strategic learning. The senior-most product person’s direct reporting to the CEO facilitates this transition, ensuring a more in-depth understanding and alignment with the company’s long-term goals. In this first year, the development of the product strategy should be a collaborative effort, transcending mere coaching or information sharing. It’s about co-creating a vision through a shared journey of insights, a process vital for the new leader to truly embody and advocate the CEO’s perspective. This gradual and inclusive approach not only empowers the new product leader but also sets a solid foundation for them to effectively lead, aligned with the company’s core objectives and vision. Without this foundational period of joint strategy development, the new leader may struggle to fully grasp and champion the nuances and breadth of the CEO’s strategic outlook.
  • Look after your tech stack the way you look after your health. When the underlying issue in a scaling startup is a deteriorating technical stack, the situation calls for a decision that usually goes beyond the capabilities of a VP of Product. In such cases, it isn’t realistic to expect the VP to address the tech stack problems while simultaneously maintaining the momentum of product development. This dilemma often points to a need for a profound reset, potentially going as far as involving the daunting task of re-platforming. A moribund tech stack doesn’t improve on its own; it requires deliberate and significant intervention. Reviving a compromised platform is sometimes achievable, yet typically requires a substantial budget increase. This investment addresses the root causes and ensures the platform’s future resilience and adaptability. The financial investment is necessary to support the dual objectives of revamping the technical infrastructure and continuing product development, albeit at a potentially slower pace. Be prepared that this journey might require reallocating a significant portion of your revenue towards product and technology – potentially up to a quarter – at least for a certain period.

In summary, if you’re a CEO attempting to bridge the product leadership chasm, here are essential steps to keep in mind:

  1. Acknowledge the Timeframe: Understand that crossing the product leadership chasm is a process that unfolds over time. It’s not an overnight transition.
  2. Move one team at a time. Accept that there will be some resistance, if not downright opposition. Use the success of the first team to win over stakeholders in completing the transition.
  3. Give the New Leader Space: Allow your new product leader sufficient time to assemble and nurture their team. This period is critical for them to establish a strong foundation.
  4. Gradual Strategy Transition: Shift the product strategy in a phased manner. A gradual handover ensures a seamless transition and alignment with the company’s long-term objectives.
  5. Prioritise Your Tech Stack: Above all, consistently invest in and maintain your technology stack. A robust and up-to-date tech stack is the backbone of product development and innovation.

About Produxity: We specialise in helping late startups and scaleups navigate the big changes and challenges that come with growth. We understands the unique hurdles you face as you move from a single product teams to a multi-team organisation. Whether it’s moving to the product operating model, refining your product strategy, or scaling your teams effectively, we’re here to help.

Feeling stuck or unsure about your next move? Check our tried and tested methodology here and let’s talk. We invite you to reach out and discuss your specific challenges with us. A conversation could be the first step towards unlocking your company’s potential for even greater success. Schedule a call with us today, and let’s explore how we can support your journey to the next level.