The latest instalment of the Beringea Scale-Up Academy convened product leaders of the B2B SaaS companies in our portfolio to hear from Nick Black, a highly experienced founder and product specialist, in a workshop focused on how to build exceptional product-led organisations.
Building products that deliver value for customers is pivotal to the success of any early-stage company. However, finding a need, developing a product, testing its value, and building a product team that can scale successfully are complex problems faced by any SaaS company.
Nick Black is a founder, Chief Product Officer, and start-up adviser who has spent more than 15 years grappling with how to build exceptional products. He joined one of our Scale-Up Academy sessions recently to share his perspectives on how to think about product strategy and development, and this article lays out those insights and the perspectives of our portfolio companies.
Finding product market fit: The power of proxy metrics
Achieving product market fit clearly underpins the work of any product team within a B2B SaaS start-up, but structuring how an organisation thinks about identifying, measuring, and developing product market fit is a complex task. As Nick commented, “product market fit is not one question.”
Nick is an advocate for proxy metrics as indicators of a product’s success. In contrast to business metrics, such as revenue growth or number of users, proxy metrics are designed to enable product teams to receive immediate feedback on the value of your product. In Nick’s words, “often the problem with product market fit is that the metrics used are trailing indicators.”
Proxy metrics typically are built around accessible data that is correlated to your business’ goals. They can be used to create a clear objective for your team, and they will enable you to iterate faster by removing the need to wait until the impact is seen in your commercial performance. A practical example might be that Uber identifies that a customer who uses Apple Pay is more likely to use the service more regularly, so that becomes a proxy metric.
Nick’s advice to companies searching for proxy metrics was to “take the business model canvas, look at each area of the business and think about all of the things that need to be true for you to achieve growth.”
Using this model will begin to tease out your leading indicators of product market fit: “an ability to create a series of proxy metrics that predict commercial success will have a dramatic impact on your ability to find product market fit.”
And yet, it was clear from our workshop that product market fit was not static, and companies would have to evolve their metrics of success over time. One attendee commented that “finding product market fit is an evolutionary process.” Another commented that they felt they had achieved product market fit for one product, but they were embarking upon launching a complementary service which required another set of metrics to consider product market fit.
For any early-stage company grappling with product market fit, it was clear that proxy metrics could provide a useful lens to consider how they evaluate their product and its value to customers.
Making customer discovery a competitive advantage
It was clear from our workshop that customer discovery was a substantial area of focus for product leaders throughout the Beringea portfolio. However, it was often a challenge to use customer discovery to develop the product roadmap.
As one attendee noted, “customers can often be good at describing yesterday’s problem, but they are not always great at describing the product for the future.” Nick’s recommendation to companies wrestling with how to create value from customer discovery was twofold.
First, think about the person that you are targeting through your customer discovery: “understand the specific problems of the gatekeepers.” In his previous role, Nick had shifted from thinking about building products to capture the attention of automotive innovation teams to using customer discovery to speak to CTOs within these organisations, as the ultimate buyer of the product.
Second, once you have identified the right person, consider the tasks that lay in front of them rather than the challenges faced today. Using this ‘jobs to be done’ framework will help you to build a product that clearly delivers value for the customer.
“If you know the jobs that must be achieved, then you will be helping your customer to overcome barriers and make progress.”
This, in Nick’s view, is the fundamental issue for product teams to consider when thinking about using customer discover for competitive advantage.
Motivating and managing product teams
Building the right culture and processes within a product team is critical to delivering commercial success, and Nick was keen to highlight three key principles that product leaders should use to underpin the way they think about management: “autonomy, mastery and relatedness.”
Developing a working environment with these characteristics will be the foundation of a successful product team. However, Nick was also quick to stress that management can be a tightrope for product leaders to walk: “it takes an age to build up the level of trust required for product managers, but it can take one moment of overriding their decision-making to erode that trust.” In this dynamic, successful leaders must embrace transparency, lead with vulnerability and admit to mistakes.
Nick also emphasised the need for the product team to own product decisions: “I am opposed to salespeople demanding the product team to build certain features.” Instead, the ‘jobs to be done’ framework mentioned earlier can provide a useful tool for salespeople to have an input into product development — if the sales team can articulate what jobs customers are grappling with, then they can help steer product teams in their thinking.
Leaders that embrace this approach to management, alongside the points we’d discussed earlier in the workshop, will begin to unravel the complexities of developing exceptional product-led organisations.
If you’re interested in learning more about Beringea’s approach to working with portfolio companies and the Beringea Scale-Up Academy, please get in touch with us at email@example.com