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Sunday Rewind: The good, bad, and ugly of OKRs by Jenny Herald

Product Management

Dave Martin

<p>Some people in the product community are licking their wounds following the release of Marty Cagan&#8217;s latest book, <span style="text-decoration: underline;"><a href="https://www.amazon.co.uk/Transformed-Moving-Product-Operating-Silicon/dp/1119697336">Transformed</a></span>, co-authored with his <a href="https://www.svpg.com/" target="_blank" rel="noopener">SVPG partners</a>. In his recent podcast interviews, Marty pulls no punches when describing the missed opportunity facing a massive number of product professionals. His focus is on product managers operating in feature teams or project teams instead of outcome-driven product teams. His clear statement that product professionals in feature factories are under-delivering on value compared to their product manager salaries has caused a rumpus.</p>
<p>He suggests that, for a feature team, a project manager is a valid and cheaper alternative. It’s true that the average project manager&#8217;s salary in Silicon Valley is 33% lower than a product manager&#8217;s salary (according to levels.fyi). However, the difference is smaller in the UK with average project managers being paid 22% less than a product manager. At the high end, possibly in the companies Marty works with, the difference is far more significant. In the UK, the companies that pay a product manager £200k or more typically are not feature factories and are often FAANG (Facebook, Apple, Amazon, Netflix, Google).</p>
<p>It might be difficult for some people to believe, but I see organisations with project managers and product managers! In my experience, these companies don&#8217;t do what Marty would describe as product management &#8211; they either:</p>
<p>• Expect the product manager to execute a role similar to the less popular business analyst position.</p>
<p>• Or they operate like an agency with highly bespoke solutions, and the product manager is internally focused and a conduit to the engineers. (ie not doing product management)</p>
<p>The book&#8217;s looks at companies with many different variations of the product manager role. In my experience, these organisational structures are complex, and the accountability for each role is fuzzy. I can recall organisations with horizontal product managers, team product managers, technical product managers and so on. If a business has 100 product managers, none of whom did any work to decide what to build, but instead manage scope, schedule and resources, then based on the average salaries the business is paying £2m a year too much. It is expensive to hire product managers to do project management.</p>
<h2>Surely, it&#8217;s the company&#8217;s fault, not the product managers?</h2>
<p>Some product professionals are questioning their roles or feeling hard done by after listening to Marty’s podcast or reading the book. Many would say that it’s not their fault; they don’t run the company, and not everyone has the privilege to be able to change jobs easily. There&#8217;s lots of noise across the product community. Many comments in communities I am part of suggest Marty is not being sensitive or fair! They might be right, but will ignoring reality help anyone?</p>
<p>Most of the comments are from folks who have not read the new book (the comments start  with “I have not read the book but…. He is wrong”). I enjoyed the book. It provides thought-provoking insights into wasted resources, which is a cold fact in an economic climate where companies are being forced to tighten their costs.</p>
<p>Large parts of the book share stories and strategies for bringing about change at all levels within an organisation. There are examples that show how companies outside of the Silicon Valley bubble can transform. The book explicitly states that everyone has the ability to influence, but specifically, that product leaders have a key responsibility to influence transformation. It is true, there are product leaders who need support and help to drive change. Driving change is hard work and if you are new to leadership it&#8217;s a really tough challenge to pick.</p>
<h2>What the book does not say</h2>
<p>Marty&#8217;s book does not say that product managers in feature teams add no value, a common accusation in the online commentary, or that feature factory product managers don’t work very hard. In fact, it explicitly states that these people are working hard.</p>
<p>It does say feature product managers are not delivering the same level of value they would if they were in the product operating model. Given that the book is co-authored by partners from SVPG, a company that makes its money helping organisations transform to the newly titled product operating model, this is no surprise. It is also totally true, in my opinion, an outcome or empowered product team delivers bigger results for the business.</p>
<p>Marty&#8217;s first book <a href="https://www.amazon.co.uk/INSPIRED-Create-Tech-Products-Customers-ebook/dp/B077NRB36N">Inspired</a>, introduced the “modern” product approach in 2008. He has been writing about this topic for almost two decades. The largest tech companies on the planet embrace this approach. It’s not unproven.</p>
<p>If we consider the Pendo research that states 80% of product features are rarely or never used, it is hard to dodge the fact that product development in many companies is broken. It doesn’t sound nice to say it, but if only 20% of features create any kind of customer or business value then product teams are failing. What’s the ROI in delivering capabilities no one uses? I would love to compare the Pendo data against the methodology deployed by the companies. What are the 20% doing differently?</p>
<h2>Product leaders need help</h2>
<p>I coach product leaders (managers of product managers), not on product craft but on leadership. The size of the challenge to drive transformation is not to be underestimated. I meet many first-time product leaders facing this enormous climb. In honesty, it’s a big ask for an emerging leader, but not impossible!</p>
<p>Driving transformation requires skilled influence, constant negotiation, and masterful communication. This is in addition to being able to build and coach teams, align peers and teams to a vision, form a product strategy, execute through outcome objectives, and so on.</p>
<p>The role of a product leader is frequently misunderstood, and how to operate with empowered teams is a constant area of confusion. One great example is who sets OKRs. I recently interviewed Chris Jones, a partner at SVPG and a co-author of Transformed, for my <span style="text-decoration: underline;"><a href="https://www.outcomehabits.com/">newsletter</a></span>. Chris explains the use of OKRs as an example of leaders struggling to transform.</p>
<p>He says: “There&#8217;s a common misperception or misconception around empowered teams and how they work specifically with OKRs. The leader who believes they&#8217;re empowering teams says, okay, tell me what your OKRs are? And I&#8217;m going to hold you accountable for the thing that you want to hold yourself accountable for. This is not leadership. That&#8217;s just abdicating leadership and saying, okay, I&#8217;m trusting my team. The good leader is going to set those OKRs. There&#8217;s going to be a lot of work with the teams. There might be some negotiations. Certainly, a good leader is going to listen to what the team thinks the OKRs need to actually be. But really, it&#8217;s ultimately the leader who&#8217;s accountable for that sort of stuff.”</p>
<p>Being a product leader is a difficult job without the transformation aspect. It is a really hard job with transformation.</p>
<p>I often hear “transformation can’t come from one person,” which sounds bizarre. Is the alternative a collective awakening where multiple people suddenly feel an urge to completely change operations and their own behaviour? If you&#8217;re the person it starts with, as with all change management, you need to encourage advocates and nurture broader support. Transforming from a feature factory to a product operating model is no different.</p>
<p>Transformed has a whole chapter dedicated to obstacles and it&#8217;s a must-read for all product leaders. The big takeaway for leadership is to empathise with the stakeholders and frame changes in terms of their desires.</p>
<p>Change, unfortunately, means breaking the status quo, which is often difficult and painful for those involved. The alternative is to focus on minor progress, such as easy optimisations, but I personally prefer to aim for more impact!</p>
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