(2024-01-23) Doshi Why Do Companies With Major Resources Distribution Often Make Mediocre Products

Shreyas Doshi: Why do companies with major resources & distribution often make mediocre products? ...is one under-discussed reason: Operators Optimizing for Optics. (theater)

To understand this, let’s start with a story. START OF STORY Acme Inc has brilliant, visionary founders (Alice & Bob), amazing culture, has built a well-loved product

With this growth, they’ve had to hire a bunch of Operators: leaders who are skilled in scaling process, teams, operations, and overall execution

it is a no-brainer for Acme to tackle adjacent areas of opportunity

during 2024 annual planning, Alice, Bob, and the exec team identify & present to the company a couple of key “strategic priorities” in these adjacent areas

One of these is especially vital to get going in H1 2024 because it poses a long-term risk to Acme’s position & growth. -- Thing is that this is a brand new initiative that is targeting the kind of user that Acme thus far has not really been built for

Alice & Bob know that it is critical to hire the right leader for this new initiative. The executive team agrees. So, after considerable thought and exploration, they choose Dan. Dan joined Acme 2 years ago and has absolutely crushed it

Alice & Bob (henceforth, A&B) give Dan ownership of the new initiative. To signal to everyone how important the new initiative is, Dan will report directly to Alice, who mainly looks after the product side of Acme

Alice, Bob & Dan set up thrice weekly check-ins to brainstorm, review progress/blockers for Zeus.

It is important to Dan that expectations are clearly set w.r.t. 2024 plans for Zeus: milestones, success criteria, core metrics, dependencies, etc. In his early meetings with A&B, Dan is careful to set very realistic expectations

Remember: Dan plays the corporate game at the Olympic level.

A&B feel a tad uncomfortable discussing milestones, success criteria, quarterly metrics targets, etc. this early on, but they see Dan’s energy

some of the most talented designers, PMs, EMs, engineers, etc. want to work on Zeus. So Dan has now put together a small but mighty core team.

Dan views his main job as understanding A&B’s vision for Zeus (especially Alice’s since she is the product visionary [0]), translating that vision to concrete product milestones, building a great team & process to execute quickly towards these milestones, and moving the KPIs

Dan is also well-aware that Alice will be writing his performance review & he has over the years gotten very good at managing expectations & perception

A useful tool for him here is the Executive Product Review: a great way to raise important questions/proposals, get execs’ opinions/surface divergence, and give his team members face-time with the execs. -- So, in addition to his thrice-weekly 2:1s with A&B, Dan sets up a fortnightly Zeus Exec Product Review

a few months in, A&B are starting to get nervous. But they can’t quite find the words to express their nervousness in rational terms. “Something” feels off about the way Zeus is progressing: Dan & team haven’t quite arrived at a core differentiator for Zeus. (compelling)

Jessie, a Designer reporting to Dan, is feeling similarly. While potential Zeus users are saying that they’d be willing to try Zeus when it is launched (they love Acme after all), they are also saying that they are reasonably happy with Zeus’s competitive product.

While Dan was caught off-guard by these conversations, he makes sure to keep a cool, calm, composed facade (a skill he developed early on in his career as a consultant).

he pushes back a bit more on Jessie (“We have a plan, let’s not re-litigate things we’ve already decided in our Jan/Feb Zeus Product Reviews. We need to hit Q1 OKRs too!” )

follows up on the differentiation question: “I've talked to Tim about how Zeus needs to be integrated such & such with our core Acme product. Users have asked about that since day 1. I think this is going to be a big differentiator for us” -- Dan shares supporting user feedback quotes. Alice’s spidey sense tells her that this isn’t enough, but she remembers her executive coach saying that she must learn to trust her most talented people.

Fast-forward, in July, Zeus v0.5 launches to a select set of customers. Dan is great at coordinating launches and making sure that they create buzz.

Lots of charts & numbers! So what if the Y-axis shows tiny numbers. If it is up & to the right, it qualifies

During the September promo cycle, Dan gets promoted

Fast-forward 6 more months, Jessie has now left Acme

hitting all quarterly OKRs, high approval rating for Dan as a leader. -- But the actual business is doing just okay, and is well below where A&B had instinctively expected to be in Jan 2025. Meanwhile, Zeus’s competitive product is growing like crazy in the market. It is beating Zeus on almost every metric: number of customers, features, margin, ARR, retention, etc. etc.

From A&B’s POV, the product & its positioning is just not compelling enough, lacks creativity & deep user understanding. (Product Management from MVP to Product-Market Fit)

after 6 more months of trying to steer the ship in the right direction, Dan says enough is enough. He’s already been at Acme for 3.5 years, has worked on both scaling a business & a zero-to-one story (Zeus), and he believes his resumé now has what’s needed for the CEO job. -- Dan finds a CEO role at a company in an adjacent vertical to Acme

Lastly, Jessie is now a co-founder of a YC startup that is absolutely crushing it. And to fast-forward a few more years, this startup will take over a large part of Acme’s core business by 2028.

this is not just at “bad companies”. Some of the very best tech companies in the world have their share of Operators like Dan and projects like Zeus.

I want to call your attention to an insidious, under-discussed root cause of Zeus-like failures: The tendency of many (not all!) ambitious leaders to manage new initiatives for Optics rather than for Impact, and get rewarded for it.

And frankly Dan isn’t the only culpable party here.

What might have prevented this debacle? Several things actually

1) Dan should not have been appointed as the leader for Zeus. Operators are great for scaling, at the right time, but they often bring premature optimization to projects. (Don't even call it a project.)

2) Things could have gone better even with Dan as leader. If Dan were more self-aware, he would have seen his role differently. He could have hired great Craftspeople like Jessie on his team, and then listened to those Craftspeople to translate A&B’s vision to a winning product.

3) A&B (& the broader exec team) should have understood that a lot of what seemed like “great operations & management” actually hurts early-stage bold initiatives

4) Last, but by no means the least, A&B should have had the leadership maturity to see through (and candidly call out) what Dan was doing: managing for Optics

instead of a) actually understanding users b) iterating towards differentiation c) instilling a drive to win d) optimizing for major business impact

Operators are everywhere in tech companies. They are extremely valuable.

many Operators, even if they have good intentions, do not understand the role of a leader of an early stage initiativ

through years of sub-par training, they feel comfortable with “running the process”.

Operators like Dan legit think that their job is to understand what the CEO wants, orchestrate actions across the org based on that, and set up processes, structures & accountability checks to ensure that those actions are performed efficiently.

Yes, it does matter what the Founder/CEO thinks. Yes, the Founder’s vision is to be understood & taken seriously. But every Founder worth their salt knows that real product work isn’t just about transcribing his/her vision. New product work is messy, and it requires enormous creativity.