Time and time again, I encounter start-ups and businesses who are getting by just fine, profitable even (which is incredibly rare in start-up world), but aren’t encountering high growth either and are struggling to grow beyond single digit percentages a year — which is a very low growth rate for a early stage technology or product company. Almost all of these companies have some things in common:
1. A core product that’s used by a diverse set of customers.
2. A loyal and captive customer base who are ingrained with the product.
3. A customer focused management team who care about customers.
On their own, each of these things are great. A core product that’s used by a captive customer base, led by a management team who are customer centric is something everyone should love, but there lurks a major danger — the consulting-as-a-service paradigm.
It usually starts when the company builds a core platform or product, and a single customer asks for a feature that they need for the product to work. We say yes for one of several reasons, including:
1. They will sign with us, which contributes to revenue.
2. They will stay with us and pay, which contributes to one-off revenue.
3. They threaten to leave us, which contributes to churn.
4. They’re friends with the CEO, which contributes to good-will.
5. They’re loud, and we just want them to shut up, which contributes to sanity.
When that yes is given, we are now in the consulting business — we’re building a feature for a single customer in return for some sort of benefit (cash or otherwise). What we’re not doing is pushing our own product forward (cue “everyone else will use this too”).
This situation generally occurs when the business knows their existing customers really well, and knows their target market really well, but have become so involved in building the product that they are now adding features directly based on customer feedback, instead of looking out into the market and analyzing what comes next.
This in itself is not a bad thing — if your goal is to be a consulting business or you have already extinguished your total addressable market. But if you are a product business who are accidentally turning into this consulting hybrid business, you’re in trouble.
So how do you stop this?
Say no (and why).
Product managers are hired to say no. This is our first and foremost priority. But it’s also an occupational hazard, since we often deal directly with executives. When we encounter situations where we’re about to start doing work for a single customer, or build features for money from a customer, say no and explain why. The last part is crucial, everyone wants the business to succeed (well, within the business anyway), and we need to try keep the company on track.
A solid roadmap
The other role of a product manager is to define the roadmap. A solid, comprehensive, evidence backed roadmap leaves no room for side projects or distractions. Every team knows what is planned, why it’s planned, and what we need to accomplish. When the company is onboard with a well developed product roadmap, it’s a lot harder for customers to weasel their projects in.
Be less friendly with customers
This sounds counter-intuitive, but your customers are asking for features because they know you will entertain their request. We are all customers, how often do you go to Walmart and ask them to build you a specific widget? We don’t because we know it’s not an option, yet we still shop there. The same thing applies here. By explaining to our customers what our roadmap is and ensuring we create a boundary where we take feedback and input, but not feature requests or projects, we can help reduce these distractions.