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Indian Startups’ Achilles’ Heels – Product Management Discipline

NextBigWhat.com has been around for the last 2.5 years and we must have seen close to 300+ startups (and 500+ideas) and out of that, only a few names that remain in the memory.

Many startups are fledgling and some of them have announced their death as well. This post is not about all that, but a few missing links that exists in the startup ecosystem (let’s not get into the funding part, as that discussion doesn’t go anywhere).

The missing link, in my humble opinion is the lack of product management discipline (a thought that was well discussed in last year’s Nasscom’s product conclave event).

For instance, most of the product startups are centered around an idea which they thought will change the world (heck! this is what entrepreneurship is all about), without realizing what customer needs and sometimes they are too late in the cycle to even go to customer and ask them what they really needed [The Story of Hammer and Nail (and Startups)]

Here are a few examples of startups/entrepreneurs that I have seen :

Startups with ‘that’ great Idea

The personal itch made founding team believe that everybody else have the same itch, the same understanding of problem statement.

Nothing wrong with that, but the missing part was the validation of problem statement – What Business are you in? Who are your real users (please do not count friends and families)? How many people are ready to pay for your service? Who, When and Why will they buy your service? Do you understand the buyer decision cycle good enough to figure out the real competition?

Shockingly, many startups even after so many cycles do not have answer to these questions (some of them still want to believe that ‘their feature is actually a big differentiator’!’)

What about those funded startups?

The fact that you got funded shows certain validation of your idea (debatable though!:) ), but why is it that some of these startups failed so badly?

Without taking names, I can honestly say that their product sucked badly. The product execution was far from being perfect. Lack of understanding of customer pain and being trapped in one’s mental model (“I am the end user” syndrome) is one great exhibit of some of the geeky entrepreneurs.

To add to that, not knowing too much about product positioning/messaging just adds to ‘Hell!  I can understand this, why can’t the users’? syndrome.

And this is where certain Product Management discipline kicks in. To borrow from my last article (Understanding Product Management Role (and the ‘Discipline’ to Build Kickass Products), here are some of the challenges that startups face (and sometimes they may not realize that they are in a matrix):

  • Feature prioritization – Is there a data-driven approach?
  • Lack of any structured methodology in understanding users.
  • As a founder/CEO, you are deeply sucked into your day-to-day activities (and that leaves no time for strategic thinking).
  • No significant market research goes into your product – a lot of what you build is validated via your friends and family.
  • Reaction to sales pressure – “Because they want this, we will build it (customer is king) “.
  • Reaction to customer feedback – “Because they ’said‘ they need this, we will build this”.
  • Too sucked into understanding competition (and sometimes, end up following them).
  • Finding it difficult to Cross the chasm

Do startups really need Product Managers?

Here’s how it typically works – someone with an idea gets some seed funding, and the first thing he does is hire some engineers to start building something. The founder will have some definite ideas on what he wants, and he’ll typically act as product manager and often product designer, and the engineering team will then go from there.

The company is typically operating in “stealth mode” so there’s little customer interaction. It takes much longer for the engineering team to build something that originally thought because the requirements and the design are being figured out on the fly.

After 6 months or so, the engineers have things in sort of an alpha or beta state, and that’s when they first show the product around. Things rarely go well in this first viewing, and the team starts scrambling. The run-rate is high because there’s now an engineering team building this thing as fast as they can, so the money is running out, and the product isn’t there. Maybe the company gets more funding and a chance to get the product right, but often they don’t.

Many startups try to get more time by outsourcing the engineering to a low-cost off-shore firm, but it’s essentially the same process with the same problems.

I continue to be amazed at how many startups just jump right into implementation, but I think we’re such an engineering-driven culture that we just naturally start there.

But any startup has to realize that everything starts with the right product – so the first order of business is to figure out what that is before burning through $500K or more in seed funding.

I believe this model applies beyond startups to much larger companies as well. The difference is that bigger companies are generally able to underwrite the several iterations it takes to get to a useful product, but startups often can’t. (earlier article).

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What’s your opinion? How many startups have the ‘Product Management’ discipline to build kickass products?

[Join us for a one-day workshop on ‘Building Product Strategy’ where we walk you through the different tenets of building kick ass products.]

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