Making Some Tough Roadmap Decisions

Problem

We acquired a startup whose product we wanted to add to our product portfolio, scale it and sell it internationally. They were operating in five countries only, and the sole purpose of that acquisition was to deploy their solution in 80 countries. Deploying a product in 80 new markets is anything but easy and required some tough decisions to be made.  

The main problem was that 70 percent of our revenue came from the US and five historical accounts located there. Those customers were taking 60 to 65 percent of the entire product roadmap. That would leave us with only 35 percent of the roadmap to develop and deploy other functionalities that would enable us to enter other markets. Thirty-five percent of the roadmap was not nearly enough to scale. Alienating our historical customers to focus on future growth was a decision I had to make.

Actions taken

I was still somewhat inexperienced; it was my first executive position and the first time managing some real money. I was probably the youngest exec at that time, which meant I felt awkward like wearing a squeaky new pair of leather shoes . But I was not overly bothered by that. I decided to focus on numbers and let the numbers tell the story.

The numbers were unsparing. It was not possible for me as a head of product to deliver on the business goals unless we change something. The original plan to deploy the product in over 80 countries with only 30 percent of the product roadmapwas unfeasible. Most of the effort was going into a bespoke development for a small set of customers not used by the larger community. The discrepancy was glaring, and I could identify the problem by merely glancing over the roadmap.

However, when I tried to discuss the problem with other stakeholders such as Sales or Account Management, they seemed to be displeased with my diagnosis. Instead, they would advocate for those large customers claiming that we were not giving them enough. The only way for me to defeat their arguments was by using the data. I had to calculate and then demonstrate the cost of lost opportunities that resulted from investing too much in our current customers, who were effectively sabotaging our future growth. That inevitably led to having those uncomfortable conversations. I offered an alternative, though: to double on product investments, and then I wouldn’t worry about rationalizing on resources. But this was not an ‘us against them’ scenario; I had to re-emphasize that we were in this together. If Product failed, our business unit as a whole would fail.

The catch was that things were not still painful. People would look at the data and disagree. Things became painful when it was crystal clear that the status quo was unacceptable because it would mean a long-term failure. That insight -- no matter how painful it was -- brought to an agreement with different stakeholders. It was on me as a head of product to come up with a strategy.

I proposed that we dramatically reduce the investment in our historical customers. My assumption was that we would lose them anyway because they were not happy with what we could offer as they wanted much more. But we would use those resources to significantly scale in Europe. Not Latin American, not the Middle East or Asia, but Europe. Our plan was to become number 2 in Europe within two years. We could not afford to compete with local leaders in each and every market, but if we could position ourselves as number 2 in every market, accumulatively, we would rank first in Europe.

Proposing that kind of strategy could easily make one the most hated person. People are responsible for the US market because I was cutting down on resources as well those for the European market because I decided to go with being number 2. While it would take no longer than five minutes to explain the strategy, it took a year to align all stakeholders. Furthermore, we had to scale down gradually in the US to be able to scale it up in Europe, again gradually.

The board and C-level executives verified the final decision. As expected, our historical customers were increasingly unhappy, but we managed to accomplish exceptional growth in Europe. Due to our significant investment in future growth in Europe, 60 percent of revenue was not coming from 5 but 50 customers, which was far more balanced and sustainable. That allowed for continuous growth, which in the end enabled us to go back to the US and win the US market back. Establishing ourselves as leaders in Europe helped us convince European HQs to deploy our product in their sister companies in the US. That was much easier than when we tried to do the opposite years back.

Lessons learned

• You need to understand your market. The most reliable way to do that is to collect as much data as possible. Having a separate set of data won’t work; you need to collect comprehensive data that will allow you to understand the overall dynamics. Also, you need to be able to project how those data will change over time. For example, saying, “We have five customers that are responsible for 60 percent of our revenue,” is not enough. Instead, you should make a projection corroborated with that data, ”If we do this and that, in a year 1, X number of customers will bring us Y revenue, in year 2, X2 number of customers will bring us Y2 revenue + Z business opportunities''. Then, you need to translate your projection into a compelling narrative and explain why you are advocating for certain functionalities. Modify your language --the language the C-level speaks is the language of growth and opportunities.
• Be prepared that people will not like you because of your decisions. In spite of that, you will have to maintain cordial working relationships. People should be willing to hear you present your roadmap, projections, etc. They don’t have to agree but should be willing to listen to what you have to say. Even if those relationships get tense at times, you need to maintain the level of understanding and potential buy-in.
• Manage the expectations from the start. Be open with your boss and explain why you will not be meeting commercial targets the first year. Also, explain to other stakeholders how their performance will be impacted by their greater cause. You have to help them shift their perspective from a business unit to the company level. It’s on you and the company to help them through the transition if needed.
• Fifty percent of your time will be stakeholder management. Instead of talking to the engineering team, you will be talking to everyone else. What brought you to Product was likely the possibility to build great products, not to explain how you are going to cut on their resources. But it is a rite of passage, which marks transitioning from a mid to senior executive.