In the first part of this series, I talked about some of the barriers to product-led growth (PLG) that come from the market and the products themselves. The right product-market fit, understanding customer needs, lack of data, and a lack of viral growth loops are just a few examples. In this section, I will talk about organizational and cultural issues.
PLG can only thrive in organizations that are culturally and structurally aligned. Unlike other approaches, this approach requires extensive cross-functional collaboration between product, engineering, and marketing to address the inevitable conceptual, technical, and market challenges. Below are the three organisational barriers to product-led growth and suggestions on how to overcome them:
1. Slow product iterations
PLG is based on a simple premise: Shipping is learning. This means that learning how to consistently release product is the best way to invest your team’s early effort. Your top priority should be to establish a solid process for delivering meaningful improvements to users as quickly as possible. Continuous delivery has a learning curve, and establishing this pattern early provides a solid foundation for PLG. You will not be able to learn to adapt to market changes or meet changing customer needs if you do not have it.
2. Weak cross-collaboration
In order to innovate a product regularly and quickly, there needs to be strong cross-functional collaboration. Across the organization, you need no-silo, cross-functional, collaborative, and user-focused teams. Common factors for weak collaboration supported by research are:
- Inadequate superordinate identity
Team members prioritize their common in-group identity over the importance of various viewpoints (e.g., engineers ignore product people or the opposite). Those in the team are more likely to ignore or reject the contributions of those working in other areas. As a result, the team is unable to effectively integrate knowledge and perspectives from different functional areas. Interdepartmental rivalry and political maneuvering become the norm.
- Strong social cohesion
The degree to which team members are connected, share common values and goals, and work together with mutual trust and respect is called social cohesion. It is the glue that holds a team together and is closely related to team performance. Although some social cohesion is necessary, excessive social cohesion has a negative impact on overall innovation capability. The organization’s ability to adapt suffers from the sunk cost fallacy, risk blindness, and aversion to change caused by groupthink and conformity pressures.
If your team exhibits any of these patterns:
- Consider how you can restructure teams to create an environment that is more functionally diverse.
- Clarify decision-making authority and hold each other accountable. The most common pattern is currently product trios, but any solution that distributes decision-making authority across different roles is effective.
- Rotate team members to gain new insights. Remember, however, that teams must go through “forming and storming” phase before they can operate at their best. It is more important to provide psychological safety so members can take risks and fail during this time than to push for efficiency.
- Encourage voicing objections in meetings and brainstorming sessions
- Introduce discussion and decision-making techniques that encourage dissent (e.g. systemic consensus).
- Give team the confidence to try new approaches.
3. Cultural misalignment
Culture is made up of interactions between people and is shaped by environment, strategy, structure, and systems. There are three main factors you should think about:
- Adhocratic vs. hierarchical: Research shows that adhocratic cultures promote product innovation, while hierarchical cultures inhibit it. Lean heavily toward decentralized, adaptive frameworks that put decision making and collaboration in the hands of teams.
- Risk tolerance: Product-driven growth requires companies to take calculated risks and experiment with new ideas. A risk-tolerant culture that provides the psychological safety to make mistakes and learn from them therefore increases your chances of success.
- Customer focus and product focus are not synonymous. A major challenge for PLG firms is gradually shifting from prioritizing the customer to prioritizing the product. Make it a habit to review user requirements and supporting data. Prioritize the product without losing sight of the customer’s needs.
Always check if your working methods are still in line with the goals of your customers, your product and your business. It may be a difficult task, but it is possible to change a culture. By creating an atmosphere where your employees are allowed to experiment and make mistakes, and by setting clear expectations, you can help your team adapt to a new organizational structure.