The Product Imperative
Avoiding the defaults to build something great
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It can be hard to define what makes a product manager successful. Their work speaks for itself, but putting your finger on what makes a great product manager successful and another fail can be challenging.
The same thing can be said for businesses. What makes one business a success and another a failure isn’t always apparent. Great founders fail all the time.
Warren Buffett, Chairman and CEO of Berkshire Hathaway, has a model for this: the Institutional Imperative. This concept has changed the way he invests in companies and how he chooses which leaders to bet on.
The Institutional Imperative
In his 1990 letter to shareholders, Warren Buffett defined a term he had used in the previous years’ letter:
Institutional Imperative, noun
“the tendency of executives to mindlessly imitate the behavior of their peers, no matter how foolish it may be to do so.”
- Warren Buffett, 1990 Shareholder Letter
Buffett suggested that institutions tend to fall into four traps which he calls imperatives. These imperatives are the default behaviors at most organizations who are not actively resisting them.
Buffett’s own words explain the 4 imperatives best:
“(1) As if governed by Newton's First Law of Motion, an institution will resist any change in its current direction;
(2) Just as work expands to fill available time, corporate projects or acquisitions will materialize to soak up available funds;
(3) Any business craving of the leader, however foolish, will be quickly supported by detailed rate-of-return and strategic studies prepared by his troops; and
(4) The behavior of peer companies, whether they are expanding, acquiring, setting executive compensation or whatever, will be mindlessly imitated.”
- Warren Buffett, 1989 Shareholder Letter
Jeff Bezos, CEO of Amazon, has shared a similar model in his shareholder letters. Bezos calls it management by proxy. By “proxy” he means systems put in place to better the organization and their ability to service customers. The problem arises when the systems become the primary focus. They lose their intended effect. Management by proxy results in people saying things like, “I followed the standard process” instead of taking responsibility when things don’t go according to plan.
Having a clear understanding of the Institutional Imperative and management by proxy helps leaders in an organization see their blind spots and avoid traveling along the default path -- what all leaders would do if not proactively minimizing the effects of the imperative.
The main argument made by both Buffett and Bezos is that leaders need to understand and actively work against these patterns in their business. Because they are so easy to fall into, most managers fall into these patterns by default, and don’t even realize they are doing it.
It is also important to highlight here that intelligence and experience have nothing to do with susceptibility to the imperative. Buffett says this was the biggest surprise he had when leaving business school -- some of the smartest and most experienced business people fall prey to the Institutional Imperative and are blind to its effects. This is why it is important to organize your business to minimize the effect of the imperative.
While institutions as a whole seem to fall prey to the institutional imperative, product teams seem to fall prey to a different, yet similar, set of imperatives. Gone unnoticed and uncorrected, these imperatives will result in products that fail. Building a product while trapped in an imperative feels like chasing your own tail -- you are constantly responding to the world around you instead of actively participating.
Let’s jump in…
The Product Imperative
The Product Imperative inherits its core from the Institutional Imperative, but highlights the default tendencies of a product team rather than an organization as a whole. As with the Institutional Imperative, product managers need to build systems and structures to ensure they minimize the effects of the Product Imperative.
The Product Imperative, noun
The tendency of product managers to neglect the important and challenging parts of their job. Letting other people and processes do the important work for them.
What I have noticed is that a product manager's ability to drive true innovation and build successful, competitive products shrivels when the product imperative comes into play.
The main elements of the product imperative are the product manager’s tendency to
have a one-track mind, only considering a few solutions,
looking through the rear-view mirror at prior success instead of through the windshield at the potential,
allow the product to be prioritized by majority rule,
assume product success equates to product-market fit,
assume busyness is a good excuse for not creating a strong vision and strategy, and
allow the process to dictate their ability to execute.
Each of these can be easily overcome by acknowledging their existence and organizing your work to minimize their effects.
1. One Track Mind
The product manager locks themself into a single way of thinking about their problem space, crushing any hope of adopting a potentially more elegant solution to the problem. As a side effect, the product manager will find all data necessary to back up their decision to shut down any potential dialogue around alternative viewpoints.
This is rooted in how our brains work. Once you see something, you can’t unsee it. Known as First Conclusion Bias, we end up blinding ourselves by filtering everything through the lens of our first conclusion. Charlie Munger, Buffett’s partner at Berkshire Hathaway, has compared this to the sperm and the egg: the egg locks out all other sperm after the first is in. Similarly, we get the first conclusion in our head and our mind locks anything else out. This isn’t always a bad thing and in many cases (specifically those where the decision being made is reversible) can be beneficial. But when we are trying to understand and solve novel problems in the product, we need to be able to see the problem without tainting our point of view.
If the product is further along in the development cycle, this might also be considered the “Beautiful Baby Syndrome”. Every parent believes their baby is the cutest. Every creator believes their work is superior. And every product manager believes their product is perfect (or at least more so than it is). This is especially true when the product manager has owned the product since its inception, having worked tirelessly to build the product into something that is meaningful. Unfortunately, as the landscape changes, parts of a product become irrelevant and outdated. The product needs to be updated with the changing times. This requires deprecating or removing parts of the product that required blood, sweat, and tears to build.
Combat this imperative by trying to “see your problem with fresh eyes”. The easiest way to do this is by working backward from your end goal to redefine the problem. Doing this exercise is called inversion and it helps you see the problem in a new light. I wrote about how to apply inversion to product management a couple of months ago.
2. Rear-View Mirror and the Windshield
Resting on their laurels, the product manager sees prior success as a reason to not look forward. They see changes in the market or changes in technology as a burden rather than something that would help their product stay on the forefront.
When you are driving a car, the only way to stay on the road is by keeping your eyes down the road, where you are headed, and only occasionally looking in the rear-view mirror. Many product managers spend too much time looking in the rearview mirror, completely disabling their ability to steer their product down the right course.
I wrote in my essay on leverage that it is a product manager’s job to put on guardrails and keep the team headed in the right direction. And though you can drive on a straight road while looking in the rear-view mirror, it is only a matter of time before changes in orientation come. By the time you have responded it is too little, too late. This is the same in product. You may continue to have success while looking through the rear-view mirror, but you won’t be able to adapt to changes in the market fast enough to stay on top. It is only a matter of time before you are off course and struggling to maintain relevance.
Combat this imperative by only using historical facing data with a grain of salt. Find people who are the best thinkers in your problem domain and follow their work. They will give you a good sense of where the domain is headed, and what the view looks like through the windshield. Keeping your eyes down the road will enable you to adapt quickly and efficiently to any industry changes.
3. Decision by Majority
Lacking any true knowledge of the territory in which their product is deployed, the product manager allows anyone and everyone else to make the decisions for what their product features should be. They turn to sales, marketing, customer success, and the customer themselves to dictate the product roadmap and what problems the product should be solving.
Hear me on this: these folks should all have input. They have territorial knowledge too and are essential voices in directing your product to success. But the person who knows the problem best should be the product manager. Their job is to look beyond the (sometimes) short-sighted suggestions of others and find the true problem to be solved.
Many other people in the business suffer from the tendency to overgeneralize from small sample sizes. They hear a problem in a sales call, maybe hear it twice, and it sticks in their mind because they were uncomfortable being unable to say, “Yes, our product does that”. And while this may be a useful problem to solve, the product manager should be using everything else they know about the industry to determine the long-term value of solving that problem. Solving too many of these niche problems leads to finding yourself stuck in a local maximum, potentially with too high of an activation energy to get out and move toward the global maximum.
Product Managers that allow their product to be driven by the majority tend to end up with a product that is trying to “keep up with the Joneses”, matching the features of their competitors. Instead of taking a unique view of the problem and selling why you are better to the market, you end up competing in a race to the bottom on how cheap you can sell your product.
Combat this imperative with your marketing team. Help them put together the position statement for your product rather than just a list of features. Your sales team will be equipped to tell the market why you decided to prioritize certain features and why your product is the best solution. Selling your point of view of the world instead of selling your list of features changes the way customers view your product and enables sales to sell more without constantly needing new features to close a deal.
4. Confirmation Bias
Using sales metrics as the only indicator that their product is successful and solving the right problems.
There are many products that customers would rather not use, but they are the best of what is available. Hiten Shah recently surveyed twitter to determine if Zoom (the video conferencing company) had product-market fit. Turns out, they don’t. Most people wouldn’t be upset if Zoom went away tomorrow. But, they continue to purchase it for 2 reasons: 1) it is better than anything else available in the market right now, and 2) the customer (buyer) isn’t always the same as the user.
The split in the buyer and user perspectives can lead to a product that demos well, has more features than any other product, and looks to be the best value. But the product ends up not being used because it doesn’t solve the actual problem. Adding feature after feature (feature bloat) just to pad the list of checkmarks in a product comparison chart doesn’t mean your product is good nor does it mean your product is solving the intended problem.
If you looked at the usage metrics of Zoom, you would only assume they have great product-market fit. Unfortunately for Zoom, their users don’t feel like they solve the problem any better than anyone else.
Combat this imperative by looking at more than just product metrics. Product managers should be doing more than just looking at monthly active users, transaction rates, revenue targets, and new clients. These are all great indicators of a growing business and a sign that the product is doing something right. What these don’t mean is that the product is loved by your users and has product-market fit. Communicate with your customers and learn about why and how they use your product. You will learn a lot more that will guide where you take the product in the future.
5. Too Busy For My Job
A product manager who has no time for vision or strategy. They only have enough in the tank to execute what has been put before them. Falling prey to the business imperative pulls them like a black hole into all of the other imperatives.
Falling into this cycle will lead to a product that tries to advance on all fronts, doing everything under the sun and none of them well. The product manager will allow any decent opportunity to pivot the team, and ultimately leave most features half baked and useless. The product vision and strategy should be used by the product manager as a tool, used to determine what to say “no” to just as much as what to say “yes” to. Taking on too much will lead to an unusable product.
“You can’t advance on all fronts in all directions” - Peter Thiel
Product managers need to be in command of their product, deciding what features are being included and how they are tracking success. Don’t enable yourself to get “too busy” doing day-to-day work that you lose sight of the direction you are headed.
Combat this imperative by making time for your vision and strategy. You must be the person to define your vision and strategy. There is no way around it and no shortcuts here.
6. That’s Not The Process
The product manager forces their agile methodology even when it doesn’t make sense just because that is what all the other teams do. They have no use for thinking long term because their sprints are only two weeks long. They throw their hands up in the air when the business asks for more predictability while maintaining the short release cycles.
This is something Bezos would call management by proxy. Letting the agile methodology get in the way of doing great work. Sometimes it makes sense to be more flexible; allowing the team to work in a more flexible rhythm. Sometimes it makes sense to do the opposite, drive discipline to the process to ensure something gets done. But at the end of the day, throwing up your hands and not allowing any changes simply because “That’s how we do things around here” makes everyone worse.
Your job as a product manager is to inspire, lead, and lift the whole team. Make the people around you better. You can do that by listening to your team, being creative about how you provide the needed information to your stakeholders, and never letting a process manage your product for you. You are the product manager, not the Scrum process.
Combat this strategy by finding new ways to manage your stakeholders and the process you use in development. Listen to what your stakeholders are asking out of your team and the development teams, and use inversion to find a way to get you there. You will be lauded in the organization if you are actively looking for ways to meet the needs of your stakeholders while helping your development team partners stay focused on building.
So What Do We Do?
Warren Buffett says one of the most important things he and Charlie do when investing in a company is to find founders who are aware of the institutional imperative. This awareness brings forth action and mitigation to ensure they don’t become prey.
Just as with the Institutional Imperative, even the most experienced and intelligent product managers fall into these traps. It is not stupidity or incompetence that leads us into the imperative, it is simply the default and most worn path. Look for places in your work where you might be blind to part of the imperative. Organize your work to mitigate the risks of the Product Imperative.
Both the Institutional Imperative and the Product Imperative are a bit of a misnomer. Imperative implies they are inevitable, inescapable, and certain. But that doesn’t have to be the case. Being aware of each of these imperatives is the first step toward avoiding the trap. Combat each imperative with a clear strategy and purpose:
1) use inversion to see your problem with fresh eyes,
2) look through the windshield by seeking out the best thinkers in your industry and letting them show you what’s coming,
3) help your sales partners by enabling them to sell a point of view instead of a list of features,
4) remember that metrics don’t mean everything, talk to your users,
5) make your vision and strategy -- just do it, and
6) manage your stakeholders and make the process you follow work for you, not the other way around.
Unlike a black hole, which has an inescapable pull, these imperatives are more like a treadmill. If you stop walking, or you trip, the treadmill will pull you back. Escaping the traps of the imperatives requires a constant effort. If you work against the default, find ways to structure your work, and keep yourself aware of the imperative, you can escape it. You have to constantly be working to not slip back into the default patterns of behavior. When you do slip, recognize it, identify what caused it, and move along with a new insight into how to avoid it in the future.
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Thank you to the Compound Writing members who reviewed this post: Stew Fortier, Padmini Pyapali, Richie Bonilla, Josh Mitchell, and Kevin Shiuan.
Really thought provoking piece. Would love to have these 6 ideas in a graphic so I can save it for easy digestion later. Nice job, Tyler!