Super product leaders harness intrinsic motivation to drive high performance.
Product management is failing, and leadership need to level up.
There is so much noise and focus on product strategy, product discovery and, more recently, product operations that many product leaders have completely disregarded their core responsibility. The product leader's most important responsibility is setting product teams up for success.
Don’t believe me? Consider recent research from Payscale found in the US, which saw the job where employees were most likely to quit from all possible jobs is the senior product manager. Further research supports my observations, showing product teams are disenchanted with how companies are run, frustrated with leadership and, in the worst examples, stressed out, leading to burnout.
If you feel this is a coincidence, let's switch our focus to product management performance. The job is to identify how to create value for the customer and the business, then work with designers and engineers to deliver features. The customer needs to use the features to create value for a customer. Given this fact, Pendo’s research shows that 80% of features are never or rarely used, suggesting only 20% create value. In 2024, the SaaS market is forecast to spend $56.4 billion on product development. If Pendo’s usage trend doesn't change, the industry will waste $45.1 billion dollars in 2024 building features no one uses.
But when we look into these figures more granularly, we see some SaaS firms achieving high feature utilisation and creating returns on product development. One common trend in high-performing product teams is leaders who focus on motivation and setting their teams up for success. I call this Outcome Leadership. In this edition of the Confident Product Leader, I will answer what Outcome Leadership is and why it should matter to you if you want high-performance teams.
Bonuses directly reduce product performance
The problem is not new. Like many behaviour scientists and organisational psychologists, Daniel Pink shared the problem and solution in his 2009 TED talk. He explains the science shows the 70-year-old management methods most companies adopt are sub-optimal for creative problem-solving knowledge work. High-performance industry-shaping product companies have aligned their management methods with this science, and their employees and shareholders enjoy benefits.
Daniel shares how traditional incentivisations such as bonuses are counterproductive for creative problem-solving work. The research shows that for creative problem-solving work, extrinsic incentivisations like financial rewards impede performance. This deserves a reiteration: motivating people with more money for product management work reduces performance. And it doesn't stop there; Daniel shares research showing that big rewards reduce performance even worse than small rewards.
This is also shown in the observation of the Spaghetti Marshmallow Challenge. In this challenge, teams must make the tallest freestanding tower from a restricted supply of spaghetti to hold a marshmallow. I have referred to this before. When a monetary prize was offered to the winner, performance dropped across all teams.
The takeaway is product leaders should not use extrinsic incentives like awards, bonuses and promises of promotion to drive motivation.
Intrinsic motivation drives high-performance
The Self Determination Theory (SDT) from the 1970s by psychologists Richard Ryan and Edward Deci, says humans are best motivated to do work by intrinsic factors, specifically autonomy, relatedness and competence. Daniel Pink reframes these motivational factors as purpose (relatedness), autonomy and mastery (competence). I prefer Daniel’s version; it is easier to remember.
Since the 1970s, much research has explored how purpose, autonomy, and mastery impact motivation and team performance. It is scientifically accepted that people with psychological empowerment significantly enhance employee performance. All this research explains the success of many of the methods Marty Cagen popularized in his book “Empowered”.
High performance and improved staff retention
I fully understand; I am suggesting you adopt a new leadership style. You may never have experienced this leadership style and may have no role model to mimic. Your boss likely does not adopt this leadership style and may even present a blocker.
So, is it worth the effort? The short answer is yes.
In summary, Outcome Leadership will:
Increase the performance of product teams.
Improve the morale of teams.
Reduce staff turnover.
Attract stronger talent.
Deliver products to support business goals.
Outcome Leadership will reduce your stress as a product leader. Your success depends on your team's success. You achieve nothing without them. Outcome Leadership sets you up for success.
How to be an Outcome Leader
You can’t transform overnight. It is a journey, and this newsletter (and my company, RightToLeft) is here to help. As you progress on your journey, you will see the rewards. At a high level, there are four key areas to work on:
Connect everyone to a shared product vision.
Share the power of decision-making.
Foster trusted relationships.
Genuinely value employees.
The shared product vision is the product leader's tool to create purpose. It should focus on customer or user experience and describe a concept, not the details. There are many habits for you to develop using the vision to connect and align teams.
Focus on sharing the power, not the sharing of decision-making. It is not just collaboration or influence. It is giving an appropriate level of power away. This is very uncomfortable for some leaders, but I promise it will be liberating!
Fostering trusted relationships initially might sound fuzzy, but it is not. This means two-way constructive and direct feedback between you and your teams. The trust implies no malicious undertones, enabling honest feedback without fear of repercussions.
Finally, genuinely valuing employees means you recognise you can’t achieve anything as a leader without your team. In product leadership, this is doubly true, as product managers reporting to you are unlikely to have any impact without other's support eg engineers. If you genuinely value employees, you believe innovation will not just come from the C-suite, and the team are in a stronger position to make better decisions on behalf of customers.
Is this possible?
I coach and train product leaders, have seen many transform into Outcome Leaders, and witnessed their teams' performance skyrocket. One such example is Anne (not real name), a product leader at a martech SaaS business.
Anne had taken over leading the product team from the founder as the business was scaling. At the time, they were about to launch their second product line, which had taken two years to build. They had four cross-functional product engineering squads and some great talent with solid experience. Six months into the role, Anne was struggling. The second product line was failing. Staff were grumpy, and staff turnover was higher than ever before. Improvements to the product line were challenging to deliver and didn’t seem to have any impact. She felt unconfident and was seriously concerned the founder might fire her.
Over a six-month duration, I coached Anne, and she was determined to make changes. She was willing to adjust her leadership style, was able to remove bias and demonstrated real grit to make things better. Here are the top 8 steps in her journey.
She deleted the never-ending backlog of feature requests that caused so much noise.
She knew the team was terrible at estimating work, so she stopped doing estimates and used it as an opportunity to encourage small slices of feature delivery.
She crafted a product concept (aka vision) all about what the user will experience and feel - almost like a keynote for an Apple iPhone.
She introduced a feedback meeting with all PMs and engineering managers and put a positive slant, calling it Win The Week. In this meeting, wins were celebrated (and documented), and there was an opportunity to escalate urgent actions or big questions.
She stopped all the user story completion reports, velocity graphs etc, as they were meaningless.
She had two weekly reports, OKR completion status and weekly team performance. The weekly team performance had one status per week per team - they had to choose which one reflected their week from “shipped code which users used”, “learned stuff with real evidence”, and “something else”.
She prioritised coaching teams not learning or shipping weekly and brought external coaching support.
She let teams decide on solutions if they had evidence-based learning. If not, she demanded experimentation, often a small or experimental release.
Anne did not get these eight steps right the first time; it took trial and error, but she improved the trust and empowered the teams. The results speak for themselves. No one in the product team believed in the new product, and there was a lot of anecdotal evidence that it solved a problem no one cared about. So, they built a new product line. A basic version was ready to get customer feedback within five weeks. Over four months, they iterated with some beta customers using it. The full launch was well received. Team morale turned positive, and staff started referring candidates to fill vacancies. As far as the product team knew, the founder didn't suggest a single feature, just the market problem and opportunity.
This was a few years ago, Anne is still in the company which is growing at a fast rate, she was recently promoted.
Goldilocks autonomy
Despite the success Anne enjoyed, it was not easy. I have coached and trained many product leaders, and giving teams purpose, autonomy, and mastery can be interpreted differently. Variations in the approach cause uncertainty and questions. Unfortunately, some interpretations do not work and leave leaders unfavourable towards intrinsic motivation methods. As with everything, following instructions without understanding how it works risks total failure.
The most common area I see leaders struggle with is sharing decision-making power, a.k.a. autonomy. Not having enough autonomy has zero impact, and too much autonomy has a marginal impact, but just the right amount of autonomy supercharges performance.
In research studies, teams with autonomy in some aspects but not all aspects were, on average, 50% more likely to succeed than teams with no autonomy.
Finding the Goldilocks autonomy is linked to giving teams the decision-making power to solve problems the way they feel best. If the team is highly experienced and capable, they will perform better with broader autonomy, and teams with more junior team members or learning a new skill need narrower autonomy.
Are you only half using product strategy?
A vital tool for product leaders is product strategy, and most product leaders underuse it. Product strategy is normally considered a tool to justify investment, and product executives define strategic initiatives to give the board confidence that the money spent on engineers, designers, and product managers will deliver a return. But that is only half the power of product strategy.
Product strategy is a crucial tool for sharing decision-making power with product teams. A strategy expressed as features on a 12-month roadmap shares very little decision-making power. If you have this kind of roadmap, you’re reducing intrinsic motivation for product managers and, as we have discussed, damaging their performance. You are also likely committing to build the wrong things and wasting the investment - but that’s a different article.
If product strategy is expressed as high-level outcomes disconnected from the product manager's direct capabilities or influence, you are at the other end of the autonomy spectrum, i.e. too much autonomy. In this case, what you call product strategy is something else, maybe a basic business strategy. On multiple occasions when I have been brought into a company struggling to empower product teams, I have witnessed product manager objectives stating, “Increase revenue by 50% this fiscal year”. This is too much autonomy and will fail to create high-performing teams.
Getting the level of autonomy wrong doesn't just fail to improve performance. It often creates frustration and stress. This can kill any transformation work to embrace outcome leadership.
Ideally, the product strategy provides guard rails for teams. The guard rails reduce the risk of teams making detrimental decisions. In practice, OKRs or similar frameworks are ideal ways to translate strategic planning to give teams clear guidance.
Product strategy and discovery should build trust
The product strategy doesn't just frame sharing decision-making power with teams. It helps build trust with other leaders such as CEOs, founders and CTOs. In scale-ups, for teams to be empowered, founders have to let go and trust the teams. Trusting product managers to make decisions can be highly emotional for founders. They often have a rose-tinted view of the effort to build features in a scalable product. They remember how easy it was for them when the business was five people. I won’t go into why today, but the product leader should use strategy to get the founder's buy-in and build trust in the teams operating within the strategic boundaries.
Encouraging product discovery in teams further helps share decision-making power. The teams are seeking evidence to inform their choices. This gives them confidence and increases trust between the founder and the team.
A key takeaway for product leaders is cultivating trust between team decisions and the founder. If the founder decides not to trust the team's choices, they typically see only one way to provide support - tell the teams what to build, aka HiPPO (Highest Paid Person’s Opinion).
You have to break stuff
As you transform into an Outcome Leader, you have to make real changes. You cannot just continue as you always did before. Expecting different results from the same actions is madness. To be blunt, you need to get comfortable knowing that you must break stuff.
This does require a good level of self-confidence. If you feel imposter syndrome or fear bold changes, do not worry - you can overcome this. I have helped many leaders during coaching sessions with confidence.
Managing your boss's expectations when you intend to break things is vital. Ideally, you don’t put yourself in a position to ask for permission. Instead, you create transparency and understanding.
Getting started
A good starting point is to reflect and understand the current condition and the gap to the target condition of the Outcome Leader. I have a template to help you think this through called the “Improvement Compass”.
Trying to drive change without your boss's buy-in is a brave game. Starting to sell the idea upwards is essential. Focus on the wins and how to derisk change. In some companies, leading one team differently to test the water makes sense. I have seen a lot of success in picking what to change and doing it across all teams. This way, as a leader, you can be more authentic, consistently achieving more substantial results.
Further learning
This article on Forbes shares three ways to boost productivity with autonomy.
For more information on the research, this article explores an experiment on autonomy over choosing teams and ideas.
If you enjoy the topic and like reading the science check out this Springer journal Motivation and Emotion.
If you want more help, you can find out about product leader coaching and training with me at my website www.righttoleft.co.uk.