Product DNA in an Enterprise v/s a Startup
- product management
- 5 min read
By Amit Acharya – VP – Product Retail Checkout at NCR Voyix
The differences between enterprises and startups can be stark. Each operates with unique methodologies, challenges, and goals, shaping the very DNA of their product management practices. Understanding these distinctions is crucial for product managers who navigate both environments, adapting their strategies to fit the context. This blog delves into the fundamental differences between product DNA in enterprises and startups, focusing on key aspects such as disruption, risk, speed, roadmaps, prioritization, and stakeholder management.
Key Takeaways:
- Startups thrive on disruption, high risk, and rapid iteration, while enterprises focus on evolution, moderated risk, and structured processes.
- Startup roadmaps are flexible and adaptive, whereas enterprise roadmaps are more structured but increasingly agile.
- Prioritization in startups centers on immediate market needs and user feedback, while enterprises prioritize long-term strategic goals and cross-functional alignment.
- Effective stakeholder management in startups involves engaging users and investors transparently, while enterprises require building inclusive relationships across departments.
- Funding in startups is performance-driven and incremental, while enterprises follow annual planning cycles with dedicated innovation arms for experimental projects.
Revolutionary Startups vs. Evolutionary Enterprises
When discussing startups versus enterprises, it is essential to recognize the fundamental differences that define these two environments. After extensive experience in both settings, three key dimensions where they diverge have been identified: disruption, risk, and speed.
Disruption
Startups are inherently built for disruption. Companies like Uber and Slack epitomize this by completely reimagining and transforming markets. Their primary goal is to innovate and disrupt existing paradigms, creating new market spaces or redefining old ones. This approach inherently carries high risks, as most startups fail; the success rate is a stark one in ten. This risk necessitates an extremely high speed of operation. Startups must move swiftly, burning cash at an accelerated rate, to prove market fit and scale effectively.
Enterprises, on the other hand, approach disruption differently. While they do innovate, the scale and nature of their innovation tend to be more conservative, often targeting adjacent markets rather than completely new ones. The risk in enterprises is moderate to low. Failures do not generally threaten the company’s existence, although they might impact individual careers. Speed, while a focus in many enterprises, particularly those undergoing digital transformation, cannot match the rapid pace of startups. There are, of course, outliers like Amazon, which have managed to maintain startup-like agility even at a massive scale. The number of products Amazon rolls out is a testament to its unique culture and is an entirely separate discussion.
Evolutionary vs. Revolutionary
From these observations, startups can be categorized as revolutionary and enterprises as evolutionary. This distinction impacts the role and approach of a product manager within these settings. While the core skill set of a product manager remains consistent, the application of tools and strategies must adapt to the environment.
Key Pillars of Product Management
1. Concept
The initial phase of product development involves ideation and market introduction. In startups, this phase is marked by a rapid cycle of problem identification, solution ideation, and market testing. The speed and risk involved demand an agile and iterative approach. Conversely, enterprises may take a more measured approach, leveraging extensive market research and slower, more deliberate ideation processes.
2. Execution
Execution in startups involves developing a roadmap and prioritizing features with an emphasis on speed and adaptability. The high-risk nature requires quick pivots and adjustments based on market feedback. Enterprises, however, often follow a more structured roadmap with formalized prioritization processes. The scale and existing customer base necessitate a more cautious approach to changes and feature rollouts.
3. Go to Market
Go-to-market strategies in startups focus heavily on rapid customer acquisition and scaling efforts. This includes aggressive stakeholder management, securing funding, and building a sales pipeline quickly. Enterprises, with established brand presence and resources, focus on strategic stakeholder management and leveraging existing sales channels for product rollouts.
3 Stages of the Concept Phase
1. Problem Identification in Product Management
In a startup or enterprise setting, the primary task revolves around identifying and solving problems. Regardless of the organizational context, the core objective remains the same: pinpoint the problem and devise effective solutions. The challenge lies in unpacking the problem and laying down assumptions to challenge oneself and others, ultimately understanding the problem’s fit within the market.
Various frameworks assist in this process. Three prominent ones are the Business Model Canvas, Lean Canvas, and the One Pager Business Case. Each framework offers a structured approach to problem identification and solution ideation, taking about 30 minutes to a few hours to complete.
Lean Canvas
Lean Canvas is an adaptation of the Business Model Canvas, tailored specifically for an entrepreneurial mindset. Created by Ash Maurya, Lean Canvas emphasizes the problem-solving aspect from the start. This framework is particularly powerful as it focuses on identifying the problem first, ensuring that solutions are always aligned with the core issue and target audience.
The process involves documenting the problem, considering potential solutions, and establishing key metrics. These metrics vary depending on the stage of problem-solving. For instance, in an initial ideation phase, key metrics might involve conducting a certain number of interviews with stakeholders to validate the problem. Once validated, the focus shifts to assessing whether there is a market fit or if a pivot is necessary.
Lean Canvas also highlights the unique value proposition, unfair advantage, and customer segments, ensuring a comprehensive approach to problem-solving. It is recommended to prioritize the problem and customer segments first, as these elements are crucial for the success of the subsequent steps.
Business Model Canvas
The Business Model Canvas is frequently used in enterprise settings, particularly for market expansion or penetration. This framework is beneficial when enterprises seek to enter adjacent markets, such as transitioning from on-premise software to SaaS solutions. The customer segments often remain similar, with the primary focus on leveraging existing relationships and channels.
The Business Model Canvas helps in identifying key activities, partners, and channels, providing a clear roadmap for market expansion. However, for enterprises undergoing transformation, the Lean Canvas model is often preferred. Lean Canvas facilitates discussions with stakeholders, including engineering leaders, executives, and customers, validating concepts and ensuring alignment with market needs.
One Pager Business Case
The One Pager Business Case is another effective tool, offering a concise format for outlining the problem and proposed solutions. This format is particularly useful for securing initial buy-in from stakeholders and quickly communicating the essence of the problem and the envisioned approach.
In conclusion, the choice of framework depends on the specific context and objectives. The Lean Canvas is favored for its entrepreneurial focus and effectiveness in facilitating problem-centric discussions. However, the Business Model Canvas remains a valuable tool for enterprises targeting adjacent markets and leveraging existing channels. The One Pager Business Case offers a streamlined approach for quick problem outlining and solution ideation.
The next part of the concept phase will delve into ideation, exploring techniques and strategies for generating and refining ideas to address the identified problems.
2. Ideation in Product Management
The second aspect of the concept phase in product management is ideation. Once a problem and hypothesis have been established, the next step is to generate potential solutions. This phase involves creating ideas, drafting mock-ups, and refining them based on user feedback.
Ideation in Startups
In a startup setting, ideation is often fast-paced and iterative. Upon forming a hypothesis, potential solutions are quickly conceptualized. Draft mock-ups are created, often using simple tools like PowerPoint. These initial mock-ups are then presented to users for immediate feedback, allowing for rapid iteration and improvement. This process emphasizes speed over perfection, ensuring that solutions evolve swiftly to meet user needs.
Tools such as Balsamiq can aid in creating mock-ups, but the focus should remain on rapid ideation and feedback cycles. The quicker the feedback is obtained, the faster the scope of the problem can be narrowed down, aligning the solution with the market segment.
User Segmentation
A critical element of ideation is user segmentation. Understanding and segmenting users accurately is paramount. Broad segments, such as age ranges from 14 to 55, are often too general. Narrowing down segments allows for more targeted feedback and better solution alignment.
One effective method for user segmentation is creating lean personas. Lean personas are temporary, evolving representations of target users, detailing their goals, motivations, and pain points. These personas are revisited and refined every three months, ensuring they remain relevant and accurate. Lean personas facilitate focused discussions and flexible, adaptable ideation processes.
Validation and Proof of Concept
Once ideas and mock-ups are developed, they must be validated through user feedback. This iterative process continues until a proof of concept is achieved. This approach ensures that the final product aligns closely with user needs and market demands.
Ideation in Enterprises
In contrast to startups, enterprises often focus on adjacent markets, leveraging existing customers and resources. product managers in enterprises have the advantage of easy access to high-level executives, key buyer personas, and crucial stakeholders. This access should be utilized to gather valuable insights and feedback.
For example, when transitioning from on-premise software to SaaS solutions, existing customer relationships can provide critical input. The process of ideation and mock-up creation in enterprises follows a similar path to startups but benefits from established channels and resources.
Leveraging Enterprise Resources
Enterprises should capitalize on their inherent advantages. Access to a wealth of existing customer data and executive insights is a significant asset. Product managers can use this information to validate adjacent market problems and refine solutions.
While the processes and tools may differ, the fundamental principles of ideation remain consistent across startups and enterprises. Rapid iteration, user feedback, and continuous refinement are key to developing successful products.
Ideation is a crucial phase in the concept stage of product management. Whether in a startup or enterprise, the focus should be on rapid, iterative development, accurate user segmentation, and leveraging available resources for validation. By following these principles, product managers can effectively navigate the ideation process, leading to successful proof of concept and ultimately, market-ready solutions.
The next segment will delve into the execution phase, exploring the development of roadmaps, prioritization of features, and strategies for ensuring effective implementation.
3. Achieving Product-Market Fit in Product Management
The third crucial topic in the concept phase is achieving product-market fit (PMF). This phase is essential for startups, as it indicates that a burning need in the market or a segment of the market has been met by the product. Investors highly value startups that have achieved PMF. But what exactly is product-market fit, and how can it be driven?
Understanding Product-Market Fit
Product-market fit occurs when a product meets a significant market need. It is the point where a startup’s product satisfies a strong demand within a market segment. To determine if this fit has been achieved, startups must engage with users and gather critical feedback.
Involved and Vested Users
For startups, it is vital to differentiate between involved and vested users. Vested users are those who provide frank and candid feedback, crucial for refining the product. These are not friends, family, or casual acquaintances but users who are genuinely invested in the product’s success. Ideally, this involves having a paid pilot, where stakeholders have a financial stake, ensuring their commitment and candid feedback.
In scenarios where a paid pilot isn’t feasible, startups should seek involved users. These users can be identified through connections on LinkedIn, past work relationships, or the sales team. They are motivated and knowledgeable about the problem space and provide valuable feedback, even if they are not financially vested.
Importance of Early Feedback
Obtaining early feedback from involved users allows startups to pivot and refine their products based on real-world insights. Regular interactions with these users help validate messaging, positioning, and design, leading to more effective product development.
Challenges in Startups vs. Enterprises
In startups, the challenge is to quickly find users who can provide substantial feedback. The absence of established relationships makes this process more difficult and time-consuming. Conversely, enterprises have the advantage of existing customer relationships and easier access to high-level stakeholders. This access should be leveraged to validate adjacent market problems and gather feedback.
Measuring Product-Market Fit
Measuring PMF involves assessing user satisfaction and market demand. One effective method is to ask users how disappointed they would be if the product were no longer available. If 40% or more users indicate they would be very disappointed, PMF is likely achieved.
Case Study: Superhuman
Superhuman measured PMF by segmenting its customers and conducting surveys to gauge satisfaction. By iterating based on feedback and focusing on specific user segments, Superhuman managed to increase user satisfaction and eventually achieve PMF. This process underscores the importance of customer segmentation and continuous improvement.
Case Study: Slack
Slack’s journey illustrates the importance of pivoting based on internal needs. Initially a gaming company, the founders developed an internal communication tool to enhance productivity. When the gaming venture failed, they pivoted to focus on the communication tool, which became the highly successful Slack platform.
Case Study: Blackberry
Blackberry’s experience highlights the risks of complacency. Once a market leader, Blackberry lost its dominance over Apple’s iPhone due to a failure to adapt to changing market conditions. This example emphasizes the need for continuous market awareness and adaptability to maintain PMF.
2 Stages of the Execution Phase
1. Understanding the Roadmap
In product management, the roadmap is a crucial tool that outlines the path from concept to market. However, it is essential to understand that a roadmap is not a static document; it is a dynamic, market-driven guide that evolves with changing market conditions and organizational learning.
Roadmaps in Startups
In startups, roadmaps are highly malleable. Typically, a startup roadmap covers a horizon of three to six months, with the understanding that it will undergo frequent changes. This flexibility is necessary due to the rapid pace of learning and adaptation required in a startup environment. As new information and feedback are gathered, the roadmap must be adjusted to reflect the most current understanding of the market and product needs.
Startups must set clear expectations with executives and stakeholders regarding the fluid nature of their roadmaps. Emphasizing that learning and failure are integral parts of the process can help manage expectations and ensure that the organization remains agile. Despite the necessity of burning cash, finding a balance between speed and resource management is crucial.
Roadmaps in Enterprises
In contrast, enterprise roadmaps are typically less flexible due to the larger scale and complexity of operations. These roadmaps often span nine to twelve months and are influenced by numerous cross-dependencies. Traditionally, enterprise roadmaps have been rigid, resembling a waterfall model with fixed timelines and deliverables.
However, there is a growing recognition within enterprises of the need for agility. Customers increasingly understand and expect agile practices, desiring faster rollouts of new features. Consequently, enterprises are beginning to incorporate more flexibility into their roadmaps. While the inherent complexities of large organizations make this challenging, pushing for greater malleability is beneficial.
Key Takeaways for Roadmap Development
- Market-Driven Pillars: Roadmaps should be based on market-driven pillars of investment. These pillars will shift as market conditions change, necessitating adjustments to the roadmap.
- Dynamic and Evolving: Roadmaps are not straight paths from point A to point B. They are zones of aspiration that must adapt to new information and market feedback.
- Expectation Management: Both startups and enterprises must set realistic expectations with stakeholders about the flexible nature of roadmaps. Learning, failing, and adapting are essential components of the process.
- Balance and Flexibility: Finding the right balance between agility and strategic commitments is crucial. While startups thrive on rapid iteration, enterprises must navigate the complexities of cross-dependencies and longer planning horizons.
2. Effective Prioritization in Product Management
Understanding Prioritization
Prioritization in product management involves determining the most critical features and tasks to develop and deliver to the market. It is not merely a contest between competing interests within a team; rather, it is about establishing a realistic path to market success. The key is selecting the right mix of features, from major functionalities to minor enhancements, and timing their release appropriately.
Prioritization in Startups
In startups, prioritization depends heavily on the current stage of market fit. The focus is typically on three primary objectives: activating users, retaining them, and eventually acquiring more users and generating revenue. Startups often work with a small number of pilot customers to refine their products. The prioritization process involves ensuring that these users can log in effortlessly (activation), have a seamless and enjoyable user experience, and continue using the product (retention).
Quantitative feedback, obtained through telemetry and instrumentation, is crucial. It reveals user behavior within the product, providing insights beyond what users verbally express. This data-driven approach helps product managers make informed decisions at scale.
The AARRR (Acquisition, Activation, Retention, Referral, Revenue) framework is a valuable tool for startups. This model guides prioritization based on the startup’s current focus. For example, during early stages, prioritization might emphasize activation and retention, whereas later stages might shift focus towards acquisition and revenue.
Startups benefit from a fast-paced prioritization process. Decisions can be made quickly, enabling rapid iteration and adaptation based on immediate feedback.
Prioritization in Enterprises
In enterprises, prioritization aligns with broader corporate goals. These organizations often have multiple products, each with its own profit and loss (P&L) responsibilities. Prioritization must account for these varied interests and align them with overarching strategic objectives.
Building strong relationships with downstream product managers and maintaining transparency with executives is essential. This fosters collaboration and ensures that prioritization decisions are understood and supported across the organization.
Flexibility in the roadmap, as discussed earlier, is critical. Enterprises must educate stakeholders on the importance of agility in response to changing market conditions. By embedding malleability into the prioritization process, enterprises can adapt more quickly and effectively to market shifts.
Key Takeaways for Prioritization
- Stage-Dependent Prioritization: In startups, prioritize based on current market fit stages, focusing on activation, retention, and acquisition as needed.
- Quantitative and Qualitative Feedback: Utilize both types of feedback to guide prioritization decisions, ensuring that actions are based on actual user behavior.
- Collaboration and Transparency: In enterprises, build relationships and maintain transparency to align prioritization with corporate goals and cross-functional dependencies.
Malleability and Agility: Embed flexibility into the prioritization process to quickly adapt to market changes, maintaining alignment with strategic objectives.
2 Stages Go-To-Market Strategy Phase
1. Managing Stakeholders in Product Management
Importance of Stakeholder Management
Effective stakeholder management is a crucial aspect of a successful go-to-market strategy. For product managers, it is essential to set expectations, send regular updates, and maintain a transparent cadence of communication with all stakeholders. This transparency builds trust and ensures that everyone is aligned with the product’s goals and progress.
Stakeholder Management in Startups
In startups, stakeholders include customers, current investors, potential investors, and executives. Each group requires careful management to maintain momentum and foster growth.
- Customers: The primary stakeholders in a startup are its customers. Keeping them informed and engaged is vital for product success and retention.
- Current Investors: Regular updates to current investors help maintain their confidence and support. These updates should highlight progress, challenges, and future plans.
- Potential Investors: Attracting potential investors without directly asking for funding involves showcasing traction and growth. Transparent communication about achievements and roadmaps can pique their interest.
- Executives: Alignment with the CEO, CFO, and other executives is necessary for cohesive marketing and public relations efforts. Regular updates ensure that the entire executive team is on the same page regarding the product’s development and market strategy.
Stakeholder Management in Enterprises
In enterprises, stakeholder management is more complex due to the larger scale and cross-functional dependencies. Key stakeholders include customers, line executives, cross-department executives, and functional peers.
- Customers: Just like in startups, customers are crucial stakeholders. Regular communication and updates are essential to maintain their satisfaction and support.
- Line Executives: Keeping line executives informed about progress and changes ensures that strategic goals are aligned across the organization.
- Cross-Department Executives: Collaborating with executives from different departments helps to synchronize efforts and manage interdependencies effectively.
- Functional Peers: Building relationships with product managers and leaders from other functional areas is vital. Understanding their roadmaps and aligning them with your product’s goals can foster a collaborative environment.
Building a Transparent Culture
Effective stakeholder management goes beyond merely reporting status updates. It involves cultivating a culture of transparency and collaboration. By building strong relationships and understanding the needs and roadmaps of various stakeholders, product managers can ensure that everyone is working towards a common goal.
- Relationship Building: Develop strong relationships with product managers across different dependent areas. Understand their roadmaps and help them understand yours.
- Regular Cadence: Establish a regular cadence of communication with executives and stakeholders. This ensures continuous alignment and the ability to address any misalignments promptly.
- Alignment and Agreement: Strive for alignment, but recognize that disagreements may occur. Aim to reach a consensus or agree to disagree and move forward constructively.
- Adaptability and Speed: Transparent communication and strong stakeholder relationships enable adaptability. When everyone is aligned and informed, changes can be made quickly, enhancing the product’s ability to meet market demands.
2. Navigating the Funding Stage in Product Management
Understanding Funding in Startups and Enterprises
The funding stage is a critical component of the go-to-market strategy in both startups and enterprises. It provides the financial resources necessary for product development, market-entry, and growth. However, the approach to funding differs significantly between startups and enterprises, and understanding these differences is essential for effective product management.
Funding in Startups
In startups, funding is often a make-or-break factor. Startups typically receive dedicated funds to drive their initial development and market entry efforts. The general cycle involves securing initial funding, demonstrating progress and potential, and then acquiring additional funds based on that performance. The ultimate goals are either to go public, be acquired, or, in less favorable scenarios, cease operations.
Key points to consider:
- Performance-Driven Funding: Startups must continuously demonstrate progress and potential to secure ongoing funding. This involves meeting key milestones, achieving market fit, and showing growth potential.
- Lifecycle Stages: Successful startups progress through various funding stages, from seed funding to venture capital rounds, and eventually to an initial public offering (IPO) or acquisition.
- Risk and Reward: The high-risk nature of startups means that while many may fail, those that succeed often do so spectacularly. Understanding this dynamic is crucial for managing expectations and strategies.
Funding in Enterprises
Enterprises typically operate on a yearly planning cycle, often conducted in the fall. During this period, product portfolios are evaluated and funded at the corporate level. Funding decisions are aligned with the overall corporate vision and strategic goals.
Key points to consider:
- Annual Planning Cycle: Enterprises undergo a rigorous annual planning process where funding decisions are made for the upcoming year. Product managers must align their proposals with corporate objectives to secure funding.
- Corporate-Level Funding: Funding is allocated based on the strategic importance of projects and their alignment with corporate goals. This structured approach ensures that resources are directed towards initiatives that support the company’s vision.
- Innovation Arms: Many large organizations have dedicated innovation arms, often under the Chief Technology Officer (CTO) or Chief Innovation Officer (CIO). These arms focus on fostering innovation and may have separate funding mechanisms for cutting-edge projects.
Strategic Considerations for Product Managers
- Timing and Alignment: Product managers must understand the timing of the funding cycle and align their proposals with corporate strategic goals. This involves being aware of when planning cycles occur and preparing proposals that demonstrate alignment with the company’s vision.
- Innovation and Resource Allocation: Even within structured funding cycles, there are opportunities to pursue innovative ideas. Product managers can leverage innovation arms and build relationships to secure resources for experimental projects.
- Continuous Negotiation: Securing funding is an ongoing process that involves continuous negotiation and alignment with stakeholders. Product managers must be adept at articulating the value of their projects and demonstrating how they support broader corporate objectives.
The DNA of product management in enterprises and startups is fundamentally shaped by their unique environments. Startups thrive on disruption, speed, and flexibility, while enterprises leverage their scale, resources, and structured processes. Understanding these differences allows product managers to adapt their strategies, ensuring that they can navigate the challenges and opportunities inherent in each setting. Whether driving revolutionary change in a startup or guiding evolutionary progress in an enterprise, effective product management requires a keen awareness of these distinct dynamics.
About the Author:
Amit Acharya – VP – Product Retail Checkout at NCR Voyix
Frequently Asked Questions
Startups thrive on disruption, high risk, and rapid iteration to quickly achieve market fit and scale, with flexible and adaptive roadmaps. In contrast, enterprises focus on evolutionary innovation, leveraging existing strengths with moderated risk and structured processes, featuring more rigid but increasingly agile roadmaps. Startups prioritize immediate market needs, while enterprises align with long-term strategic goals and cross-functional collaboration. Additionally, funding in startups is performance-driven and incremental, whereas enterprises follow annual planning cycles with dedicated innovation arms for experimental projects.
A product manager at a startup operates in a high-risk, fast-paced environment, prioritizing rapid iteration, flexible roadmaps, and immediate market needs. In contrast, a product manager at a big company focuses on aligning long-term strategic goals, managing cross-functional dependencies, and navigating structured processes, while also incorporating agile practices and leveraging established resources.
Startups have highly malleable roadmaps, typically spanning three to six months, allowing for quick adjustments based on new insights and feedback. Enterprises, however, follow more structured annual roadmaps with a growing trend towards agility, accommodating longer-term strategic goals and cross-dependencies.
Product managers in startups prioritize immediate market needs, rapid user activation, and retention, using frameworks like AARRR. In enterprises, product managers focus on aligning with long-term strategic goals, managing cross-functional relationships, and ensuring that their initiatives support overall corporate objectives.
In startups, stakeholder management involves engaging customers, investors, and executives with transparent, frequent updates to secure ongoing support and funding. In enterprises, it requires building inclusive relationships across departments, maintaining regular communication, and aligning with broader organizational goals to manage complex dependencies.
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