Product Management in a Broken Incentive System with Ronnie Varghese

Hello everybody. Welcome. Come on in. Hey folks. So I can see people are just sitting down and settling in right now. Hello everybody. Good to see you here. Jump into the chat and say hi. Let us know where you're coming in from. Hi Matt. I can see you've jumped into the chat right away. Hi AMD. Nice to see you. Good. Welcome back. Where's everybody coming in from? We've got Matt in Edinburgh. We've got myself right at the other end of the country and in the UK. I'm in Brighton. Ronnie, how about yourself? — I'm in Dubai right now. — Ah, cool. There we go. Welcome. — Good to be here. — We've got folks from Egypt, somebody from Norway. Who else we got around? Everybody jump in, say hello, and we're going to get started off very shortly. Somebody else in the UK, Bedfordshire, welcome. All right, so I can see we've got a crowd turning up now. Oh, we got Adam in Brighton. Hey, I think I'm waving towards Brighton. I'm in Hoveve, actually. So, I don't know. Jeff from Toronto. Welcome. You grew up in Toronto, right? Grew up near Toronto suburbs. — I'm from Toronto, too. It's cool to see someone from Toronto, Canada standing in. — All right, Jeff. Any other Canadians represent? All right. Brilliant. So, we're probably just getting settled in. So, we're going to start in just a moment, everybody. But welcome. Glad to see you here. All right. Hello. Welcome everybody and welcome to the ProPad product expert fireside series that we run here. It's a series of webinars that we've been running for years and so you can go back in time on our site and find all these different interviews and presentations and fire sides that we've done in the past and it's always with a focus on the amazing experts that we have in our community who bring in their insights. It's a focus on the content and the learning and sharing. So today is going to be recorded. It shared. you will have a chance to ask questions as well. So, make use of the Q&A section in Zoom and you'll be able to add your questions and add your up votes and all that sort of stuff. We'd love to hear from you as we get going. Before we jump in and do an intro to Ronnie, I want to tell you a little bit about what we're doing here at ProPad. So, ProPad is a tool that myself and my co-founder Simon built when we were product managers ourselves. You might know us as the co-founders behind Mind the Product, the big community of product people. And we recognized this need for tools that actually helped us do our jobs better. We needed something to keep us on track with all the experiments and all the feedback and all the stuff that we had on our plate and provided in a way that our stakeholders could understand where we were now and where we're trying to go. And it gives you this sense of control and organization as well as transparency for the rest of the team to understand what's being done and why and how it connects that bigger picture so that they can all pitch in a sensible way and provide you as a single source of truth for all your product decisions, your entire product world. So it's now being used by thousands of teams around the world. It's something that you can try for free. We've got a free trial as well as a sandbox environment which is preloaded with example data and things like lean road maps and OKRs. You can see how it all fits together. And our team is made up of product people. So you can give it a try and let us know what you think. We'd love to get your feedback on that. Now I want to jump into what we're really here to talk about which is product management in a broken incentive system. So, this is a really juicy topic and I'm not going to say that we have all the answers because there are some really broken systems around us, the way that our organizations work and how we grapple with them, how we understand and even talk about them. And we're going to talk to Ronnie Vargis about this. So, everybody say hi to Ronnie. Ronnie's had one of those careers that gives you a proper wide-angle view of how organizations actually work. He's been a founding CEO. He's been a CPO. He was a chief digital officer at Almosafer where he helped scale the company. He's done the building. He's done the scaling. He's sat in the rooms where decisions get made. And then he became a leadership coach, which tells you something because you don't walk away from that kind of track record unless you've seen something that really makes you think the real problems here aren't technical. So today, through his coaching company, Mindful Leadership Coaching, he works with leaders and teams on building high trust cultures, aligning around purpose, and driving the kind of impact that actually sticks. And what I love about talking to Ronnie is that he doesn't do like fluffy advice. He names the system. He sees the incentive structures, the fear, the power dynamics that shape how product decisions actually get made. And he's really honest about it. So today is that's where we're going. I've been really looking forward to this conversation for a while. So Ronnie, huge welcome. Thank you for joining us here today. — Oh, thank you so much, Sha. It's such a pleasure to be here and like I told you before call. This is not a topic that I think I would be all that comfortable speaking about in a lot of places, but I feel very comfortable speaking to you about it because I've had a great amount of respect for you and the work that you've done over the years. You've been an inspiration to me. I think I still remember when I was at Alma using your

now next later framework as a way of trying to transition from the old waterfall way of working. You're someone I knew about and had such a huge impact on me way before I even got a chance to meet you. So, I'm just really grateful to be here and talking about this topic to you and I hope it really does help some people who are here listening today. — Ronnie, I'm absolutely honored and I know I've told you about our audience here, how brilliant they are and how keen they are to ask really good questions as well. So, folks, get your questions in as we start chatting because you're in for a really good one here. Now, so we're talking about these incentive systems. What do we mean about incentive systems in an organizational context? Because most people hear incentives and they think about bonuses or compensation. You're talking about something broader. — Actually, that's a great starting question because actually to some degree that is where I'm talking about it is. And it's interesting when we I think originally picked the title for broken product management and broken incentive systems. I thought about that some more and I thought to myself actually you know what maybe broken incentive systems isn't the way that I would put it now. Rather I would say mismatched incentive systems. — Yeah. because actually the root systems that I want to talk a little bit about I've realized and this is not this is more of an open question I want to for I don't want to formulate a conclusion around it but some could even argue and I in some ways argue that actually those systems are operating exactly to design — right and so that's one way so to begin with it's interesting right and I'm sure this is a challenge that many product people face when we talk a lot about outcomes versus outputs and using things like OKRs and setting objectives that are measurable objectives and a challenge that I remember when I was coaching my team and I was learning this myself was often this idea of a product outcome being something that would be some sort of a behavioral shift, right? Is that we would start with that it's hey we see someone struggling, we see a group of people struggling with something or there's an opportunity here to help them tap into something. So what's the behavior that we're trying to change and then often times when we would be in the room with the decision makers that we were presenting the recommendations to, it would be really interesting because it seemed like their eyes would glaze over sometimes. I'm like, "This is fairly straightforward and obvious. So, I'm not really sure why they're not understanding. " And oftentimes the feedback I would get is we don't understand how this connects to our business metrics, right? Get your point. We understand the friction. We understand why conversions going down. We understand why people are dropping off here. We understand why there's some kind of a struggle here, but we don't understand how fixing this is actually going to improve our numbers. So then I would step away and say, "Okay, you know what? Then you know what? I really have to start thinking from our financial model. I have to really understand our business's income statement. I have to understand our balance sheet. all of that. And I have to really start working with my team to train them on understanding that language because then going into the room with those stakeholders means that we should really be yes, we should bring the language of our craft and the evidence of our craft, but in the end, what those stakeholders care most about is okay, how is this going to move the needle for me? and how is it me in language that makes sense to me which is it's going to be revenue my gross margin cost it's going to be my profit and these were all the things that they were really interested in and so I thought to myself okay this is great and but even then sometimes what I noticed is that okay road maps are still getting overridden by stakeholders right like they come in and there's almost this like fear of okay I get your point but no I want you to go and build this right and then I started And that of course I would leave very frustrated as I'm sure many people here can relate. Right? It's this idea of we've done all the hard work, right? We've done all of the discovery. We are giving great customer stories. We've really tapped into the insights. We know that by experimenting in this particular area of the problem, we are going to change behavior, make people feel value, and we know that's going to have an impact on our business. And yet sometimes the response is still no, we don't care. Go and do this. And so that made me start really one the classic. So this also to a degree and I'm sure we'll talk about this too is I think oftenimes in the language in our space comes back to this idea of agency, right? It's oh you just need more agency. You should do more of the discovery. You should do more. It's almost like it's positioned as if it's some form of failure of product people. And I was one of those people that really believed in this idea of I'm not going to be a victim. So I will take ownership of whatever I can take ownership. And you continue to do that and there's this kind of almost like this internalized kind of self-laming that goes on because of it. Okay, it must be because I suck at my job. That's why this is not working. And all of that then got me to recognize that wow this is sometimes a very depressing system to work in because you can do all of that good work and that made me then dig deeper to really understand and this is where as a CEO it helped me understand a lot better much more so than being a CPO because when I was a CEO and then sitting in boardrooms with to take a big step back and I I'm really sorry for the dumb economics lesson here but the fact is when we think about startups to scaleups to enterprises All of these systems work in this one simple idea of like our capitalist economic system, right? And what does that really mean, right? Which means

that there is a group of people that have put money into something that they need a return on that investment. And that return on investment has some sort of a time horizon to it, right? And that might be a year, that might be five years, and it's usually a multiple X return that they're looking for. So even if you think about the CEO in the room with a board going through a planning cycle, they have set targets for growth way before any of the discovery has even begun. Right? So at the end of a year coming into the new year, you're going to have a CEO show up and I don't know how many of you guys have experienced this, but when I've sat down even today, some of the CEOs that I coach, when I ask them the simple question of, "Hey, give me an idea of your vision and your strategy. " The answer that comes back to me is not a vision or a strategy or a problem to solve or a market to go after. It's a target. It's a financial target. Right? And they come with the number saying that this is our strategy. And I say that's really a strategy. That's a number. Right? It's like a strategy is defined as like what problem are you solving and how do you plan on solving that problem creating value by solving that problem? Do you have an answer for that? And they usually don't, right? And again, it's not because they're bad people, right? But sorry, go ahead, John. And that's really telling, right? The fact that they're listing their number, right? Reach this number, that's the strategy to keep their job, right? Oftentimes the CEO or whatever sort of set of stakeholders you have up there, they're holding on by a thread sometimes because they're at the whims of the board. external stakeholders who often have more power than they do who are setting these. And actually, that is their strategy is they've just got to hit that number and that way they get to hold on to their job. Now, is it a strategy not for the company? And that's the piece that they're missing and ends up getting translated badly down these different chains. And that's where you start seeing this concept of this whether we call it a misaligned or broken incentive system. But ultimately everyone has different goals that they're sometimes not saying themselves to the people around them which means people are pulling in different directions. — Yes. Absolutely. A very personal story is that I used to remember sitting in quarterly I don't call them quarterly planning but we used to have a cycle where before going into every new year we would sit down and kind of plan for the next year which is we would come with all of our problem statements right that came from our discovery and we would say okay if this is what our objective or target is then these are the problems that I think we should go after we don't have a solution for them yet because we still have to go into the solution discovery but we're quite sure based on the evidence that these are the problems we should prioritize right and often times I would see my CEO pick apart not the logic but he would pick up the people or he would pick apart the fact that it didn't come with a solution that gave him a sense of clarity or a sense of it's because I think there's something about again road maps right road maps are there to really solve a comfort problem at least in my perspective right it's there to give confidence that we are clear on a direction to go so I think giving people a road map gives those individuals and remember this is really important. They might have a title of CEO, CFO, COO, whatever you want to call them, but they're people too, right? They're people that have their own fears. They're people, just to your point, is that they have someone that they answer to as well that have put a particular expectation on them to deliver something for them to keep their job, right? And so they'll come into the room and they don't talk about that, right? They don't share about their fears. insecurities yet because they feel like they have to be the ones to show confidence or have the answers. And so when my CEO would have a go at members of my team being angry or being upset or picking things apart, we would leave the room and I would I'd sit there with my team and they'd say, "I don't understand like why did he pick that apart or why was he so upset? " And I would tell them, "Listen guys, I'm not making excuses for his behavior, but I think what you guys don't recognize sometimes is that he's a person too, right? He's a person with a heck of a lot of fears and we have to answer to him but he has to answer to everybody. us as his employees. He has to answer to the market. he has to answer to and in this case I say he because it was specifically he but it's she or he whoever is in the position of leadership in that it's scary place to be and that pressure where their compensation is tied to those targets where they're you know and it could be in the form of whatever their salary is shares they own often times is very tied to short-term incentives right and that leads to this whole idea of okay if the financial plan is set before any kind of discovery is done and that's done in a waterfall model, then the things we're doing within that system are constantly competing against that. — And so give us some examples. You say that a lot of these incentives are based on like short-term a lot of these these movements are based on short-term incentives. What do you mean by these short-term incentives? What does that look like for a real CEO? — So in principle, a lot of that operates in the form of some sort of a So let's say a scaleup, right? Most scale-ups that I've worked in are less concerned about profit and they're very much concerned with growth, right? And

actually we can look at in today's world right if we look in the AI world that we live in today and you look at all the buzz around it most of what we're seeing in terms of the metrics in the public sphere are all growth metrics and that's what these companies are competing on right they're competing in the market on whether it's open AI whether it's anthropic whether it's perplexity any of these companies the most important metric that these companies are displaying to evaluate themselves and how the market values them is based on the number of people the percentage of the market or the active users that they have. You can imagine there is a seale executive in there where their compensation is tied to both the continuous growth of that number and also to how that number in their company is competing against the market and that individual is directly tied to growing that. Now growing that does not imply that it's necessarily creating the greatest value, — right? because there's a number of things that are done just to attract people to the platform and that like you said doesn't necessarily trickle down well to the teams that are solving the problems right and so that CEO then comes back and puts a lot of pressure on their teams because that growth especially in today's world where that's hyper accelerated right they have to show like 10 20x growth in a quarter which is insane in the preAI world I used to think the kind of pressure we were under was immense but I can't see it with some the leaders that I coach today, the pressure that I'm under is immense. — Yeah. And the reality of if they don't hit those numbers is going to hit them like a brick, right? You don't if you have a bad quarter as a CEO, maybe you make it through. If you have a few bad quarters, then you're out. The board will often replace you with somebody who is willing to do growth at all costs. And this is often why, you know, this is why I often see companies who they had the chance to take a leap of faith on investing in R&D or investing in an acquisition that would have been transformative for them, but they don't do so because they're just so focused on getting those numbers, moving it up in the right direction that they're not actually willing to take a look around and say, "Actually, we could try to go for this thing. This might take a bite out of us now, but could be impactful for us later on. " Like examples like Kodak, for example. Kodak held all the patents for digital photography, but they got eaten alive because they didn't dare jump into it. They thought it was going to slow them down when in fact that was the direction they had to go. Or things like Blockbuster, you hear the rumor that they apparently turned down an offer to buy um Netflix when it was much smaller, right? So they could have moved into that, but they stuck with their guns and just continue to grow what they were trying to do. Now I wish I were a fly on the wall in those rooms when those conversations were happening. I didn't get to see what they were making or how they were incentivized or anything like that, but it is a pattern that we see over and over again. — Absolutely. And actually, you touched on another thing, which is once an organization or a company has gotten to a certain size, there's an added risk that the leaders in that company have, which is they cannot lose size and so they become a lot more risk averse to do experimentation as well. So that's why sometimes and I'm sure many of us may have gone through being at a startup versus being at a scaleup. It's interesting because I think startups still to a degree have still a sense of all the things that we do talk about in our craft show up a lot more I think in startups because they're a lot less tethered to these external forces. But where I have seen that shift is because startups oftentimes begin with that very I would say idealist kind of point of view of no I really do want to solve a problem that's truly existing and I'm really just trying to hone that as best as I can but at some point in time because of the way that our incentive structures our market incentive structures are built they're then become measured on growth and that growth our system has created this concept that you need to get external investment whether that's from a VC or some other investor to come in and as soon as you get that external investor what you recognize about a VC for example is a VC does not care about the problems that you solve they care about the time horizon and they care about getting a significant — return in that short time span and so you can imagine that now the entire internal incentive structure shifts accordingly as well right and you'll often see leaders who are quite good leaders in a startup they and you'll see this sometimes where you'll see the startup leader get shuffled out for a more mature leader. — And that might be the case, but I actually think that often happens because the incentive changes. The original CEO or the leadership of that team that really did want to solve problems, — their ideology doesn't fit what this new company wants to do anymore. — And ultimately, that might be a win for the company. That's the thing that unlocks them and enables them to get to that 10x growth is by taking in that funding and by switching out their leader for somebody else who's able and willing to do. But it's not a win for the human who was in that role. — And that's what we're up against is that the individual humans have these incentives. And sometimes it is to get the salary and their bonus and whatever else. And sometimes it's just to keep their job because that can be on the line just as much as anything else.

— Absolutely. I was going to say that. So I know when I kind of describe this again, it sounds like there's this very bohemoth system that I like I don't want people to I guess walk away with a sense of just doom and gloom either, right? It's okay. I know that this is the wall that I'm up against and so what can I do? Because that sounds pretty depressing. It sounds then what's the point of me doing anything whatsoever? I can do great work so might as well just give up and go home. And that's not really what I want people to take away. I think it's more about like we talked about before. It is about naming the system for what it is and how it does operate and being able to shift what is actually within your control and let go of the things that aren't within your control. Right? And that's kind of the mindset shift, right? which is okay I can't change this incentive structure but I can try a few things and I remember there was a few things where when I started seeing these leaders as human beings for one and recognizing that they had their own fears let's say pressures that were driving them I did my best to as a human being understand what those fears were what their objectives were and try to do my best to also align the product work that we were doing to both achieve the types of problems that we wanted to solve, but as much as we could also achieve that individual person's objectives as well. I'd say there's the customer or market objectives that we're trying to solve. There's the organizational target solve, but I think one thing as product people or product leaders is also solve the individual challenges of those leaders that you're trying to support as well, right? is that if we can really humanize those people and try and really help them in what they're doing, you'd be surprised by how quickly they will start working in a different way as well. — And this is what's so unique about being in a product role is that you are the one who is closest to all these different moving parts, right? Do you know that we often represent product management as being in the center of the business, the tech and the user? We often under utilize our business reach as product people, right? And so what we're talking about here is how can we build up a shared vocabulary so that we can talk about these problems? How can we learn which questions to ask or how can we just build our confidence so we can start talking to leaders about these tougher ends of the equation which all influence what we're doing, right? It's not just about what the market needs, it's about what the company needs from the product function as well. And I often remind people that like Ronnie says here, your CEO is a person, right? They are people too. They are humans just like our customers are. And just like your customers, they might be somewhat difficult to understand and all that sort of stuff. We demystify them by doing discovery. We get out there and we talk to our customers and we set up ways of learning from them. You can do these same activities with your internal stakeholders, with your execs. You can ask questions around what problems they're trying to solve or what they're trying to do instead or how they're thinking about things. You can pull out this information in the same way as you pull out information from your customers. And there's lots of unique ways of doing so. Sometimes it's just a matter of asking a series of questions or asking them about why they're going for certain things, right? Not just taking at face value x number as a goal and trying to then create stuff to ladder up to it. Ask them where they came up with that number and what happens if you miss it or how it was made up of, what sort of numbers was made up of. And that will start getting you closer to understanding what they're trying to achieve. Now, the thing is that humans are also human, right? CEOs are, as we say, they're humans and humans do have some of the same biases and things that customers will as well in that they won't always want to tell you the truth. everything. They'll hold something back. And so, it's a matter of trying to understand and gain trust and have these conversations in a way that allows you to work meaningfully with them to make sure that you are able to help achieve their goals and your goals in the same breath. — Yeah, 100%. I think this kind of ties into sort of a second point, right? Because I was trying to think about how to frame what I see as let's say the root of a lot of things that we talk very symptomatically, right? Like I always go back to actually one of the things where I think it was Marty Kagan's most recent book, Transformed. He laid out about seven different reasons for why transformations fail. And I've got a few of those written down here. Like one of them is for example weak product leadership in roles. Another one is lack of CEO and executive commitment failing to empower teams focusing on output over outcomes. And when I see these they are true and that's been my experience of why transformations are really hard. But once again I think often times the way that it gets framed is it's a problem that product alone has to somehow solve that it's because we have to be better at our craft or talking to our customers. — We got to take it all along. We do like I think product people take it all on and what I'm going for in terms of the root of the problem is there's root one is understand the actual business incentive system that actually works quite contradictory to all of those things that we're trying to do in building an organization that operates in this model. The second thing is also

there's a clear thing that we need to understand that most leaders that end up as leaders have never been trained to be leaders. And this actually us as product and let's say within product or engineering or design most organizations not all just look at the growth structure that exists right it's usually you're going from being an individual contributor who is a crafts person right you're really great at product you've learned all of these amazing skills and these competencies and then at some point you hit this kind of wall where in most companies the next stage for you to move to in order to progress which is part of your reward system in your compensation system is you now have to become a manager, right? There's a few bigger companies out there that have, I think, clued into this a bit and they do have two tracks, right? There's an IC track and there's also, let's say, people track, but most companies actually only have the people. But what most organizations don't do is they just put you in that position because you're a great IC, right? And okay, here now we're going to give you a team or bunch of people department or a division to now go and lead. and they leave them with zero support. — And so they might be exceptional at their craft, but they actually haven't been given any sort of coaching or support in understanding that now what you're leading is not the product and not necessarily you don't have direct impact on the metric outcome, but who you are is you're the person nurturing that environment and the group of people and taking care of them. And when they haven't been coached to do that, what most of them jump into is just trying to scale themselves as individual contributors. Right? That's one thing to point out. The second is that those other types of leaders when we look at our senior finance leaders, our senior HR leaders or senior like our CFOs or our COOs or CMOs, oftentimes those people don't end up in those roles because they're people leaders either. They end up there because again they've successfully achieved sort of very high level financial targets. That becomes their credibility and they will move into other companies to do similar roles. And so what you have is you have a group of people that are leading that have not really been given emotional intelligence tools like a lot of the human stuff that we're talking about which is how do we take care of our team members? peers? How do we even take care of our customers? And ultimately when those skills have not been translated, the people abilities, the human abilities of just being a community of people that can take care of each other and re and so there was a shift that happened for me at a certain point in time where I was that and I'll tell you this is where I think it started giving me a lot of peace and made me feel much more connected with my role as a leader was I gave up trying to achieve the targets as my primary job and I started focusing on the only thing within my control is I can try and create an environment for the people that are in my team where hopefully they are growing, they're learning, they're trying to do as much as they can to drive an impact and that's within my scope of control and influence and in being and of course trust me I'm a person who really believes in therapy. believes in mental health. I'm a huge believer. I use all of these things for myself and they have given me a set of tools that allow me to connect with other people including those senior leaders who struggle. So that's definitely one other thing that I want to talk about that people should invest in themselves to do that for themselves because most companies won't. Yeah. And this is we were talking about something there. This is why psychological safety goes both ways, right? So we have to remember that the people who are in these positions often rose up. It's not because they're necessarily better or smarter than the people that report to them. It's that they've been in that position longer and have moved up their career, but they don't necessarily have the training or the knowhow to do what it is that they're doing now. Remember, every business, every company is a unique creature. Everyone is on a different journey. And so, even if your execs act and look as if they know what they're doing, they've never actually done this before, right? Not this particular challenge. They are making it up. And sometimes it's more obvious and sometimes it's less obvious, right? Some people are better at pulling it off other people. Obviously, we know there are companies out there and I'm sure there's people in here are nodding along going, "Yeah, my team, my execs are struggling and it's more obvious. " But the reality is that they don't necessarily know exactly what to do, right? No one possibly can know what to do. They can just go in more equipped. But it's actually the companies where they're willing to be a little bit more vulnerable and share what it is that they are trying to do, share their anxieties, share why they are aiming for particular things that allows other people in the team to get on board with it and to help reach those goals. Otherwise, it becomes very much an us versus them. that in companies all over the place, execs versus everybody else, the big bad execs who are just coming up with numbers and barking orders as opposed to working with the team to help

build the best possible version of the company. And so this is where you got these misalignments where, you know, one group is incentivized to just aim for some one set of numbers, but isn't actually incentivized to help bring the team along with that journey. And they don't want to show that they are the ones who don't know what they're doing. And so that psychological safety plays both ways I think. — 100% 100%. And I think we should have an understanding of what healthy leadership could look like. But the truth is most people who've never experienced it don't know what that should look like. And actually quite unhealthy behavior looks very normalized, — right? Because that's what everybody experiences. And I think having a better understanding of what actually is healthy and what's not healthy then allows each of us within our roles to be able to make conscious decisions about wait a second okay I can't change this person or I can't change the way that this whole entity operates like you said but what can I do within my immediate sphere my team the people that I interact with can I take a moment to actually stop and pause and look at these people as human beings that are just struggling with the stuff that they're struggling with and can I show up every day and put that first and then I'm also a believer that if we do put that first and this has been my experience the natural byproduct is that we will actually have a better chance of building hitting these financial targets too right or these metric targets because it's just a safer environment for people to work — this takes me back to a story from when I was a baby product manager myself many years ago and I joined a company that it was within the first couple months I realized that something wasn't right with how they were operating very much a salesdriven type port company, but they were VC backed with this expectation that they were going to grow like this any day now. But I was looking at it and realized that there wasn't anything that they were doing to actually get to the point of growing. They're just taking orders from customers. Now, keep in mind that I was a baby product manager at this point in time. I lacked the vocabulary to know how to talk about this or know how to question it. And so, I went along with the ride thinking they know what they're doing. And it was only years later they went under. They didn't make it. It was not surprising in hindsight. And it was only years later that I built up enough vocabulary that I wish I could have said to baby me going, "This is what you should say. This is what you could do. " Maybe there were things that I could have said to raise the alarm or to point out that what product was doing was not going to help them make it to the next year. And I hope that product managers today because we get the chance to actually share and learn. This is before I knew all the product people. Product managers when they get together share and learn and create this vocabulary, create this knowledge of how companies can be wellrun, badly run and what to do about them in these different situations that it actually builds up our ability to pull the companies in the right direction. — But to your point, it's not always up to the product manager to pull the company in the right direction. Jenny's got a question here around what's your view on stripping out bonuses and simply increasing salary bases? Do you think it helps to drive better behavior? And I want you to answer that question, but also we got to think about it because us as product people, we don't get a say on stripping out bonuses. I wish I could sit above it all and just dictate how we might create these better incentive structures, but we've also got to think about what we can do in our roles as product people. — Is there any more context in the question or is it just as with — No, that was it. That's the question from Jenny. I would read that as in theory if we didn't have these bonuses and we just had people working with salary bases — would that drive better behavior and I've got some thoughts on this but I'd love to hear yours as well. — Yeah. So I'll give you my perspective on it. And I'll say this from the perspective of like how I built my product organization, right? And anything that I did when I built my product organization was built on a few different inputs, right? One is that there's a brilliant book. It's called trillion dollar coach. It's about Bill Campbell, right? Who was actually one of the coaches. The reason why it's called trillion dollar coach was because he was one of the most senior people at Apple. He coached Steve Jobs, many of the senior people there. He himself was the CEO of I forget the name of the insurance company. It was a fintech company that he was the CEO of and then he went on to coach the Google founders, the meta founders, all of these things, right? And he was in the background and so a lot of his philosophy informed me in terms of how to build an organization. There's other sources. There's one called the speed of trust which is by someone named Steven Mr. Cvy who's actually the son of Steven Cvy who wrote the seven habits of highly effective people. And this is again a brilliant book because his book really tangibly describes what trust actually means and how to build a trusting environment. And so based on all these things that sort of informed my own experience, there was maybe four or five different things that I thought all have to be there to make it a place that can have a great culture. Right? Compensation, meaning financial compensation is just one part of it, but it's actually subordinate to a bunch of

other things. One is that I think people have to be given challenging problems and given the resources to address those challenging problems. So it's kind of like you have to be put in a place where things aren't so easy. They're actually hard, but they're not so hard that you can't work together with a group of people to actually solve them because that's actually how we feel a sense of fulfillment and growth, right? Second is that it has to be an environment where people are incentivized to collaborate not to compete. And so that's really important where it's your reward system has to be based on collective rewarding not on individual because that leads to more competition in turn reporting of information not wanting to support each other. Another is that it has to be a place where people are given resources to constantly be growing and learning, right? Because okay, you're challenged with hard problems. You need to be given the resource to address those. You want to be working in safety with a group of people. And then as you solve challenging problems and they become easy, you need to be given more learning and development and more coaching to address even harder problems. So that feeling of constant challenge and growth is what I believe to be the foundation soil that makes it just an amazing place to work. Now together with that now as people contribute in that way to amazing outcomes in an organization then you also have to recognize and reward them for it right that's the point at which I believe compensation reward progression so for me that was the entire gamut of things where if you're able to do them in some holistic way you create an environment where people love being there even if it's hard and they love being together and they stay together for longer. But any one of those things on its own, like for example, you can compensate people a lot of money if it's a miserable place to work because it doesn't have that opportunity for growth. And believe me, I speak specifically about product people, engineers, designers. We're people who like tough challenges. We like to be challenged. You don't give us challenging things to do and the opportunity to grow and learn. I'm pretty sure most of us would say any amount of money in the world is not going to make me stay, right? Right. So that's the way that I think about that problem. But what's your point of view on that? — Yeah, you're absolutely right. You're talking about fixing some of the underlying pieces that incentivize people. And when you talk about this idea of stripping out bonuses and letting just increasing the salary bases and having people incentivized by something flat like that, maybe I'm a bit jaded, but I see systems like this as like a stubbornly leaky faucet in that you patch up one thing and people will find ways of extracting value for themselves in other ways. And so maybe they don't call it bonuses, but maybe there'd be some other sort of system or whatever in place that would compensate them. So it's very difficult to slap on or just say that this is the solution one versus the other. I think it's very nuanced with how companies work and how people work. And Ronnie, you're right. To get the absolute best out of people working collaboratively, you've got to incentivize them to work collaboratively. And that's a difficult challenge and that's why many of us continue to grapple with it. There's another question here from Maria and she says, "I've heard from GTM leaders. Yeah, this looks like a great list of problems to solve, but we need concrete ARR impact estimations for each. Right. As much as we can bring the insight from experiments and the metrics we have, it's undoubtedly hard to commit to any concrete numbers that GTM wants. How do you recommend solving this? " — I want to take a step back for a little bit. Right? Any answer that I share with you guys, I don't want anyone to take any of that as a silver bullet. Right? And I think one of the things is it's really important that you can apply any of these things, but this is part of the conversation is sometimes the environment is going to be such that there's really nothing you can do. And I want to call that out for what it is, right? There's no amount of things that you or your team could apply. That said, it doesn't mean that there aren't things that we could attempt to do might actually get us to a better place. And I think it goes back to understanding who's on the other side with you. And I would say let's say sales and marketing and product are always seen as these sort of opposing forces, right? Sales is constantly trying to achieve these targets that they're set on and product is always seen as the one that are trying to like hold them back some way. It's no, we got it's going to take us longer to do our discovery. And actually the I think the solution is simple but not easy, which is the same which is understanding like working with our sales counterparts as if they're members of our team. — Recognizing that human beings because they are right — and absolutely like but there's always this thing of oh no they're over there and we're competing with each other and like pulling ourselves apart but I think the most important way that I've learned to work with them is to actually be in the room with them when they're trying to make a sale. When you

understand the pressure that a salesperson is under from their sales leader or from the customer, it changes the way that we as product people operate with them. Because it's the same as what we talked about, if you can understand the pressure CEOs under, it'll change the way that we communicate with them and we frame things to our CEO. is that we have to see our sales partners or our team members as if we're trying to solve their problem the same way that we do for our customer as well which is when we understand their psychology when understand the pressure that they're under and we also bring them into our world right and I also believe in this idea of seek first to understand before trying to be understood one thing that we as product people love to do is we want other people to understand our craft but the truth is actually it's if we want any form of collaboration with others It's actually on us to take the first step and say let me understand your craft — and to reframe this in product management terminology. This is doing discovery, right? So we're talking about how you do discovery on the execs within your business. Talking to the salespeople to understand, hey, what is it that they've asked you to do and this is what they've asked us this team to do. that gives you insight as to what the underlying goals of the business are and helps you course correct to make sure that you are putting together something as a collected team because you are on the same team that actually helps the business move forward in the right directions. It also gives you firepower in meetings with the execs where needed where if you're saying hey look you've asked them and you're incentivizing them to do this but you've asked me and my team and you're incentivizing us to do this. If they win then our thing goes down. If we win, then their things go down. What is the goal for us here that allows us to work together? You can't have two teams with opposite goals and only one team can actually do well in that because it forbids the other one from doing well in theirs. You know, the example being if sales is incentivized just to get short-term sales and close new deals and they're allowed to sell anything, doesn't even have to be on the road map yet, then that's going to slow the product team down from figuring out what it is that's going to help the company do the big growth curve that they've been asked to do. Things are pulling against each other. And that's when you say, "You've been asked this and I've been asked this. We're being played against each other. Let's go talk to the top. " And that gives you to go talk about. — I'll give you a really funny example of this. It's not a sales and product example, but it's actually a customer support and product example, right? And so we were given this very interesting and so one of my last companies was a travel company. So we used to get people that would call in about issues with their flights or their hotel bookings. And for some reason we were seeing this challenge where we were getting very low NPS numbers after the customer service calls. And then part of it was around they gave this problem to our product team to say, "Hey, make the customer care team more efficient. Give them more data. make it easier for them to serve the customer and we said okay great and it's interesting oftentimes what we will do is we will go look at it as being like okay let's go look at the interaction problem customer recordings for whatever reason I got very curious and I said I want to understand what is the incentive system that works within customer care and what's interesting is so customer care in this company worked on commissions so they had a base pay and they had a variable pay and the variable pay — was directly tied towards time on call with the customer, — which means the lower your average time on call with a customer, the higher your commission is going to be. How do you think that's going to incentivize a customer? — Who came up with this? — I could have told that'd be bad. So, it was hilarious because now there's a lot of things we could have spent our time looking at quote unquote technological ways that we could have made this better for our customer care agent. But when I took this incentive problem to the CEO and said, "Hello, there's really very little headroom that we have to address this problem unless you solve this incentive problem. " But that's just how customer care works. That was a response that I got, — right? And that's a situation where it's like, okay, not really sure what you would like me to do with that. But again, it didn't stop us from trying to address the issues in the way that we could. It also just told us what was the reality of what we could address, right? It showed us what our limitations were that hey, here's a hard limit that is systemic, that's incentive based, that we're not going to change no matter how much we improve something on the other side. So having that otherwise what we would have done is we would run like hundreds of experiments maybe not have seen the needle move and then thought that all the work that we were doing was actually leading to failure or just not useful outcomes. So, I think understanding all of these different moving pieces actually makes us better at our jobs because we have a clear understanding of what how to diagnose the problems. And sometimes the problem isn't just the problem with how we're dealing with the customer or how we're solving the customer problem, but it's also just our internal processes and

these incentive systems that we might not be able to change. — Yeah, exactly. And speaking of things that we're not necessarily able to change, Andrea's asked a question here as well. Can we do good product work without a clearly stated strategy or and only having those target numbers? Sometimes it feels like the problem is the time horizon needing to move the dial on those numbers require sustained effort that's just not invested into. — Yeah, and that's a great question and this ties to really again going back to the idea of what's not within your control and what is the mindset with which you can operate. Right? I I'll be honest with you guys. I think when I took over this role, I think in my first year, there was this constant trying to like, okay, we need to hit our timelines, road map. And we were delivering a lot and none of it was creating much impact, right? And so, honestly, I got to a point where I thought I was going to get fired from my job, right? Literally, I was like, I think I'm not hitting any of the expectations here, but I'm also not doing the way product that I think would be valuable product work. So, we're not doing product in an intelligent way, in an evidence-based way, in a discovery model way, and I'm trying to appease these stakeholders, I seem to be failing at both, right? And so, I got to this point in my career where I thought, okay, I think maybe in about a quarter or two, I'm probably going to get fired, which means if I'm going to get fired in about two quarters anyways, how do I want to operate with the time that I have left? Right? And the conscious decision I made is I went to my team and said, "Guys, the way we're doing this is not working. We're not going to get their permission to try it this way. Let's go start talking to customers. Let's start identifying what their problems are. Let's draw the insights. Let's start running experiments. And I'm going to take the heat as the leader. " And I should say this in context, which is I did operate from a place of it is better to ask for forgiveness than for permission. And I made this decision that if I'm going to get fired, I'm going to get fired for trying to do it this way. Because at the end of the day, what I realized is if I was going to lose my job anyways, at least I wanted to be able to look myself in the mirror and say, "I tried. I tried in a way and it wasn't because I just did it in a way where I felt like my hands were tied. " To answer that question, what I would say is that when you do have targets and when you don't have a strategy, if you choose to take the risk and try to do this in this type of method of product, it can help you develop a strategy. then have something that is a real vision that you can take back to your leadership team and say, "Here's something that makes sense. " And if you're running, if you're trying to release things and measuring the outcomes based on the insights that you're finding, there's a pretty good chance that you're going to start driving impact. And the one thing I do know about those stakeholders is that when they do start seeing the needle move, they start believing in this, right? And they become more open and willing. But once again, not everybody because I do believe that it does require leaders that have some level of open-mindedness to being able to see that outcome and shift their mindset when they do. — And Ronnie, that was a great story because you were talking about basically this company wanted to based on the way that it was set up, the way that it's incentivized, wanted to have you run things in a particular way, right? Sales had sold this or we've got to do this thing. So now you've got to deliver this thing by this deadline. And you tried to go at it. you knew that it wasn't the right thing to do, but you tried your best at it and then realized it wasn't going to work and you might get fired. And there's that moment when you thought that you could get fired that you realized actually, you know, what's the worst that could happen? That's when you started then, frankly, organizing the team in a better way and asking the tougher questions. Now, we in hindsight, hindsight's brilliant because you now know that you probably could have started doing that from day one and just gone to their plan. I actually know a better way of doing this. But sometimes you've got to go through it. You've got to try it their way. it. They just get a sense as to what's in there. But if there's anybody out there who I'm sure there's people listening who are in a position where they're going, "Something doesn't feel right. I don't think this is going to help me hit the goals. I know I'm doing it how I've been told to do it, but I'm not sure if I can break out of this. " Actually, you probably it earlier than you think you do. You probably don't need to get to the point where you think you're going to get fired to step up and start asking the tough questions and taking a few risks. And I recognize, and I say this from a place of privilege, it is a risk, right? there is the chance that maybe Ronnie you were about to get fired and by stepping out you could have been fired first day. We don't know but we do know that there are most likely better ways to build things and get the team on board with stuff by breaking the mold a bit by asking for forgiveness rather than permission. — Yeah, absolutely. And I think you mentioned something that is a really important caveat, right? Which is that it is a privilege to be able to make that choice. And there's a lot of people who are going to be in organizations or in cultures or working under leaders

where you have a personal life context where it's no I need this job and I need the paycheck and I need to support my family and I can't take this risk and I am actually in an environment where even if I tried it would piss somebody off so badly that they would most likely fire me pretty quickly. Right? And that is something that a person has to be conscious of and make a very deliberate choice for themselves of is this okay for me to accept and therefore I have to accept that maybe there's not as much I can do here and that's the type of awareness that I think people should have hopefully also with the help of support and that's why sometimes we can't be really objective for ourselves that's where a coach a mentor someone even who's a peer at another organization who's not in the middle of it with you can often times be more objective and be realist, right? Like I wasn't, right? Like I I'll tell you like a part of it was it's like I had the privilege to be able to do that. I sure if I lost a job, I knew I was going to be okay, right? Second is that I was in a place where the results did change the mind of the people who were there because the people I was working with were egoless enough, right? That they were like, "Oh, you know what? At the end of the day, the result is all that matters to me. There's some places where you'll be working with people where even if you're achieving that target, the politics of the place or the ego is involved. Just somebody's ego is going to get bruised and get hurt that oh, somebody else seems to be doing the good work and they're not going to feel good about that and that's going to lead to all kinds of things. This stuff is a lot more complicated than it looks, but it is important to have those conversations with other people to figure out what's the right choice for each and every single person. And remember, it's not your job to be the hero, right? You can't save every business. I look back at this story from when I was a very new product manager and I didn't have the vocabulary to talk about it. And I think maybe if I done some things, maybe things could have moved in the right direction, but actually realistically the company was going to go down anyways. It went down 6 months after I left. And I look back and what did I take from that? Yeah, I didn't save the company, but that wasn't also my job. What I did take from it was some really good lessons on how to run and how not to run a business that allows me to take that forward in my career. I don't want to put on people going, "Oh, you have to go do this thing and step up and say these things and then it'll all fall in line. " Sometimes it will. And actually, it's definitely worth a try or oftentimes worth a try. And it's with breaking that assumption that everybody above you knows what they're doing or has told you exactly why they're doing things in a certain way that actually sometimes just asking those right questions can unlock information that you can use to help shift the way that the company itself works. You know Iran is coming from a place where it actually did shift the mindset. It is possible. That said absolutely agree that this is something that is coming from a place of privilege. It's a place of saying, "Hey, you know what? We can take this step outwards. " That said, Ronnie, you're absolutely right in saying that a lot of people could benefit from having coaching or guidance or additional help in that sort of sense. Ronnie, do you want to tell us a little bit more about what you're doing with Mindful? — Oh, yeah. Absolutely. For sure. You mentioned it a bit in the intro. It was probably about three or four years ago when I was in the middle of doing that CPO role. At some point along the way, what I came to realize is the part of the job that I actually loved the most was actually seeing the people that I was working with grow. And because of some of the training that I've had and the work that I've done that I had amazing coaches who supported me and my leadership style was very much a coach leader style, which is I really believed in helping people grow into having the skills and the capability, but also the emotional intelligence to do this type of work. And so when I came to the natural conclusion of that role, probably about a year before that, I was thinking about what do I really want to do? And what I realized is actually I want to help other people become that type of a leader, like a leader that fundamentally cares, someone who cares about creating the environment that makes it great for other people and other coach leaders in the world. And so that's where I went off and said, "Hey, this is what I'd like to do for the rest of my career and really help other leaders. " What's interesting though is I'll give an example. Either I'm really good at what I do or I'm really bad at what I do. Because in the last year, there's been at least three of the clients that I've worked with where what they came into coaching for was which is they were at the VP level and they wanted to break into the seuite and their sort of objective for coaching was I want to make it to the next level. And we worked together for about two months. And at the end of the time that we worked together, two out of those three actually decided to leave their job and go do something different. Because one of the first questions that we start off with in coaching is, what do you think is truly going to make you happy? What's feel fulfilled? And what do you think this promotion or this bigger scope of a role or this increment in your job, what is it really trying to

achieve for you? And then in the work that we do together, we actually try and dissect is achieving that really going to help you achieve that. And with at least two of those people, what they came to realize is, oh, this is what I think I need to do because I'm not very happy in what I'm doing right now. But I thought that by getting to that next level, I'm going to get there. But they came to realize that actually no, that's not what's going to help me achieve what I want to do for myself. Now, in other cases, yes, that is what people moved on to do. But I think that's what coaching can really help people do is to really recognize who they are and what their values are and what's important to them and then bring that to the work so that you can really feel true to yourself in what you do. — Fantastic. Sounds like huge amount of impact that you're having there. So really appreciate hearing about that. Thank you so much Ronnie for joining us. Just before we go, I want everyone to get this into their calendar. We're going to be back May 28th. talking to David Pereira all about another hard truth. AI made you faster, but did it make you any better as a product manager? So, we're going to be diving into that same time, same place, May 28th. So, get that in your calendar and the invites for that go out soon. In the meantime, huge thank you, Ronnie, for chatting to us today and sharing these absolute ground truths that we see in these companies. Really good to bend your ear on that. And thank you everybody for all your questions and jumping in on the chat. Good to see you all here. And we'll see you again next time. Thank you so much for having me. Really appreciate it. It was great to be here. — Of course. Fantastic. All right. Thank you everybody and we'll see you here next time. Bye for now.