Maximizing Impact: The Blueprint for Building Successful Value-Driven Teams

Recently I was interviewed by Steve Preda, host of the Management Blueprint Podcast, we delved into topics like iterative learning, strategic alignment, customer value creation, and the application of the Lean Startup model. The discussion provided insights into adapting products, whether in software or traditional services.

We discussed building with an experimental mindset, embracing mistakes for learning while aligning with strategic goals. Measurable objectives were stressed, with the concept of an "epic statement" guiding efforts and measuring success.

We also discussed the agility difference between software and hardware development and how the Lean Startup approach is not exclusive to software. It was shown how the model can be applied to other industries like a house cleaning service, promoting quick releases, testing, and value-centered iterations.

The challenge of statistical significance in small businesses was addressed, with David highlighting the importance of trends and customer reactions even with limited data.

The conversation concluded with the focus on aligning with customer value and company objectives. David encouraged quick releases, learning, and continuous improvement, offering his willingness to help others understand these concepts.

The discussion provided valuable insights into aligning business strategy with measurable objectives through iterative learning, customer value, and the adaptable Lean Startup model. These principles, irrespective of the industry, can guide businesses towards innovation, growth, and strategic alignment.

Transcript:

[00:00:05.010] - Steve

Good day, dear listeners. Steve Preda here with the Management Blueprint podcast. And today's guest is David Subar, the founder of Internal, which enables technology companies to ship better products, plan and execute successful product road maps, and achieve product market fit more rapidly, and deploy capital more efficiently. David, welcome to the show.

[00:00:29.430] - David

Thank you. Thanks for having me, Steve.

[00:00:31.730] - Steve

Yes, great to have you here. I'm very curious to get into your story and your blueprint and all that stuff. Let's start at the beginning where we always do your entrepreneurial journey. So how did the idea come about for Interna and what was the road that led you to it?

[00:00:53.030] - David

I had been chief technology officer and chief product officer of a number of different technology startups. And I'd done that for quite a while. And I'd learned a lot. I learned a lot of things that you shouldn't do. I learned a lot of things that you should do. Some of the lessons were hard learned. And I realized after a while, what I started out doing was I wanted to take technology and build something that people recognized. That's why I started my career. I started my career doing research and development in AI and machine learning. But over the years, as I started managing bigger and bigger teams, I realized what I was really good at, it was really more important for me anyway, for companies, was building teams that could build great product. And it's building, writing software is very different than building teams. And they're both important skills, but they're different. And so what I realized was, many companies, particularly, I work in technology companies, don't know how to build teams that can build great products, which means that they spend a lot of money and it takes a long time and they release something that's the wrong thing, and they use capital inefficiently, which means they don't get to have the impact they want to have, and they don't get to be successful companies.

[00:02:26.530] - David

And so that was what started driving me is like, how do build teams that build products that really have an impact, have companies have an impact, have companies be successful?

[00:02:37.540] - Steve

Now, David, your approach, is it tailored specifically for tech teams or it's for any team?

[00:02:46.090] - David

It's for any team, but tech teams have some particular advantages and particularly software teams. But it starts with you've got to understand who your customer is. Who do you serve? What do they want? What creates value for them? Creating profit and revenue is a side effect of creating value for your customer. If you don't understand who your customer is, they're not going to likely want to buy your product or service, and therefore you won't make revenue and you won't be profitable. That's where it all starts. That's true for any company. Okay. The next thing... Yeah, go ahead. You had.

[00:03:26.790] - Steve

The question? So this is basically the first step of your blueprint. So on this podcast, you always try to isolate the framework, the business blueprint that people can relate to, can capture, and then try to apply in their businesses. So we call this blueprint the deliver better product faster blueprint. And step one, deliver customer value. If you don't deliver the value, there's no revenue, there's no profit, the business is not sustainable. That's clear. So what is step two in your framework?

[00:03:58.520] - David

Step two is, you know who you're going to serve, you believe you know what they want, you got to put stuff on the roadmap. Everything on the roadmap is a bet. You're not going to get it exactly right. You get a certain number of bets because you have a certain amount of unlimited capital. You have a certain number of bets. So you're going to put things on the roadmap. Everything on the roadmap is going to have an epic statement. An epic statement looks like, we believe by doing this feature for this user, they will receive this value, and we'll know that when we see this metric move.

[00:04:34.360] - Steve

So let me stop you right there. So you said that every step is a bet, essentially. Is this feature going to work? Is it not going to work? Is this going to be useful for customers or not? And then what would be the vision for that if it really worked? I guess what is the impact of it? That's the actual statement for the customer. And then so before you move on, how do you decide which bets to go after?

[00:05:02.530] - David

That's a great question. There are a million bets you can make, a million ways you can achieve value for the customer. You filter those bets from which of those are aligned to your company strategy. You could do a bunch of things for customers, but you want to do things that also benefit your company. So, hey, we want to increase market penetration. We're going to pick those bets that increase market penetration. We want to decrease churn. We're going to pick those bets that decrease churn. Look at those bets, compare it to your company strategy and filter by those and say, Okay, here's the ones that create benefit for the customer, and they also create benefit for us. Now, of those bets, so now we've filtered some, some of those bets are going to be more or less expensive. Going to take more time, less time. Pick the ones you can learn quickly from. Pick the ones that take smaller amount of time to build and release, so you can see if you're actually having forward progress with the marketing for your business. Those are the two steps of filter. Which of them align to your strategy?

[00:06:16.380] - David

And which of them cost less capital, take less time to get on the market so you can learn quickly? This is all about learning quickly. We're making bets, some are going to be right, some are going to be wrong. How do we learn as efficiently as possible about whether we're progressing for the customer or for us?

[00:06:34.010] - Steve

What about the third dimension, which could be the impact on the customer? Because you can have multiple bets that are in line with your strategy, and then you can learn, maybe some of them you can learn quickly. What about the dimension of the impact on the customer? Because I'd rather you learn something a little bit slowly and create more impact than learn it quickly, have minimal impact. Can you take it into account as well?

[00:06:59.840] - David

Yes, well, that's part of the epic statement is we believe by doing this feature by this customer, they will receive this benefit. So you have to understand the benefit they're achieving, and then you have to be able to measure it to see if they've really achieved it. If you don't have that fundamental thing of we're achieving this value for the customer, don't start. You're not going to have a sustainable business. It's got to start. It's rooted in we're creating value for someone else. And then when we do that, that value creation has to create value for us. But it's got to start by creating value for customers.

[00:07:37.590] - Steve

Okay, so we deliver customer value, we make some bets, we rate them. Are they easy to learn? Do they have an impact? We describe the impact as an epic statement of the vision of the impact, then what's next? What is the next step? I guess that's going to be step three in your sequence.

[00:07:58.570] - David

Right. Well, I mix step two with step three, which is which of these bets align with where the business strategy for the business is going? If you're running product management engineering, you're probably not the CEO. A lot of times product management engineering groups become feature factories. Some salesperson would say, We need this feature because I have to close this deal. Or marketing says, we need this feature because I want to market it. Those are things that are aligned to individual departments. And a feature factory is one that just takes orders and does what's told. What you want is to have an empowered product management engineering team. So if you're not the CEO, that alignment to where we try to drive the customer, which of these bets do we pick, really are about alignment with the CEO because the CEO is trying to increase the market value of the company over a long period of time. And doing that, driving to that North Star gets alignment with the CEO. If you are a CEO, then congratulations, you're aligned with yourself by definition. But you need to have a strategy.

[00:09:08.980] - Steve

So aligning with the CEO is the same as aligning with the company's mission or vision? It's the same thing or it's separate?

[00:09:17.330] - David

I would say it's aligning with the company's strategy. At least in theory, the CEO has built a strategy to fulfill the mission and vision of the company. And so all the things in the roadmap need to fulfill that strategy. If you're doing something that doesn't fulfill that strategy, it's a hobby. That's lovely. I have hobbies I really like and no one pays you for them. So t he alignment with the CEO is alignment to the CEO's strategy, which drives the company forward, which gets you the mission vision.

[00:09:54.370] - Steve

So step one was to make sure we deliver customer value. Step two is filter our bets. And we said that we want to pick the bets that are aligned with our strategy and that are easy to learn and generate impact. Now, when we are aligning the bets with the strategy, isn't that the same as aligning with the CEO, or there are two levels of alignment?

[00:10:17.650] - David

No, that's the same. Actually, I would say first step is know who your customer is. Second step is pick bets that you're going to make. Third step is align those bets to the CEO, which is the same as a strategy in a company.

[00:10:31.440] - Steve

Okay. All right. So you aligned it to the CEO. And then what's next? So you know your customers, you came up with the bets, the directions that you want to develop that software product, perhaps. It's fully aligned with the the company that the CEO represents.

[00:10:51.570] - David

Now you're going to build it. You're going to build it. So you made a bunch of... You said, Here's the bets we're going to make. Now you got to build it. And you got to be efficient and efficient and quickly as you can at building it because every company has limited capital. So the question is, how quickly can we get this thing in the market and see if we made a bet, if our bets are right or wrong? You should expect some of your bets are going to be wrong. That's okay. But you want to learn quickly. If all your bets are right, you're not stretching far enough. You're not trying hard enough. I worked with American Express years ago. I was at an AI tools firm and we were building something called authorizer's assistant. Authorizer's assistant was an intelligent system to make credit decisions every time you used American Express card. American Express advertises, we have no preset credit limit. It doesn't mean they don't have a credit limit. It just changes every time you try to make credit card. If you're doing well, you have a higher credit limit. If you're not doing well, you will lower So I said to our sponsor, American Express, So you want us to make no bad authorizations?

[00:12:08.300] - David

Every authorization should be good. He said, No, that's a terrible idea. I'm like, Why is that a terrible idea? He said, Because I can get no bad authorizations very easily by having zero authorization. And people are going to use Mastercard and Visa. I want to make the right number of bad authorizations so I can learn. It's the same when you're doing product. Some of them should be wrong, but you should learn quick when you go, Oh, we thought the customer was going to like this. We thought this is going to be profitable. It's not. What did we learn from that? And how are we going to change our roadmap? How are we going to change our bets based on that? It's all about a very active feedback loop. So the quicker you can release in the market, the quicker you can learn, the better you can tune the product roadmap, the company to creating value for customers, the better you can tune the company for fulfilling its strategy.

[00:13:04.070] - Steve

Okay, that's awesome. So build it, make some mistakes. That is optimal number of mistakes to make so you can learn and you are basically swinging for the fences. You're not playing it too conservative. And then you measure against your objective. So what about the objectives? Are they tangible upfront? Upfront, they talked about aligning with the CEO's vision, but is this more of a broad stroke alignment, or is this a very granular where you actually have measurable objectives alignment? How does these two alignments come together.

[00:13:46.540] - David

It's about being granular and measurable. That's where the Epic statement starts. We believe by doing this feature for this user, we will see this metric move, but we will create this value and we'll know it, we will see this metric move. Everything you're doing has a measurable value you're creating. And then also for the strategy, here's the strategy. Once again, this example, we wanted to decrease churn. Did churn decrease? Yes or no? Oh, churn decreased more than we thought. Oh, that's interesting. What did we learn from that? Churn didn't decrease, it increased. Oh, that's interesting. What did we learn from that? Everything needs to be instrumented. So the objectives you think you're going to meet, you need to know whether you actually met them or not. And then after you measure it, you need to ask that question, Oh, here's what happened that was different than what we expected. Either more or less positive? What did we learn? And then we start the process again. Do we actually have the right customer? Do we have the right stuff on the roadmap? Are our measurements right? Are we aligning with strategy? Can we build faster? And so you just start the whole process this is again, you iterate.

[00:15:01.450] - David

Now, I said before, software, it's easier with software. Why is it easier with software? Software, my time to market is very small, particularly for consumer software. I can release a new version of the app. B2c software, it's a little bit harder. If I have salespeople that go out, maybe I'm selling to insurance companies and they have a long time to implement things or large B2B enterprises. When you're producing hardware, it's harder still. So you need to modify these techniques for whether you're doing a consumer package good, I'm making soap, whether you're building a piece of technology hardware or you're doing software, because your velocity of learning is different.

[00:15:47.430] - Steve

Yes. So in a consumer market, you can experiment easier because there are bigger numbers. Statistically, the more significant tasks, I guess, you can A B test much easier there. When you're in the enterprise market, you have to be not upset your enterprise customers, and maybe it's a smaller number and you have to thread more carefully. Is this why the difference or there are other dimensions?

[00:16:14.130] - David

Well, it's that, but it's also just the consumption of new releases for B2B tends to be slower from B2C. I had 25 new apps on my phone today. I woke up, looked at them quickly, just said, Okay, great, accept them all. Those were 25 bets that different companies were making with me. My new iPhone that I'm waiting for the iPhone 15 to come out, you may not expect this, but I'm one who keeps technology for a long time. So I have an iPhone 10. I have a Apple watch, I have a new Apple Watch, but I have a really old iPhone. So the velocity of me consuming new hardware is much slower than software. Now, the good news is my wife has an iPhone 14. A lot of people have iPhone 14s and 13s. Apple, in aggregate, can learn not to... I'm not the only slow consumer, but there's a lot of people who are consuming the hardware, but that's a once a year release. Software can be multiple times a day. So the ability to learn is slower. You've got to be more thoughtful about your bets when you're doing slow release cycle products than when you're doing quick release cycle products.

[00:17:27.830] - Steve

Okay, that makes sense. Now, you described this process as a lean startup approach. So tell me about this lean startup. So is this just for software and technology companies, or is it also for professional service businesses, maybe traditional service businesses who deliver maybe retail service, food service, household service businesses as well? Or just for software businesses and why?

[00:18:05.770] - David

It's for everyone. It's just easier for software businesses. But let me talk about how you do it if you're not a software business. Let's say you have an online service. Let's say you have a house cleaning service. Let's say you have a large house cleaning service and you have a 1,000 people that go to houses across the nation and clean their houses. It takes a while to train 1,000 people for them to learn whatever new technique it is. An easier way to build this model is go on the website and put up a service that you don't yet offer and say, I'm just completely making this up. Pool cleaning. We do pool cleaning now too. We do house cleaning and pool cleaning. In pool cleaning, people put a button is learn about our new pool cleaning service, test how many people actually click on it. That is a cheap way to understand demand for the service. Then say, coming soon, sign up here for our new pool cleaning service. It's going to come out in three months. We're making that up, obviously. There's ways of testing consumer demand or customer demand without launching the whole service in a much less expensive way.

[00:19:20.490] - David

Now you need to do it in a way that is not deceitful to your potential customers. But there's ways of measuring demand. And then you can go like Oh, people actually want the pool cleaning service? I'm going to do it in Brooklyn, New York only. I don't know if there's pools in Brooklyn, New York. Probably there are. I'll make it easier. I'm going to do it in Costa Mesa, California. There's pools in Costa Mesa, California. I'm not going to start it nationwide. I'm going to start it in a small... And I'm going to test the service, and then I'm going to expand it. The key is, once again, small, quick releases that don't cost much, where you can learn quickly. And then you could iterate the service, and you could expand the geography. Okay.

[00:20:00.530] - Steve

So it's basically a running sprint. So let's say I have a pool cleaning service and I create a process, maybe a 15 step process, how I prepare and then how I empty the water from the pool and then the detergents I'm using and the equipment I'm using and the process how I'm going to go through and then refill the pool. Let's say that's the process. And then I test how successful the process is and then iterate and maybe tweak the process. Is this how it would apply to a traditional service business?

[00:20:33.760] - David

Exactly. But it's not just iterating and tweaking the process to make the process better, but making sure the customer received value and the company was able to achieve its objectives. It's just not the technical components of the process. I can tell you a lot about how software is built. I came from the software side of the world. I can talk to you about algorithms and efficiency. I can talk to you about some large language. Miles is going, You know what? Most people don't care. That's technical stuff that nerds like me are really interested in. What people care is when I get on Google Maps, do I get efficient directions to where I want to go? That's what people care about. Those processes, I want to test them so I know that I'm efficient as a company, doing what I want to do. But the ultimate measure is whether I'm creating customer value and whether it's pushing the company forward. And that's what you fundamentally have to measure.

[00:21:34.600] - Steve

So how do I create a practical test environment where I'm only delivering a limited number of... The service is a limited number of customers. So let's say if I'm a pool cleaner, maybe I'm starting a company, I'm trying to figure out what would be the optimal process or maybe innovate on the existing processes that are out there. Let's say I figure things out. It's a 15 step process. I have one crew. They can deliver that maybe to three or four houses maximum a day. So how can I get data that is reliable? Is this applicable to a small business service? Or you have to have a certain number of certain population of users to use it in order to have a statistically significant data so that you can actually use it to run your next sprint in your business?

[00:22:33.310] - David

Right. So system significance is a really good question. It's having larger numbers to test against, you're going to get a better result. If you're a small pool cleaning company with a few customers a day, it's better than not having data, but it could be suspect. This is another reason. I came from the software industry. It's easier in the software industry because you can do A B tests on here's the old method, here's the new method. We're doing it at scale, we're seeing things trend. But even in startup software businesses, startup software business by definition, have few clients. So you do your best you can with the data you have, and that's why iterating quickly becomes very important. Hey, I'm a software business. I only have 100 clients in the beginning. They seem to say this, Okay, let's double down and try more of that. Is that working? Now we have 1,000 clients. You know what? That was 30 % right, 70 % wrong. Great. But it's about being quick at doing the releases and learning quickly. It's all about learning quickly. The lean startup model came very much from the software industry. And we work, internal works, in the technology industry.

[00:23:46.310] - David

The techniques I'm talking about are applicable other places. We work with Lynda. Com, we work with Disney, work with lots of companies. But it's easier when you have large numbers. But in any case, it's required to release quickly, learn quickly, think about what happened and do it again?

[00:24:06.660] - Steve

I'm just thinking, trying to relate it to my coaching business. I started, I don't know, six, seven years ago, and I didn't have large numbers. I wanted to test things on, but I did perceive sometimes a better reaction or a less good reaction. And of course, it depends on the client as well. But even with a few repeats, I get a feel for what is a better way. And then I did more of that and did less of the other. And it helped me along the way, even without a scientifically proven testing methodology and statistical numbers. So that's a great blueprint. So make sure you deliver customer value. You formulate an epic statement of your bets that you have chosen. Make sure it's aligned with the CEO's vision, build it, and then measure it back to the objectives. So David, if our listeners would like to learn more about your process or would like to contact you, talk to you, or explore about Interna, where should they go?

[00:25:08.750] - David

So our website is www. Interna. Com. So it's I N T E R N A. Com. You can find me on LinkedIn. So in turn, by the way, is like internal without the L. My name is David Subbar. It's like Subbaru without the U, S UVAR. You can find me on LinkedIn. You can hit me up there. You can hit us up on our website. You can find us there. Feel free to reach out. If someone just wants to spend a few minutes talking about these things. I'm glad to chat with anybody anytime.

[00:25:36.520] - Steve

Awesome. Well, David, thanks for coming to show. Really enjoyed it and have a great day.

[00:25:41.990] - David

Thank you, Steve. Glad to be on you.