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Scaling Startups: The Ultimate Guide For Founders

In today’s fast-paced digital environment, scaling represents both the greatest opportunity and challenge for startup founders. While launching a startup is difficult, successfully scaling requires an entirely different skillset, strategy framework, and operational systems. This guide explores essential frameworks, common pitfalls, and proven strategies to transform your promising venture into a market leader.

What Does Scaling a Startup Really Mean?

Many founders mistake growth for scaling, but these concepts differ fundamentally:

Growth typically involves adding resources at the same rate as adding revenueScaling means increasing revenue at a significantly faster rate than resources

When scaling startups, you’re creating systems and processes that allow your business to handle increased demand without proportionally increasing costs or operational complexity. This distinction represents the difference between steady growth and explosive, exponential expansion.

As Meghan Matuszynski, CEO of Inbound Media Solutions, notes: “Growth is about incrementally adding resources to increase revenue. Scaling is about dramatically increasing revenue without a dramatic increase in resources.”

Learn more about what scaling in business really means →

Understanding the Scale-up vs. Start-up Distinction

Before implementing scaling strategies, understand where your company sits on the scale-up vs. start-up spectrum. These terms represent fundamentally different phases in a company’s evolution.

Start-up Phase Characteristics

During the start-up phase, companies typically focus on:

Finding product-market fitValidating the business modelBuilding the minimum viable productOperating with small, versatile teamsMaking quick, often intuitive decisionsScale-up Phase Characteristics

In contrast, scale-ups have validated their core business model and are now focused on:

Accelerating growth systematicallyExpanding market shareOptimizing operationsBuilding specialized teamsImplementing more structured decision-making processes

Understanding these differences is crucial for implementing appropriate strategies. Attempting to scale before achieving product-market fit is a common reason for startup failure.

Learn more about the key differences between scale-ups and start-ups →

Why You Need a Framework for Scaling a Business

Many businesses fail not because of poor products or insufficient market demand, but due to ineffective management of rapid growth. Scaling challenges can overwhelm even promising startups without a systematic approach.

Common scaling challenges include:

Operational inefficienciesInconsistent product qualityDifficulty maintaining company cultureCash flow management problemsTalent acquisition and retention issues

A structured framework provides the roadmap needed to successfully navigate these challenges. It helps anticipate problems proactively rather than addressing them reactively.

Discover a comprehensive framework for scaling your business →

The Scaleup Methodology7 Pillars for Sustainable Growth

Through extensive research and work with hundreds of scaling companies, we’ve identified seven critical pillars forming the Scaleup Methodology—a proven framework for sustainable scaling:

1. Sales: Building Your Growth Engine

The foundation of scaling startups is a robust sales strategy driving consistent revenue growth. This isn’t merely about hiring more salespeople—it’s about creating scalable systems efficiently converting prospects into customers.

Key elements include:

Developing a comprehensive digital sales strategyCreating educational content driving customer acquisitionImplementing multi-channel awareness campaignsBuilding scalable sales processes and automationDesigning engagement approaches demonstrating product value

Without effective sales strategies, even innovative products struggle to achieve sustainable growth and market expansion.

Learn more about scaling your sales funnel and sales operations →

2. Continuous Delivery: Maintaining Innovation Velocity

As your startup scales, maintaining speed and quality in product development becomes increasingly challenging. Continuous delivery practices ensure consistent improvement delivery without compromising quality.

Focus areas include:

Implementing rigorous coding standards and technical excellenceDeveloping agile development practicesCreating comprehensive testing frameworksLeveraging data-driven insights guiding developmentAutomating deployment processes

For technology companies, scaling your digital product capability is particularly crucial during growth phases. This requires specific approaches to product development, architecture, and delivery processes.

Explore strategies for scaling your digital product with continuous delivery →

3. Agility: Adapting to Market Changes

The ability to pivot quickly in response to market feedback is critical when scaling startups. Companies maintaining agility during scaling can seize opportunities rigid organizations miss.

Essential components include:

Cultivating an agile organizational mindsetImplementing appropriate agile methodologiesEmpowering Scrum Masters to facilitate transformationDeveloping strong Product Owners driving successBuilding high-performing, cross-functional teams

This focus on agility ensures your organization can pivot quickly as you scale to meet evolving market demands.

Discover how to maintain agility while scaling →

4. Lucrative: Creating Financial Sustainability

Scaling without financial discipline invites disaster. Successful scaling startups build robust financial practices fueling growth while maintaining sustainability.

Key financial strategies include:

Implementing dynamic budgeting approachesDeveloping accurate forecasting modelsEstablishing transparent financial reporting systemsOptimizing cash flow managementCreating strategic funding approaches

Remember, revenue is vanity, profit is sanity, and cash is king. Keep all three in mind while scaling.

Master financial strategies for scaling startups →

5. Evolution: Building an Organization That Can Scale

Your organizational structure must evolve as you scale. What works with 10 employees won’t work with 100, and what works with 100 won’t work with 1,000. Critical organizational elements include:

Implementing a robust Product Governance ModelAligning team activities with strategic visionOrganizing around value streamsFostering cultures of continuous improvementCreating learning organizationsDriving innovation at all levels

The transition from start-up to scale-up requires a fundamental shift in product governance and management. A comprehensive Product Governance Model serves as the backbone of your scaling organization, enabling necessary processes while maintaining innovation and agility.

Discover how a Product Governance Framework can transform your scaling →

6. Upgrade: Attracting and Retaining Top Talent

Your team ultimately determines your scaling success. As you grow, attracting and retaining top talent becomes increasingly important and challenging.

Focus on:

Implementing advanced talent sourcing strategiesCreating structured onboarding processesBuilding strong employee relationshipsUtilizing effective recruitment toolsDeveloping rigorous selection processes

Scaling companies typically shift from hiring generalists to specialists with deep expertise in specific areas. This transition requires sophisticated recruitment, onboarding, and management practices.

Discover strategies for scaling your talent acquisition →

7. Product: Maintaining Customer-Centricity

At the heart of successful scaling startups is unwavering focus on creating products solving real customer problems. As you scale, maintaining this focus becomes increasingly challenging but even more important.

Key product strategies include:

Crafting a product vision that scales (COMPASS)Continuously discovering and validating market needs (RESEARCH)Defining and assessing key performance indicators (ASSESS)Planning and executing successful go-to-market campaigns (FRAME)Optimizing pricing strategies (TUNE)

This product-centric approach ensures your scaling efforts remain focused on creating genuine user value.

Explore digital product development strategies for scaling startups →

Scaling Digital Products: Special Considerations for Tech Companies

For technology startups, scaling digital products presents unique challenges and opportunities. Digital products have distinct characteristics requiring specialized scaling approaches:

Key Challenges in Scaling Digital ProductsMaintaining product quality as user base expandsEnsuring technical architecture supports increased loadEvolving feature sets without disrupting existing usersBalancing innovation with stability and reliabilityManaging increasing technical complexityStrategic Approaches to Digital Product Scaling

Scaling digital product development requires robust delivery practices maintaining quality while accelerating feature deployment. Key components include:

Implementing rigorous coding standards and technical excellenceFostering development agility for rapid market responseUtilizing comprehensive testing frameworks ensuring product reliabilityLeveraging data-driven insights guiding development prioritiesAutomating deployment processes for consistent, reliable updates

This systematic approach creates the technical foundation necessary for successfully scaling digital product operations across growing user bases.

Learn more about scaling digital products effectively →

12 Critical Scaling Mistakes That Prevent Startups from Becoming Unicorns

As important as knowing what to do is understanding what to avoid. Many promising startups fail not because of poor products or market conditions, but because of avoidable scaling mistakes. Here are critical errors that can derail your scaling journey:

1. Organizing Around Functional Departments Instead of Value Streams

Traditional departmental structures create silos hindering communication and slowing value delivery. As you scale, these silos amplify, making the organization increasingly inefficient.

Solution: Build your organization around value streams—the end-to-end flow of activities delivering customer value. This approach ensures all necessary capabilities are contained within cross-functional teams that can move quickly and adapt to change.

2. Strategy-Execution Misalignment

When high-level strategy doesn’t translate into day-to-day execution, scaling becomes nearly impossible. This misalignment leads to departments working in silos, often with conflicting goals.

Solution: Implement Strategic Product Objectives aligning your entire organization around delivering customer value and achieving business outcomes.

3. Rigid Annual Budgeting

Traditional, inflexible budgeting processes severely limit a startup’s ability to respond to market changes and opportunities. This becomes increasingly problematic as you scale.

Solution: Embrace lean budgeting with quarterly rolling forecasts, value stream-based funding, and rapid reallocation mechanisms for emergent opportunities.

Discover all 12 critical scaling mistakes to avoid →

14 Game-Changing Scaling Tips for Explosive Growth

Now that you understand the framework and common mistakes, here are actionable scaling tips to accelerate your growth:

1. Embrace Customer-Centricity with Design Thinking

When scaling, remember your customers are your North Star. Use design thinking to create products exceeding expectations:

Conduct empathy interviews uncovering deep customer insightsUse journey mapping identifying pain points and opportunitiesImplement rapid prototyping and testing cycles2. Implement Continuous Improvement

Make continuous improvement a fundamental practice:

Adopt Agile methodologies across all departments, not just techImplement regular retrospectives identifying enhancement areasUse data analytics driving decision-making and optimization3. Bridge Strategy and Execution with OKRs

Don’t let your grand vision get lost in day-to-day operations. Use Objectives and Key Results (OKRs) to align your team:

Set ambitious, measurable objectives at the company levelCascade these objectives down to team and individual levelsReview and adjust OKRs regularly

Explore all 14 game-changing scaling tips →

Finding Scalable Business IdeasYour Ticket to Exponential Growth

Successful scaling often begins with choosing the right business idea—one with inherent scalability. Truly scalable business ideas share several key characteristics:

Minimal marginal costs for serving additional customersProcesses easily automated or standardizedPotential for rapid expansion across marketsStrategic technology use facilitating growthTop Industries for Scalable Business Ideas1. Software as a Service (SaaS) Ventures

SaaS businesses represent the gold standard of scalable business ideas, offering cloud-based solutions on subscription models. Once developed, your software can serve thousands of additional users with minimal incremental costs, allowing exponential growth.

2. E-commerce Innovations

With proper infrastructure, e-commerce businesses can reach global customers, automate fulfillment processes, and operate without physical retail overhead, creating excellent scaling potential.

3. Subscription-Based Models

Subscription businesses benefit from predictable recurring revenue and economies of scale, making them highly attractive for scaling.

Discover more scalable business ideas across high-growth industries →

Implementing the Scaleup Methodology

Adopting a comprehensive framework for scaling startups requires a methodical approach:

1. Assessment and Goal Setting

Begin by evaluating your current status across all seven pillars. Identify strengths to leverage and weaknesses to address. Understanding whether you’re truly in the start-up or scale-up phase is crucial for implementing appropriate strategies.

Based on this assessment, set clear, measurable improvement goals in each business area.

2. Prioritization

Based on your assessment, determine which areas need immediate attention. Focus on addressing the most critical constraints to your scaling efforts.

While all seven pillars are important, trying to improve everything simultaneously can be overwhelming. Prioritize based on assessment results and business goals.

3. Create a Roadmap

Develop a detailed roadmap for implementing improvements across each pillar. This should include specific actions, timelines, and responsible parties.

4. Build Cross-Functional Teams

Form teams including members from different departments to implement improvements in each pillar. The Scaleup Methodology emphasizes cross-functional collaboration importance.

5. Implementation and Measurement

Develop specific action plans for improving each priority area. Create clear metrics tracking progress and assign ownership for each initiative.

Regularly measure progress against goals. Be prepared to adjust your approach based on results. Remember, scaling is not linear – it requires constant adaptation and refinement.

Navigating the Critical Transition from Start-up to Scale-up

The journey from start-up to scale-up represents one of the most challenging business transitions. Understanding this critical phase requires examining several fundamental transformations:

Leadership Evolution

The skills building a successful start-up aren’t necessarily those needed to scale it. Founders must evolve from visionary innovators to organizational architects or, sometimes, bring in experienced executives complementing their strengths.

This transition often involves:

Developing structured leadership teams with clear responsibilitiesCreating middle management layers maintaining control spanImplementing professional development for founding team membersStrategic hiring of experienced executives from larger organizationsProcess Implementation

Scale-ups need systems supporting growth, but excessive bureaucracy can destroy agility that made them successful. Finding this balance requires:

Documenting critical processes while eliminating unnecessary proceduresImplementing automation reducing manual overheadCreating clear decision-making frameworks empowering teamsMaintaining regular review cycles eliminating outdated processesTechnology Infrastructure Scaling

Early-stage solutions working for dozens of customers often collapse under thousands or millions. Scaling requires:

Rebuilding core systems for massive scalabilityImplementing robust security and compliance measuresDeveloping data infrastructure for analytics and insightsCreating APIs and integration capabilities for ecosystem expansionCommon Challenges in Scaling Startups

The scaling path is rarely smooth. Understanding common challenges helps navigate them effectively:

1. Premature Scaling

One of the most common and dangerous scaling startup mistakes is scaling too early. Before accelerating, ensure you have:

Validated product-market fitEstablished repeatable sales processesBuilt systems handling increased volumeDeveloped a clear unit economics model2. Maintaining Company Culture

As your team grows, preserving company culture becomes increasingly challenging. What once happened organically now requires intentional effort. Successful scaling startups:

Document and communicate core valuesHire for cultural contribution, not just skillsCreate structured onboarding processesInvest in leadership development3. Resistance to Change

As you implement new processes and systems, you may encounter resistance from team members accustomed to previous work methods. Address this by:

Clearly communicating reasons for changeInvolving team members in the processProviding adequate training and supportCelebrating small wins along the way4. Cash Flow Management

Cash flow challenges kill many promising startups during rapid growth periods. Maintaining financial discipline while scaling requires:

Understanding your cash conversion cycleManaging accounts receivable effectivelyForecasting cash needs accuratelySecuring appropriate funding before urgently neededThe Future of Scaling Startups

The scaling startup landscape continues evolving. Several trends are shaping how companies will scale in coming years:

Remote-First Scaling

The shift toward remote work has changed how companies scale. Today’s startups can:

Access global talent poolsGrow without large office investmentsBuild more diverse teamsCreate more flexible work environmentsAI-Powered Growth

Artificial intelligence is increasingly becoming a scaling multiplier, enabling startups to:

Automate repetitive tasksPersonalize customer experiences at scaleMake data-driven decisions more effectivelyIdentify market opportunities more quicklySustainable Scaling

Investors and customers increasingly value sustainable business practices. Forward-thinking startups are:

Building environmental sustainability into operationsCreating more inclusive company culturesDeveloping ethical AI frameworksConsidering societal impact alongside financial returnsConclusion: Your Scaling Journey

Successfully scaling startups requires a comprehensive approach addressing all business aspects. The Scaleup Methodology provides a framework helping hundreds of companies navigate this challenging but rewarding journey.

Remember that scaling is not a destination but a continuous process of evolution and improvement. By systematically addressing each of the seven pillars—Sales, Continuous Delivery, Agility, Lucrative, Evolution, Upgrade, and Product—you build a foundation for sustainable, explosive growth.

The evolution from start-up to scale-up isn’t merely growth—it’s transformation. It requires rethinking assumptions, rebuilding systems, and often reinventing company aspects. Companies recognizing and embracing this reality are positioned to join elite organizations successfully navigating this journey and emerging as market leaders.

As you embark on your scaling journey, focus on creating systems allowing you to maintain agility and innovation while growing rapidly. With the right scaling business framework, your startup can overcome scaling challenges to achieve its full potential.

FAQ Section for Scaling StartupsWhat’s the difference between growing and scaling a startup?

Growing means increasing revenue by adding proportional resources (like staff and infrastructure), while scaling means increasing revenue at a significantly faster rate than resources. In true scaling, you’re building systems allowing revenue growth without corresponding cost increases.

How do I know if my startup is ready to scale?

Your startup is ready to scale when you have: 1) achieved clear product-market fit, 2) established repeatable and profitable sales processes, 3) built systems handling increased volume, and 4) developed a clear unit economics model showing sustainable profitability. Scaling before these elements are in place often leads to failure.

What are the biggest challenges when scaling a startup?

The most common challenges include maintaining product quality during rapid growth, preserving company culture as the team expands, managing cash flow effectively, implementing necessary processes without creating bureaucracy, and evolving leadership styles to suit a larger organization.

How important is hiring during the scaling phase?

Hiring becomes critical during scaling. You’ll need to transition from generalists wearing multiple hats to specialists with deep expertise in specific areas. Having a structured hiring process, clear role definitions, and effective onboarding becomes essential to maintain quality during rapid team growth.

Should we raise funding to scale our startup?

Funding can accelerate scaling, but isn’t always necessary. The decision should be based on your business model, market conditions, and growth goals. Many companies bootstrap scaling efforts using revenue, while others require external capital to quickly capture market share in competitive industries. Consider your unit economics and cash flow needs carefully before deciding.

How do we maintain our culture while scaling rapidly?

Preserving culture during scaling requires intentional effort: 1) clearly document and communicate core values, 2) incorporate values into hiring processes, 3) create structured onboarding emphasizing culture, 4) recognize and reward behaviors exemplifying your values, and 5) ensure leadership consistently models cultural principles.

What metrics should we focus on during the scaling phase?

While specific metrics vary by business model, key scaling metrics typically include: Customer Acquisition Cost (CAC), Customer Lifetime Value (LTV), LTV

ratio, burn rate, growth rate, retention rates, and operational efficiency metrics. Successful scaling startups maintain balance between growth and efficiency metrics.

How does our organizational structure need to change as we scale?

As you scale, transition from functional organizational structure (marketing, sales, product, etc.) to value stream organization where cross-functional teams focus on delivering specific customer value. This approach helps maintain agility and customer focus while reducing handoffs and communication bottlenecks.

Is it possible to scale too quickly?

Yes, scaling too quickly is a common startup failure cause. Signs of premature or too-rapid scaling include: declining quality, cash flow problems, cultural deterioration, increasing customer churn, and team burnout. Sustainable scaling requires balancing growth ambitions with operational capabilities.

How do the challenges differ between scaling a physical product business versus a digital product?

Digital products typically have lower marginal costs and can scale more rapidly without proportional resource increases. Physical products face additional scaling challenges including supply chain management, inventory costs, manufacturing capacity, and distribution logistics. However, both types share challenges around team scaling, culture preservation, and maintaining customer focus.

What role do systems and processes play in successful scaling?

Systems and processes are the foundation of successful scaling. They allow maintaining consistency and quality while reducing dependence on specific individuals. The key is implementing enough process to support growth without creating bureaucracy slowing innovation. Focus on processes directly supporting customer value delivery.

How do we prevent burnout during the scaling phase?

Scaling often creates intense team pressure. Prevent burnout by: clearly prioritizing initiatives, saying “no” to non-essential activities, setting realistic timelines, celebrating wins, ensuring adequate resources for key projects, and creating a culture valuing sustainable performance over heroic efforts.

What are the signs that our scaling efforts are working?

Positive indicators include: increasing revenue without proportional cost increases, improving unit economics, maintaining or enhancing product quality, positive customer feedback, healthy team culture metrics, increasing operational efficiency, and the ability to make and implement decisions quickly despite growing organizational size.

How do we balance innovation with stability during scaling?

Use the dual-track approach: maintain a “discovery track” focused on innovation and a “delivery track” focused on reliable execution. Allocate resources to both tracks, with teams dedicated to exploring new opportunities while others perfect and scale existing solutions. This balance helps avoid stagnation while maintaining operational excellence.

Should we consider international expansion as part of our scaling strategy?

International expansion can accelerate growth but adds complexity. Consider it when: 1) you’ve demonstrated strong product-market fit in your home market, 2) you have evidence of demand in target markets, 3) your systems can support international operations, and 4) you have financial resources to sustain expansion until reaching profitability in new markets.

The post Scaling Startups: The Ultimate Guide For Founders appeared first on Luís Gonçalves.

Doing experiments – how to create Hypothesis and validate your Experiments

Lean Change Management Model

Lean Change Management is a book written by Jason Little, which shows how to implement successful change through examples of innovative practices that can greatly improve the success of change programs.

Jason talks about the Lean Change Management Cycle, which consists of 3 big parts: Insights, Options and Experiments.

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Let´s first look at a brief description of it:

Insights: It´s very important to understand the current state of the organization, before you can plan any change. In order to do that, there are several tools, assessments, and models you can apply to understand the current position. The Lean Change Management book describes many practices to collect Insights.

Options: When you gain enough Insights to start with the planning, you will need Options. Options have a cost, value and impact. Options usually include one or more hypotheses as well as expected benefits. These hypotheses are then turned into Experiments.

Experiments: Now it’s time to introduce a change and see if it works out. At this point you should learn enough about your current position and consider multiple Options.

Experiments contain a sub-cycle:

Prepare: This is the planning stage of your Experiment. At this point, all you have are your assumptions about the change. In this step you validate your approach with people affected by the change.

Introduce: In this step you start working with people affected by the change. Once a change will reach this step, it is part of the process.

Review: Here you review the outcomes of the Experiment. Normally you do this after the amount of time you thought you would need for the change to stick.

In this model, Insights is when you observe the situation as it currently is. Then you move to Options, where you evaluate cost, value, and impact of each possibility. From this you create a hypothesis to test the expected benefits of that test. Using that hypothesis, you form an Experiment.

Why Experiments?

When undergoing a change in your organization, you want to automatically call everything a change. But calling changes “Experiments” helps you develop an approach that makes it OKAY to not know everything upfront.

There might be unexpected impacts of a change transformation in your organization that you didn´t previously consider, and for that reasons calling a change an experiment helps you be more creative and learn while the change is in progress.

Experiments consist of 3 main components: 

Hypothesis: When you think a change is a good idea, then you create a hypothesis. It is based on your own bias.

Measurements: This is how you´ll measure the outcome of the Experiment

Big picture: You can track a big picture on your change wall. Your Experiment should fit into the big picture of your change.

Creating Hypothesis

All experiments start with hypothesis. Below you find a hypothesis structure:

We hypothesise by

We will 


Which will have


As measured by

This structure or template helps change agents to be explicit about Experiments. You´ll be able to measure your Experiments better when you explicitly state the benefit, measurement and goal for your Experiments.

Another advantage of using this template that it uses a simple language everyone can understand, so nothing complicated.

You can follow the following thought process:

think about what the experiment would be
think about who would be affected
think about what would be the benefit
think about how to validate the Experiment as successful


Validating Experiments

 I believe most of people are concerned if these selected processes are right thing to do, so how could we validate them?

Validation is confirming that the change you´re planning is the right one to focus on before you spend all your time and effort designing a change that is likely going to be wrong.

To validate your Experiment, you have to go through 2 steps:

1. The first step involves asking 2 questions before running the Experiment: 

How will we know this Experiment has been successful?
How will we know we are moving towards our outcome?

2. The second step is to review your Experiment with people that are affected by the change to see their reactions. 

Measuring Experiments

“What gets measured gets managed.”
Peter Drucker, Management Guru.

It´s important to be careful how we measure progress, because it can influence behaviour.

Jason suggests using both qualitative and quantitative measures to measure business outcomes that organizations see when adopting lean practices, but also intangible measures like whether or not people feel that this way of working is really effective.

This is crucial because it´s not only important that organizations are making progress, but people should be happy too.

Qualitative measures

Jason uses an example in his book when he asked a team during a daily to raise and resolve project risks and issues. He didn´t feel theses were effective and to find out how people feel he posted a poll asking for feedback. On the right side of the flip chart he wrote “This meeting is awesome!” and on the other side, “This meeting is terrible.” People had to vote by marking an “X” under the choice showing their opinion.

Quantitative measures

NPS (Net Promoter Score) s a good way to collect the data. By using NPS, you ask a question: “On a scale of 1 to 10, how likely would you recommend this product/service?” People who vote 9 or 10 are promoters and those who vote 1 to 6 are detractors.

In overal, allowing teams to align themselves with overall change strategy is sometimes more important than actually pushing measurements on them. It motivates the team to contribute because they feel a sense of ownership about their involvement in the change process.

It´s crucial there is a strong alignment between management and teams for this approach to work. More about alignment read here.

Sources: http://leanchange.org/resources/exper...
Book Lean Change Management by Jason Little

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Balanced scorecard the ultimate guide for leaders

If you’ve been following my blog for a while now, you know how I keep talking about goals, objectives, and metrics and this post will not be different, I will be talking about: balanced scorecard.

THE ULTIMATE OKR GUIDE

Do you want to know more about OKRs? We wrote a white paper that summarises everything that you need to know to start using OKRs in your company! Do not wait any longer and download your white paper now.

Download The White-Paper

Every business owner, manager, or leader understands the importance of these things. Without goals, you’re in a blind spot. Without goals, you won’t be able to define success, and much more important – measure it. You just keep doing what you’re doing without a clear direction.

But goals are not enough. To turn your goals into specific, actionable steps, you need to set objectives. You do this by breaking down a goal into smaller fragments and determining the key steps to achieve them.

It doesn’t stop there. You also need to measure your success. You need to know how well your organisation is doing by comparing your current performance against your goals. And to do that you need metrics.

Speaking of metrics, there are different ways to track and monitor performance. We’ve talked about lean management concepts like KPIs and OKRs. Now, let us discuss another popular performance tracking approach – the Balanced Scorecard.

Balanced Scorecard

Developed in the 1990s by Robert S. Kaplan and David Norton of Harvard Business School, the Balanced Scorecard is widely used by modern organisations as part of their strategic planning and management processes. It focuses on four areas: learning and growth, business processes, customers, and finances.

The Balanced Scorecard is used to understand how a business’ internal functions affect external outcomes. It is used primarily to assess the implementation of a strategy or operational activities. It may also be used to assess the performance of individual employees but based on a 2017 survey, only a small number of companies (17%) use it this way.

The main purpose of a Balanced Scorecard is to reinforce good behaviour in an organisation assessing performance in four major areas, also called “legs”.

Learning and Growth

This area looks at how the company is doing in terms of keeping a strong, productive, and effective workforce. A balanced scorecard is used to assess how fast a company responds to change, how well it trains employees especially on the rapidly changing technologies, and how long it takes to develop a product and bring it to market.

As companies embark in an era of rapid technological growth, businesses must be in a continuous learning mode. Businesses are often faced with the challenge of hiring technical workers. At the same time, they also need to train existing employees to keep up with the change. According to Kaplan and Norton, learning is more than training. They emphasize the need for mentors and tutors within the organisation, as well as the importance of ensuring that workers readily get help when faced with a problem.

Business Process

Internal processes have a major impact on the external outcomes of a company. The business process perspective pertains to internal activities, functions, and initiatives that need to be measured or assessed. Such processes have to be examined and evaluated to measure its impact and whether or not they are helping the organisation achieve its mission.

Aside from the strategic management processes, this area also covers mission-oriented processes which are the major functions of the organisation, and the support processes which are repetitive and are therefore easier to measure.

The metrics in the balanced scorecard are created by those who know these processes most intimately.

Customer

Customer satisfaction is what brings money to the table. That is why most companies rank customer perspective second in their balanced scorecard, next to finances.

The concept behind the customer perspective is simple. For your customers to patronize your products and services, you have to keep them happy. To make them happy, you have to understand them.

Companies make use of different metrics for the customer perspective on their balanced scorecards. But it all boils down to knowing what the customers want.

When putting together your balanced scorecard for this leg, keep in mind the following things:

What your customers are looking for. Objectives like “increase the number of customers by XXX” are not enough. Instead, aim for something unique and specific to your business by differentiating your products or services and knowing why customers choose you.
Describe your objectives from the customers’ viewpoint.
Understand the difference between what your customers say and do. There are customers who can give you amazing reviews but won’t buy from you again while there are others who keep on complaining but buy from you regularly. Looking at things like their purchasing behavior, renewal rates, speed of purchasing, and other factors can give you great insights that you’re less likely to see from surveys.

Financial Perspective

Finances are lagging indicators, which means they don’t do well in telling you what could happen, but only what did happen. Financial indicators are considered the most important element in the strategic management process. In fact, the financial perspective is what drove the creation of the Balanced Scorecard.

As a for-profit company, your main goal is to increase your profit. But what specific measures should you use to track this goal?

While profit is important, there are other things to consider, such as how you can keep the costs down so they don’t grow faster than your revenue. Some other measures include cash flow, debt leverage, and bond ratings. Objectives measured on profit primarily involves revenue growth while objectives based on expenses include measures like production, marketing, and overhead expenses.

Balanced Scorecard and OKR

A balanced scorecard is a promising tool used by many companies to measure performance in four key business areas: growth, business process, customer, and finances. It’s a more traditional model which possess some similarities to the agile framework OKR.

The two frameworks complement each other fluidly because OKR the success of the four perspectives can be structured and enabled by OKRs. Meanwhile, the KPIs in a balanced scorecard gives you a benchmark in setting ambitious yet achievable goals.

THE ULTIMATE OKR GUIDE

Do you want to know more about OKRs? We wrote a white paper that summarises everything that you need to know to start using OKRs in your company! Do not wait any longer and download your white paper now.

Download The White-Paper

 

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What is an Objective in company Objectives and Key Results?

In this post we will talk about what is an objective in company OKRs? I’ve written several blog posts about this topic but for this publication, we discuss Objectives at a deeper level.

THE ULTIMATE OKR GUIDE

Do you want to know more about OKRs? We wrote a white paper that summarises everything that you need to know in order to start using OKRs in your company! Do not wait any longer and download your white paper now.

Download The White-Paper

In our past articles, we talk about OKR as a goal-setting framework and how it can help your business or organisation succeed. You’ve seen how giant companies like Google, Amazon, and Microsoft capitalised on this framework to fuel growth, boost employee performance, and achieve impressive milestones. And now, you’re more than willing to try it for your company. 

Not so fast.

Learning how to set OKRs may look simple. But to ensure success, you need to understand the two components of this framework: objectives and key results.

Today, we’ll focus on OBJECTIVES. 

In business, the term “objective” is the GOAL that a company aims to achieve. 

In OKR, an objective is a brief yet specific outcome it wants to achieve in a definite timeframe. 

Objectives answer the vital question “Where do I want to go?” Think of it as a destination on a map. The moment you unfold it, you know exactly how to get there, how many cities, towns, or regions you need to pass through, and an estimate of how long it would take you. 

What is an objective and its characteristics

In OKR, objectives are the outcomes that reflect the priorities of an organisation. 

Below are the key characteristics of objectives:

Objectives are:

Aligned. Group objectives (those that are created by departments, segments, or smaller groups in the organisation) should be aligned to the company OKRs set by the leaders or executives. 
Time-bound. Each objective has a due date. Objectives should be kept within a short and strict timeframe. Why is this so? This is to encourage employees or team members to focus on their goals and review them in cycles. Creating a timeline enables OKR holders to identify what’s working and what isn’t so they could change the course if their OKRs are not contributing to your company OKRs. 
High-impact. Objectives are ambitious and should often make a person feel uncomfortable. They should always be the things that when achieved, will have a hugely positive effect on your organisation. 
Empowering. OKRs involve everyone in the organisation. Each person (employee or team member) has their own set of OKRs which are made accessible to the entire organisation. Not only does it promote transparency, but it also promotes collaboration and cross-functionality across teams.
Specific. Objectives clearly state what the person has to go through to achieve the desired outcome. 
Measurable. Every objective also has a corresponding key result. The key results are scored. Check out how Google scores its OKR here.

Objectives in OKR: Ambitious yet Achievable

In companies that adopt OKR, objectives go beyond what each team member expects from their role. It’s going the ‘extra mile’ to contribute to the organisation’s success.

Let’s take a look at a few examples of objectives and examine whether they fit the qualities of an OKR:

“Make our website better.”

While it sounds like a great objective, this statement does not clearly state what the company wants to achieve. It doesn’t answer the question – what is it that you want to accomplish? What is your desired outcome?

A clearer, more specific objective will be something like this:

“Improve targeted traffic to the company website by 30%.”

Let’s have another example.

“Increase online sales.”

Again, this one is vague because it does not state a specific desired outcome. 

A more specific objective will be something like:

“Increase website conversions by 35%.”

“Grow sales from the company online store by 85%”.

Stretched Goals

In OKRs, the objectives you create should be attainable and challenging at the same time. Objectives should be something that is beyond your comfort zone. So, for example, if you are constantly hitting your revenue goals, you can consider increasing it by 25% in the next six months.

Of course, you want to make sure that even though it is challenging, your objective should be realistic. Make use of data (such as sales records for the past few years and other relevant information) to verify whether you are aiming for a stretch goal.

Dos and Don’ts in Writing Objectives

Don’t go overboard.

When setting objectives, you want to prioritise things that have more impact. By practicality, you can only have 3-5 objectives for a certain “period”. When choosing objectives, list down the goals you want to achieve and then rank them based on their impact on your company OKR. Use the five-why analysis to figure out which objectives are the most critical ones.

Do set a deadline.

What sets objectives from goals is that the former is time-bound. 

Don’t stray away from your company OKRs.

One common mistake by many organisations is treating all of their OKRs are the same. However, no matter how many OKRs your organisation has, at the end of the day, there is only one top priority – and that is the business’ OKR. Nonetheless, at any given point, everyone in your team or organisation should feel confident that their work is contributing to your company’s top priority.

Make it concise.

Objectives should be clear and specific. Usually, it’s a one-liner phrase or statement that is easily understood.

Group Objectives & Company Objectives

OKRs are usually categorised into two – group (team) OKRs and company (organisational) OKRs. 

Before the rest of the organisation is asked to make their OKRs, heads, leaders, and executives will first determine the company OKR. Once established, these OKRs are cascaded to the entire organisation. Only until then can departments, teams, business units, and frontline employees can work on their OKRs.

I hope this article answered your main questions: what is an objective. If you liked this article and you are looking for a way to align everyone in your organisation, let’s have a call or simply download our OKR Guide.

We also offer OKR consulting and OKR training, but our approach differs from other companies, we believe OKRs should be fully integrated with your product development.

If you’re not ready to talk to us yet, attend our weekly OKR webinar.

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Do you want to know more about OKRs? We wrote a white paper that summarises everything that you need to know in order to start using OKRs in your company! Do not wait any longer and download your white paper now.

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Digital Product Management

Lean Product Management is the digital product management methodology that assures us an effective management of the digital product life cycle and success in the market.

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And what does success mean? Success means a withdrawal in time dedicating resources to another strategic initiative, pivoting to change the focus of our product, or achieving a sustainable and scalable business model that far exceeds the initial investment.

Lean Product Management is a methodology that covers the entire life cycle of the digital product, from the idea to the withdrawal, providing the necessary practices, techniques and tools so that the product teams can build successful products.

But it is not only that, Lean Product Management requires certain practices, processes and organizational structures to ensure success. The implementation of this methodology in matrix organizations or companies with many silos and bureaucracy will be limited in its effectiveness.

Lean Product Management is a methodology that combines in a practical and effective way the principles and practices of Lean, Lean Startup, Lean UX, Behavioral Economics, Competitive Strategy and Metrics.

The Problem

90% of startups fail and between 40% and 70% of new products do not get enough traction in the market, and there are several reasons for this: dysfunctional organizational structures, ineffective and inefficient processes, the wrong mentality or inappropriate methodologies, practices and tools.

Money, talent and time are still wasted on developing products that are not of interest to anyone.

Therefore, the organizational principles of Lean, which revived Japan’s postwar economy, and especially Toyota, are nowadays more necessary than ever for digital product management.

Companies need value-oriented organizational structures, new digital product management techniques and a new mentality.

Lean Organization

Organizations face a crucial challenge today. The pace of change, customer expectations, technological disruption and volatility in general make the mental and organizational structures of the last century useless in the 21st century.

Companies need to structure themselves to become true lean product organizations, and for that they require a very specific and fundamental role for success. The Digital Product Manager. But, neither the Product Owner, nor traditional product managers, nor Business Development Managers can develop that role successfully.

The Digital Product Manager is responsible for the product strategy, the design and evolution of a sustainable and scalable business model and for coordinating all efforts for the iterative and incremental evolution of a product that delights customers and generates business growth. She is ultimately responsible for the success of the product.

Lean Product Management methodology includes the fundamental techniques that any Product Manager must master today to develop successful products. But Lean Product Management is not enough without the appropriate organizational structures, processes and mentality.

Digital Product Manager

The current high demand for Digital Product Managers is indicative of a trend towards the professionalization of product teams and a change of mentality in companies to improve digital product management.

The lack of qualified talent in most developed economies is evident. Companies face the need for great growth and the lack of qualified profiles and high turnover, especially for software development profiles, product owners and product managers.

In order for companies to grow rapidly without losing speed and agility, they need to be structured in autonomous product teams led by a Product Manager with proven experience in Lean Product Management. This person is responsible from start to finish the success of the product, including: strategy, P&L, budgeting, sales, marketing, go-to-market, development.

This requires fundamental skills, such as: product strategy, market research and prospecting, product discovery, metrics, competitive analysis, pricing, business models, marketing, results-oriented management, customer development, operations, etc …

The Digital Product Manager is a professional with a combination of technical skills, business and digital product management techniques very difficult to find. And, in the end, what companies end up hiring when they look for a Digital Product Manager is one of the following profiles:

Product Owners without business skills
Agile, Lean and Lean Startup Skills-Free Business Profiles
Technical profiles with no experience in modern product management.

This situation means that people with important skills gaps end up leading the products. Therefore, if we want to solve these knowledge gaps, what is needed is a modern and effective global approach to digital product management, which is what Lean Product Management provides.

Digital Product Management

Due to the momentum of the agile and Lean Startup methodologies and the rapid change we are experiencing, the role of the Digital Product Manager has become a fundamental piece for those companies that want to develop successful products, innovate and lead their markets.

For this role to be successful it requires a reorganization of the value flow in Value Streams or autonomous Product Teams.

If we put an expert Digital Product Manager in an organization by silos or functional units she will get frustrated. On the other hand, if we put an inexperienced role in a lean product organization, she will not be able to lead development and innovation successfully.

Digital Product Managers require some basic skills like any other leader: emotional intelligence, negotiation, leadership without authority, communication, public speaking, etc. We take that for granted. However, there is a set of skills and practices that great product managers must master in order to lead product teams towards business growth and customer satisfaction. And, that is what Lean Product Management is about and we cover in the following modules:

Product Life Cycle
Business Models
Achieving Product-Market Fit
Product Strategy
OKRs
Lean Product Roadmap
Prioritization Techniques
Metrics

Let’s briefly review each of these topics.

Product Life Cycle

Effective digital product management requires understanding that product life cycle is not only a theoretical issue, but it must be understood that each stage of the life cycle of a product requires different techniques, practices, tools and decisions. The consequence of not understanding this can lead to premature escalation or to dedicate too many resources to a product that should still be in the exploration phase.

We can identify the following stages and sub-stages in the life cycle of any product:

Ideation

Exploration
Problem-Solution Fit


Product-Market Fit (Validation)
Execution (Scale)

Growth
Sustain
Retire

Lean Product Management helps us understand each of these phases, and what decisions, metrics and activities it implies for successful digital product management.

Your prioritization mechanisms and your investment decisions are different in each of the phases.

Business Models

Many companies are still governed by opinions and illusions. In some cases this translates into investing many resources and developing an idea until you have a product that does not interest anyone, or in other cases this is reflected in the accumulated waste in the preparation of a business case of 50 pages full of opinions, illusions and lies that is handed over to the development team to execute.

Modern digital product management requires a Lean approach to business modelling. From the idea to the withdrawal of the product, we are continually evolving the business model.

The business model can be the difference between success and failure of the same product. In other words, your product is your business model and you should iterate and evolve it gradually from the beginning.

The Digital Product Manager has to determine the main risks and the amount of uncertainty. In the same way as in agile software, development, the delivery is divided into small chunks to reduce uncertainty, risk and improve the flow, Lean Product Management uses the same principle but applied to the business model, where we have business model hypothesis and experiments to validate or falsify those hypotheses.

Achieving Product-Market Fit

The Product-Market Fit is the most important milestone in the life of a product.

To achieve Product-Market Fit, you must be able to gain traction in the market by evolving an MVP until you reach a point where you can safely accelerate for growth.

A key point of the Lean Product Management methodology and digital product management is the definition of what is included in the first MVP, and its iterative and incremental evolution based on market feedback, appropriate metrics and the business model .

Product Strategy

A product strategy is basically reduced to correctly answering the following two questions:

Where to play?
How to win?

From the first moment we have an idea, we must be able to answer with certainty to those two questions. We have to be focused on which markets and customers we want to target and what is the strategy to win their hearts and wallets.

You are always competing against something or someone else. Therefore, you must be clear how you plan to win. Even in new markets, you are competing against non-consumption.

The core of the strategy work is always the same: discover the critical factors in a situation and design a way to coordinate and focus actions to address those factors. The most important responsibility of a Digital Product Manager is to identify the biggest challenges in advance and design a consistent approach to overcome them.

OKRs – Embedding Strategy into Execution

Assuming you have a good product strategy now you need to make sure that everyone is rowing in the same direction and that information flows to update your strategy if necessary.

Embedding strategy into daily operations is also great pain point for many organizations and with OKRs (Objectives and Key Results) we can make that happen.

OKR is in Lean Product Management the method to set goals that allows you to connect strategy with execution and enable decentralization and leadership at all levels of your organization.

Lean Product Roadmap

Product Roadmaps have a purpose, however, traditional implementation creates more problems than it solves.

With a results-based roadmap, we connect our business objectives with delivery while keeping the entire company aligned and providing the necessary predictability at the strategic level.

A Lean Product Roadmap is a strategic communication tool that represents a prototype of your product strategy and connects your vision with the implementation. The Lean product roadmap is not oriented to product delivery on certain dates, but to achieve results for the company and benefits for customers.

Prioritization

Product managers are constantly asking themselves a question: what should we do next?

Lean tries to do the right thing, at the right time, in the right amount. And, to achieve that, we must have information available that allows us to make the right decision.

Prioritization is the result of an equation between business risk, uncertainty and the money we have. However, in order to prioritize correctly, some things must be clear before, otherwise, we are constantly improvising:

Business model
Product life cycle
Purpose, vision and principles
Business strategy
Business goals
Product vision
Product strategy
Product goals
Metrics framework
Economic framework

If any of the above points are missing, our prioritization will be a constant headache and we will be at the mercy of arbitrary, political and illusion criteria. On the contrary, if all the points on the list are clear to everyone in the organization, the prioritization should be a matter of seconds for anything in progress; from great initiatives to stories of individual users or technical tasks.

Lean Product Management helps us properly prioritize the most important jobs for customers, expected results, unresolved needs, experiments, functionalities to be incorporated into the MVP, assumptions and results.

Metrics

This is probably one of the main weaknesses in digital product management. Despite the amount of data available and the analysis tools, product teams and organizations use the wrong metrics to make the wrong decisions at many different levels.

The most important thing to know here is that, at any time, according to your product strategy, your business model and the stage in the product life cycle in which you are, there are only a few metrics that you should consider .

A Digital Product Manager knows it. Having too many or too few metrics is the mistake. What you have to do is change the metrics according to the evolution of your business.

Each product must be managed with a reference framework of metrics that help us make decisions quickly and efficiently.

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Find Out What Makes Communities of Practice Successful

You’re probably sold on the idea of having Communities of Practice in your company. There’s just so much to it that you couldn’t pass the chance of assimilating this framework into your company culture. In this blog post we will explain what makes communities of practice successful.

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Being the strategic leader that you are, you’re probably curious what are the things that you should know to have the buy-in from your employees to participate in CoPs.  You’re in the right place. Below are some of the solid researches we made to study the pitfalls of implementing CoPs.

Deconstructing Communities of Practice

Before diving into the details, let’s refresh your memory and understand how CoPs work.

Jean Love and Etienne Wenger coined the term community of practice (CoP) in 1991 to describe a method of learning which involves regular interaction and sharing of knowledge between subject matter experts rather than simply acquiring information through a coded source.

The CoP is defined by three characteristics, namely, the domain, community, and practice.The domain refers to the collective competences, commitment, and interests of the community.

The shared domain among the members of the community inspires participation and continuous learning. While the domain provides the community with a focus of interest for the members, the practice helps the organisation develop, share, maintain and collect knowledge.

CoPs are promoted in various sectors including healthcare and business sectors. In the healthcare sector, it’s used to understand concrete information such as practice guidelines and medical techniques.

CoP was first mentioned in business literature during the mid-1990s to describe a learning process through apprentice training, informal learning groups, virtual communities and multidisciplinary teams.

Until today, companies like your use CoPs to help build their identity and develop and refine the skills of their employees. Most importantly, CoP plays a crucial role in managing and distributing knowledge resources within and outside of organisations.

What Makes Communities Of Practice Successful
How Corporations Use Knowledge Resources

Ikujiro Nonaka explained that knowledge can be distinguished into two forms – tacit and explicit.

He further extended that although the creation of an idea starts in a person’s mind, social interaction plays a crucial role in developing and polishing the information until it becomes a usable form of knowledge.

Explicit Knowledge – This type of knowledge is usually found in manuals, books, documents, memos, and business reports. Because the knowledge is coded, it’s easier to be shared, identified and articulated within a certain business unit. Additionally, it’s well structured, rational, and objective.
Tacit Knowledge – It’s defined as a type of knowledge acquired from a personal experience or through a previously completed or failed task. Compared to the latter, it’s more difficult to extract tacit knowledge because it often includes intangible factors such as intuition, values, cultures, personal beliefs, and insights of the subject matter expert.

Regardless of the rationality of explicit knowledge, tacit is more important, especially in corporate learning, because it helps in maintaining a competitive edge and promoting innovation.

However, managers find it extra challenging to collate and collect tacit knowledge. This is where CoP comes in as it is considered the most effective way to manage tacit knowledge.

Community of Practice Development Stages

Knowing the development stages of CoPs will help you understand how and when your leadership should step in. Building CoPs can be daunting especially for when it’s just starting out.

Knowing these stages will help you keep an optimistic mindset in actively investing in your CoPs. The stages below will serve as your map in developing CoPs. So let’s dive in.

According to Wenger, the CoP has five development stages, namely, potential, coalescing, maturing, stewardship and legacy.

He points out that the development model shouldn’t be considered as prescriptive but rather indicative because each community can go through the stages differently.

Some groups or units may succeed easily in completing the stages while others need more time to perfect their social learning strategy.

Potential

At this stage, the community is merely a loose network of experts who occasionally reach out to one another to discuss their interests. The goal at this point is to inform members about the mission and vision of the community.  Some of the members may assume roles to initiate conversation, while others take charge of gathering data about the issues that need the immediate attention of the group.

Coalescing

It’s mostly referred to as the infancy period, and among the rest of the stages, it’s the most fragile one. Initially, members of the organisation get excited after the launch of the community.

The momentum then declines as they recognise their other responsibilities and commitments. At this stage, it’s crucial to build a stronger bond between the members.

Maturing

Once the members understand the essence of building a solid relationship with the other members, they can focus on constructing the identity of the group. Developing the identity helps generate more value for both existing and prospect members. This is the perfect time to standardised processes and operations.

Stewardship

After the community creates a defined identity and an organised method of sharing, discovering and polishing information, it can start expanding its focus, addressing other possible issues or engaging in a new project. As the community grows and sometimes loses its leaders, its crucial to have an ongoing plan to keep the ball rolling.

Legacy

Communities of practice eventually fulfil their purpose. However, unlike teams which move on after they complete a task, the responsibilities of a community never end. Most of the time, they move on and start anew. Sometimes, the domain of the community becomes too complex that it’s better for the group to split to give distinction to the new domains. Other groups decide to merge with fellow communities to further expand their reach.

Different growth measures are used to assess each development stage of a CoP.

One of the metrics you can use is the total number of community members ever since the community “launch” or the knowledge transfer between the members of the organisation.

Do take note that knowledge transfer can’t determine if learning does occur among the members. Instead, it only refers to the number of emailed pages, uploaded or downloaded documents, and replies to online, physical and phone discussion.

Another metric used to study the progress of a CoP is the active member participation rate which can be computed by combining knowledge, replies, and discussion and dividing the total value to the number of unique visits.

Measuring these metrics may sound tedious but remember things that don’t get measured don’t scale. And we both know we want to scale and make your company’s CoPs successful. These metrics and regular check-ups are part of the game.

Factors that Affect the Efficacy of a Community of Practice

There’s a 2008 study on the factors that affect the success of CoP from European Management Journal.

The research conducted surveyed 57 community of practice leaders from organisations such as Mazda, Siemens, IBM, Oracle, World Health Organisation and United Nations.

The study revealed governance mechanisms that are used by CoP leaders to succeed in sharing knowledge and practices among the members of the group.

Some of the tips include sticking to clear and strategic objectives, dividing community objectives into simpler subtopics, and explaining the community’s goal to all the members. Additionally, the research paper enumerated the top reasons why a CoP fails.

Lack of a core group

It’s essential to have a group of actively engaging members in a CoP. Most of the time, the core group is formed during the early stages of the CoP. The members of such a group must maintain the engagement to encourage other participants.

Lack of a solid identity

Sometimes, members can’t identify with the practices of the community. Leaders must explicitly showcase the community’s identity through the collection, management, and processing of shared knowledge.

The rigidity of individual competences

Naturally, most members prefer depending on their own competences, so they are less likely to integrate the practices used by the community. Some aren’t too keen on sharing their best practices because of stiff competition in their department.

The absence of one-on-one interactions

Community members sometimes don’t like one-to-one conversations, especially when solving problems in their unit.

Knowing these pitfalls can steer your wheel in the right direction. When opportunity meets preparation, you would know that the growth of your company will go beyond the auspices of just being “lucky”.

As a leader in your company, you’re now armed with the ideas on how to go through these hurdles.

A community of practice is proven as the most effective way to manage and share tacit knowledge in any type of corporation.

Which is why, understanding how a CoP works, specifically its stages of developments and the factors that affect its efficiency is absolutely essential for every group of corporate learners and trainers.

Remember that a company that knows how to maximise their knowledge-based assets, delivers nothing but cutting-edge innovation.

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Communities of Practice Rules To Improve Your Company Knowledge Capital

So you’ve heard about Communities of Practice? If not check read “Communities Of Practice“! It’s just the most natural way to harness the inner genius of your team. It’s like constructing a playground for highly vetted talents you hired and you’re letting them play, make friends, and do some awesome magic for your company. And in this article we will discuss 5 communities of practice rules.

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And they don’t have to feel forced doing the work because it’s something they enjoy doing for your company. Imagine high-spirited talents doing nothing but to diligently improve your company because they enjoy working for you and their workmates.

That’s how powerful CoPs are.

So how does it really work? The framework of Communities of Practice can be a little tricky. And without proper planning and systems in place, it will take time before your company fully reap its full potential.

So we suggest that you start with these immutable communities of practice rules in planning and setting up your company CoPs.

Communities of Practice Rules
Membership should be voluntary

Communities of Practice are voluntary which makes them different from your regular company teams. The members focus on the value that they can offer to each other and to your company.

In the earlier stage, this value may be sourced from the needs of the community and the current issues. As it undergoes several stages, such value evolves into a systematic body of knowledge which members should be able to access easily.

Generally speaking, it is a much better option when participation is voluntary in your company’s Communities of Practice.

When the participation becomes compulsory, it faces the risk of making the community as another meeting that one has to attend and endure. It can affect the social energy that boosts meaningful learning in Communities of Practice.  

Recruit participants who are deemed as experts and a credible source of information

One of the many benefits of Communities of Practice is that it can produce and refine tacit knowledge from your workforce which could have been hidden if not for the social learning mechanism of CoPs.

In order to realize this benefit, it is crucial that participants have intermediate or at least have bsaic knowledge in the shared interest of the community in order to share valuable information and content.

This requirement will ensure that the community is not really starting from zero (no prior related knowledge means you have to provide more support, structure, effort, and training).

In some organisations, community membership is deemed as a privilege. At American Management Systems (AMS), a member as an expert by his manager.

Upon successful entry, the participant has to accomplish one knowledge-development project every year in order to keep his status in the community.

His participation is funded by the business units which in turn provides other funding ventures such as the annual projects, workshop attendance and annual conferences.

Of all the communities of practice rules, this can be a little harsh but this ensures that you’re funding an investment that is meant to be rewarded with great return.

Support and nurture the existing Communities of Practice

Just like all networks, Communities of Practice need nurturing. Someone usually takes the lead in establishing the community.

Often, the need to set up a community starts from simply caring about the issues in the workplace. Members invite colleagues so they can learn and grow together.

They become involved in learning conversations using an inquiry approach. This leads to working together with an aim to deepen the understanding of practice by the members. It also leads to finding the best evidence to help members enhance their practice.

As someone with a management role, you can offer your CoPs to provide a resource speaker in their sessions. The speaker can be from non-competing organisation or company who are knowledgeable in topics that your CoPs discuss.

The more diverse and dynamic the resource speakers you bring to your CoPs, the more exponential their knowledge growth would be. It’s like investing in stocks; the only difference is that CoPs only grow in compounding interest for your company.

It also paves the way for the group to evolve and form subgroups on its own even if it was established for a specific topic.

To summarise, nurturing Communities of Practice include the following activities:

Negotiating the group’s strategic context
Legitimising the members’ participation
Fine-tuning the organisation
Leveraging the existing practices
Providing various forms of support such as guidance, resources, and links to other communities

The focus should be on gathering information as opposed to making decisions or taking action

While growing your company’s CoPs, immediate results should not be expected yet. In the short term, the value is really in the open communication among members when they share their problems and needs.

 In the long term, a systematic collection of knowledge should be built which members can easily access. This can be in the form of proceedings, wikis, knowledge-base, internal company blogs, and archives.

As your company CoPs continuously grow and evolve, so is the knowledge capital of your company.

Your job is to make it sure that as your CoPs evolve, you put strategic systems and frameworks that reap all information encoded in each interaction and discussion of your company CoPs.

The management should not dictate action

You should not manage the Communities of Practice in a heavy-handed way. While Communities of Practice provide a relatively different approach to reach the same goal, it also provides a different kind of structure meant for focusing on knowledge sharing.

Members thrive in an environment based on collegial relationships as opposed to reporting and manager-employee relationships. Furthermore, the community leaders (Communities of Practice coordinators) are deemed as peers and not as bosses.

Stick to these communities of practice rules as you develop and grow your company CoPs. You may adjust some details as the needs arise but it all comes back to these five simple rules.

Adapting CoPs can be daunting especially for companies with a traditional mindset. But times are changing and the people you will be working with are different from the people you used to work five to ten years ago.

Employee retention rate is getting lower each year and everyone would want to pursue their own “startups” to scratch their entrepreneurial itch. But we’re all a social animal.

Everybody loves working with other people. So this is where CoPs becomes your secret weapon. It’s the first few steps that you have to make to build high performing company that is capable of evolving to face new challenges in the days to come.

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5 Major Product Development Mistakes and How To Avoid Them

Executives like you are worried about the major mistakes their companies make that stop them from becoming market leaders in digital era and attaining the growth level they want.

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This article will tell you about five major product development mistakes.

Sadly, these mistakes have devastating effects on a company’s ability to deliver products with a high acceptance rate in the market.

It is no longer news that within 40% – 50% of products fall short of their market acceptance expectations. So what are these five mistakes and how can you avoid them?

The 5 Product Development Mistakes


Organisational Design

One of the key reasons why many companies are unsuccessful in product development is their organisational design. Many businesses are organised around egos and silos instead of creating value.

There are three essential organisational design patterns. Two among them aren’t functioning. They can stop your business from providing optimal customer satisfaction fast.

Also, they can make things difficult to maintain in order to make your business grow to the extent of becoming a market leader in the digital era.

Organisational Pattern 1: Proxy Product Managers

In this case, the Business Unit requests that Product Managers deliver on a Business Case that has already been enhanced.

As such, Product Managers have the responsibility of coordinating the high-level delivery blueprint while Product Owners and their team manage the in-depth backlog.

All the more so, if you’re into Agile as a team, it is characterised by sequential stages and a fixed plan of work, with silos and hand-offs division of tasks and wishful thinking.

Several businesses claim they are into Agile and it’s because their teams are into Scrum or can deliver software repeatedly and increasingly every other week.

Organisational Pattern 2 – Proxy Product Owners    

This pattern evolved as an improvement to the previous pattern. Nonetheless, rather than have different roles in its delivery function, it only has one and that’s the Product Owner. Though it’s still a delivery role.

Organisational Pattern 3 – Product Organisation

In this scenario, the Product Managers are absolutely responsible for product development or product line development.

The Product Manager is responsible for leading a small team of committed people that:

Designs the product concept
Creates the business case
Heads the technical design of the product
Manages the development process
Works with production engineers, sales/marketing and
Oversees the product into production

If your company or business has adopted pattern 1 or 2, you’re already using the wrong pattern. You will end up delivering products no one is interested in and you’ll be caught up in a lot of challenge as time goes on.

Cognitive Biases

As a result of automatism in the human brain, there are up to 150 cognitive biases that make humans make illogical decisions.

The key method of preventing those biases from affecting product development process is to repeat and execute short feedback loops provided by customers and using data to make rational decisions.

A lot of cognitive biases have a negative effect on how companies define their strategy and review new ideas before executing them. The most significant ones are Innovator Bias and Confirmation Bias. But you can easily avoid both when you implement the right processes.

Innovator Bias

It’s easy for people to fall in love with their ideas or solutions without ascertaining the problems such ideas and solutions can solve. It is absolutely mandatory for new technologies or inventions to be able to solve problems.

But a great idea that runs across your mind while you’re having a warm bath may not accurately transform into a new growth trend for your business. To make the idea effective, you’ll have to solve several different interconnected variables.   

You may have a great idea like Steve Jobs or Henry Ford. But many customers don’t know what they really want.

However, in this scenario when you have such a great idea, you should review it all over to figure out the actual problem that idea can solve.

You should also ensure that there’s a market that is big enough for you to build a business model with it.

Even more, you should ascertain that your solution is different from present solutions and competitions by creating a unique value proposition (USP) for your brand.

These are the key things you’ll have to do repeatedly and increasingly by implementing the scientific approach and testing your most risky assumptions over and over again until you get a hold of the market.

Confirmation Bias

This refers to the possibility that people look for, interpret, and remember information that affirms their beliefs and opinions.

A confirmation bias occurs when people gives more significance to evidence that affirms their hypothesis and down plays evidence that could show it is false.

Putting The Cart Before The Horse

This is one of the most common mistakes many traditional companies make.

Many companies scale before they have any objective that you have developed a product people want and there’s an actual market for whatever you’re offering (Product-Market Fit).

Oftentimes, when there’s an idea, goal or a project, companies design a business model all of a sudden, provide funds for the project based on assumptions, estimates and future predictions.

They put the entire resources, infrastructure and workforce together upfront and then, they start building outrageously.

Whenever executives like you have to work with traditional businesses, they often ask their clients to view product development the same way they approach innovation or startups.

Management should take up responsibilities like Venture Capitalists.

They should also use innovation accounting to evaluate progress until their solution is ripe enough for Product-Market Fit and then focus on growth.

You shouldn’t hire 15 developers if you’re yet to ascertain product-market fit.
You shouldn’t assign budget of the year to projects and products from the first day.
You shouldn’t bother about creating a scalable architecture from the first day. Allow your infrastructure to grow with your customer base. Or else, you may end up spending a lot of money on things you don’t need.

Some business owners are also known for making the mistake of scaling their businesses before they achieve Product-Market Fit. Such approach is a big mistake because scaling is expensive and it requires constant funding.

If you scale without having product-market fit, you’ve made a terrible mistake.

Because of the way many traditional companies operate, assign resources, budget and offer incentive to management, it stops them from working this way. As a result, it affects their operation and eventually makes them insignificant.

Simply Because You Can Build It

Many companies are always too eager to start building before making up their mind on the problems they want to solve, for whom and if there’s an existing market that is big enough and willing to pay for their solutions.

This is one of the most common patterns of waterfall of so many agile businesses till date.

This problem is an attitude of delivery. An attitude of output over results. In this scenario, their ultimate challenge is to move the working software to the production phase regardless of its ability to solve any problem or provide solutions or not.

The entire process is similar to a feature factory.

In this case, the company is not even aware if there’s any problem that deserves a solution and if their product can solve the problem or not. All they know is that they are building a software.

Don’t forget that building a software can be one of the most expensive things your business will do. So do everything possible to reduce the cost of building the software.

In this case, the agile principle of “working software is the primary measure of progress” is not applicable. Rather, the only measure of progress in this case is validated learning.

Several companies also make the mistake of considering whether to make an investment or execute a project based on its cost.

Unknown to them, cost is one of the less important variable among all the variables in a business model. In most cases, the most crucial variables include the market size and the product adoption rate.

So rather than ask how much it’s going to cost to build or implement a software or project, you should ask how much you’re going to sell and how fast.

Similarly, just because you can design or build a software doesn’t mean you should go ahead and build one. Rather, you should ask yourself several different questions including:

What problem will it solve?
Who will use it and how many are they?
What alternative exists in the market?
What price should we sell in order to make profits?
Are our target customers willing to pay such price?
What are the operational and technological effects of the price?
And other related questions.



Wishful Thinking

This simply means operating or running a business blindly or making crucial decisions without using any data. Many companies and businesses are guilty of this mistake and it occurs anywhere from strategy to operations.

Many investment decisions are done as a result of about a 50-page business cases that are made up of false data and assumptions.

In many cases, there’s no framework for deciding what project deserves funding or not and more often than not, the HIPPO has to make the eventual decision.

Product Managers and Product Owners often schedule their work based on what seems to be an urgent need, opinion or perhaps the situation that makes the loudest call.

Our Approach

We strongly suggest that you view a Product Owner as a Product Manager with contemporary skills such as Lean Startup, Behavioural Economics, Customer Development, Analytics and Innovation.

As soon as you organise around products, you should get a competent Product Owner and put him or her in charge to steer business growth. However, finding and hiring such talent in the job market is hard, requires a lot of time and also very expensive.

As such, we have designed a program that will enable you to develop great Product Owners in your own company.

Our program was designed by our expert coaches and consultants and they are meant to save time, money and all the stress involved in finding and hiring the right Product Owners. Want to know more about it, contact us at info@evolution4all.com

LEAN PRODUCT MANAGEMENT GUIDE

We have developed a Product Management Guide to help you understand How to successfully apply Lean StartUp practices to deliver better products to market faster.

Download The Guide Now!

The post 5 Major Product Development Mistakes and How To Avoid Them appeared first on Luís Gonçalves.

3 Terrible Mistakes of Digital Product Companies And How to Avoid Them

Are you offering products nobody is interested in?

About 72% of all newly launched products fall short of their revenue targets, according to a recent HBR blog post.

LEAN PRODUCT MANAGEMENT GUIDE

We have developed a Product Management Guide to help you understand How to successfully apply Lean StartUp practices to deliver better products to market faster.

Download The Guide Now!

In fact, as soon as you launch a new startup or release a new product, the odds are already not in your favour.

As many as 75% of venture-backed startups do not succeed while 40% – 90% of newly launched products end up with a very low market adoption rate.

Even at the micro level, the challenge is still the same. A larger percent of new ideas fail to provide any real value for individual customers and corporate clients.

However, among leading brands such as Netflix, Amazon, or Microsoft, failure rate is within 50% to 70%.

The question is, why do startups and newly launched products record such high percentage of failure?  Is it because the brain behind them aren’t so smart? No!

Rather, many startups and newly launched products fail because they implement wrong processes, structures and thoughts.

Nonetheless, for larger brands like Netflix, Amazon and Microsoft, failure is not considered a huge challenge because they strongly believe in experimenting to arrive at the right result.

The major challenge with failure is the amount of money the company lost in the process as well as the associated learning. In fact, it is normal to experience a high rate of failure.

But the most significant aspects are the amount of money spent and what you learned from the failure so far.

If an executive like you cannot create an effective strategy that you can repeat to generate similar successful results to develop a business idea into a sustainable and growing business model by testing and gradually funding it, you have a business challenge.

Mistakes of Digital Product Companies

There are three major mistakes many businesses make irrespective of their industry, niche or how long the company has been in business:

The wrong structure
The wrong process
The wrong people

The Wrong Structure

As businesses grow, they add more hierarchy, bureaucracy, and segment their workforce into specialised units or departments and easily forget how they became successful in the first place.

Lean Thinking has five key principles:

Define value
Organise in Value Streams
Enable flow
Implement pull
Seek perfection

One of the key principles many companies always abandon as they grow is focusing on value and organising to deliver value promptly to either corporate clients or individual customers.

This is the principle an executive like you should never abandon when you’re growing your business in the digital era and when you have grown so big to the extent that you’re no longer competitive or innovative.

If you’re running a digital business, you should organise in a Product Organisation with independent end-to-end teams in charge of a product or line of products.  If you are interested in this topic you should check the blog post: “Why A Matrix Organisation Will Kill Your Company“.

The Wrong Process

Agile is built on two solid principles. The first is pleasing your customers via quick and constant delivery of important and useful software. While the second is that a working software is the basic measure of improvement.

This is only acceptable if you have teams that are mindless feature factories that are not connected to customers and strategy. Otherwise known as delivery teams, they are not connected to the customer and the company.

They are only responsible for repeatedly and gradually delivering whatever they are instructed to.

However, the right process involves having a better perception and having a crystal clear understanding about the mission of your teams which must include building a business model or achieving a business objective.

The entire process should revolve around moving from idea to execution, research, and authentication. It involves creating an effective business model and a product to satisfy customers.

The Wrong People

Finding great Product Owners in the market is becoming extremely difficult by the day and I explained why that is gradually becoming a regular problem in this post.

Asking the wrong person to take responsibility of a product is a costly mistake.

On the other hand, one of the key mistakes many businesses make is presuming that Scrum Masters or Agile Coaches can transform an amateur or inexperienced Product Owner into a skilled Product Owner.

Why is this a mistake? Most Agile Coaches and Scrum Masters do not have the required skills and experience a modern Product Owner needs to be successful.

Agile, Scrum and Kanban, are valuable at enhancing operational effectiveness. Agile is very great at enhancing delivery.

Nonetheless, Agile knows nothing about creating a viable business model, conduction market research, repeating an MVP or conducting customer development.

The procedures and practices needed to try-out and authenticate an idea until it is good enough for implementation are unknown to most professionals who use Agile.

Our Approach

We propose that executives just like yourself should consider a Product Owner as a Product Manager who is well-equipped, experienced and has acquired contemporary skills such as Innovation, Behavioural Economics, Analytics, Lean Startup, and Customer Development.

As soon as you organise around products, put a skilled Product Owner in charge. One that is professional enough to steer positive business development to thrive your business in the digital era.

However, such Product owners are scarce so finding one is very expensive and takes a whole lot of time.

To make it easier for you to save time, money, and avoid stress, we have created an effective program that will help you to develop great Product Owners within your company.

Our program was designed by our expert product coaches and consultants with a wealth of skills and experience in the Product.

To know more about this program, contact us at info@evolution4all.com.

LEAN PRODUCT MANAGEMENT GUIDE

We have developed a Product Management Guide to help you understand How to successfully apply Lean StartUp practices to deliver better products to market faster.

Download The Guide Now!

The post 3 Terrible Mistakes of Digital Product Companies And How to Avoid Them appeared first on Luís Gonçalves.