The habits that set apart transformational product leaders

Today we are talking about why organizations are increasingly facing the need to transform and how to navigate those changes. If you have experienced a big change, you already know firsthand how challenging it is. All of us need to know the principles that make transformations successful, and that is what we’ll takeaway from this discussion.

Joining us is John Rossman, who was an early executive at Amazon and led the launch of the Amazon Marketplace (which allowed third-party businesses to sell on Amazon). He is a four-time author including best seller “The Amazon Way” and “Think Like Amazon,” as well as a sought-after business advisor and keynote speaker. His expertise is on leadership for innovation and business transformation.

His most recent book is Big Bet Leadership: Your Transformation Playbook for Winning in the Hyper-Digital Era.  

Summary of some concepts discussed for product managers
[2:41] What advice have you received that helped you think about how to have more successful influence in the organization?

I had a longtime business partner, Steve, who told me, “After Amazon, your superpower is always clarifying and simplifying the discussion, the meeting, or the communication.” I recognized from Steve that one of the things I learned at Amazon was how to clarify and simplify. Especially in a complex situation, the person who can clarify and simplify the communication is the controller of the situation.

After I left Amazon, one of my key clients was the Gates Foundation, and Greg Widmyer told me, “You do a really nice job taking the little strategies, inserts, and mechanisms from Amazon and delicately implementing them and influencing our work. I think you ought to write a book about it.” The ability craft a story and influence others at scale through a book was a great piece of advice and something I had never thought about before.

[5:48] What are Big Bets and why are they important to organizations?

A Big Bet is any initiative, strategy, or project that both has the potential for significant business impact and business upside and has significant multi-sided risks or assumptions. They are not simple initiatives or straightforward capabilities.

Big Bets typically happen at the enterprise level but can happen at the team or product level. They get called lots of things like market repositioning, merger integration, digital transformation, AI strategy, etc.

Big Bets have a 70-85% failure rate, but those are all errors of commission where an initiative was taken and it didn’t work as scheduled. The biggest failure point is typically the benefits. But those statistics don’t count the errors of omission where a Big Bet was needed but one wasn’t taken. When you see a company go from great to average or from average to irrelevant, a Big Bet was needed.

The framing of my book, Big Bet Leadership: Your Transformation Playbook for Winning in the Hyper-Digital Era, is critical to answer the question, why are Big Bets needed? It’s my hypothesis that these past 30 years of digital change has been the warmup innings for the next era, which we call the hyper-digital era. The companies that can make a core capability out of transformational change, high potential impact, and high risk will win. In addition to being operationally excellent and great at incremental moves, they are going to be great at these transformational capabilities, these business model changes that are so essential. Those are the Big Bets.

[9:33] Tell us about solving wicked problems.

If you asked me, “John, what are you good at?” I would say I’m good at solving wicked problems—multi-sided, non-obvious problems. Technology is just one of the mega forces that I think will drive this next era. Mega forces include change, labor force, and population. Another mega fore is the need for our country to drive innovation. Just to be able to afford the required spending, we have to grow the economy. Those mega forces combined will create this cyclone of transformational change.

There are going to be a lot of new winners and new losers. Transformation has to become a core capability for senior leaders. Today, it is not. That’s the problem we are trying to address in Beg Bet Leadership.

[11:44] Can you share a success story—why transformation was needed and what the leader did to make it successful?

My co-author Kevin McCaffrey drove new business incubation at T-Mobile, a company that has gone through a decade or more of Big-Bet success. In the book, we feature four Big-Bet legends: Elon Musk, Jeff Bezos, John Legere, and Satya Nadella. The story of T-Mobile starts in 2013 when John Legere declared war on the other three major carriers and started the uncarrier moves. Over the next five to ten years, T-Mobile underwent 12 sets of uncarrier moves. It took them from an irrelevant fourth-position carrier to a brand and innovator in a very commoditized business. They created value propositions for customers by doing the exact opposite of what the industry did. Before T-Mobile changed the game, we had to sign contracts for phones and carriers and pay overage and roaming fees. It was all customer-unfriendly. John Legere led a revolution. T-Mobile’s stock is up over 700%. They’re now the market leader. John Legere set up a system for Big Bets.

Kevin and I studied these legends to understand what they do differently from other operational leaders. Our framing is that Big-Bet legends have three habits:

• Create clarity.
  
• Maintain velocity.
  
• Accelerate risk and value.
  

[16:05] What are the differences in innovation practices between T-Mobile and Amazon?

Amazon has an innovation approached called Working Backwards. They start with the customer and work backward. They use written memos and active debate to experiment and make both high-stakes decisions and refinements before they commit resources.

Many former Amazon leaders make the mistake of implementing Working Backwards at their companies. It typically fails big-time because you don’t have the culture, the DNA, or the background to be successful. Kevin and I, from a first-principles standpoint, redesigned a Working Backwards process that fit T-Mobile. A lot of that experience is now in Big Bet Leadership. We outline a specific approach of how to write memos that help create clarity that sets up the other two habits that are the essential underpinnings of being successful at Big Bets.

[18:21] What should product managers know before implementing a successful practice in a new company?

Understanding the cultural norms and natural orientations is critical. T-Mobile is a very finance-driven organization, almost to a fault. We weren’t going to change that. We figured out how to take advantage of that through our application of this memo process. We feature the financial case as part of the ambiguity that has to be tested away before we go big on our Big Bets.

If you need to change everything about how the company works, you’re setting yourself up for failure. Shrink the change and minimize the transformation to get to the real business transformation.

Tell us about the three habits of successful Big-Bet leaders.
[20:27] Create clarity.

Start with customer centricity. You have to get to the real “what sucks.” Our first memo is called the What Sucks memo. It’s easy to talk about the low- and middle-grade issues your user has, but what’s the real “suck” that would get them to actually switch to buy your product or service at a premium? Get to that level of understanding through all your customer research, and capstone it with a singular point of view: Here’s the customer. Here’s what sucks. Here’s the killer feature. What’s the one use case, feature, or combination of things that would solve this “suck”?

Once you have a great definition of the suck and the killer feature, you can make the outcome definition. What is your crystal clear value proposition that would deliver this killer feature? What are the three to five critical assumptions, risks, or things that have to be true in order to deliver that killer feature and that outcome definition?

Bezos says he wants “crystal narratives with messy meetings.” Have the clear memo and then allow wandering in the discussion. Writing memos is hard, but it makes it so much easier for the senior executives to understand the situation and what you’re proposing, to see underlying opportunities, and to weigh them against other potential resource allocation decisions. We have a lot of really good ideas, but we can only go with a limited number. We create clarity by separating out the right Big Bet from all the other good ideas.

[24:04] Maintain velocity.

It’s easy to start off with energy and commitment, but your transformation can quickly become just another typical project or initiative. For Big Bets, you have to predict the issues that come along with Big Bets, like policies, naysayers, and stakeholders. To maintain velocity, you have to put your Big Bet in an environment that will allow it to have a pace that is unnatural for typical projects.

[25:12] Accelerate risk and value.

Accelerate risk and value, deferring as many other commitments and resources as possible until the big assumptions and unknowns are better understood. This is the most counterintuitive habit for most senior leaders. We tend to fall in love with an idea and then announce it and start budgeting and making commitments against it. That doesn’t allow us to test and validate those big assumptions we’ve been making or allow our project to change. When the team members see all the commitments they’re being signed up for, everyone becomes task-oriented and starts de-risking the project, and that’s where the biggest failure points happen. Our ambition becomes lower, so we might deliver the initiative but not the promised impact that went along with it.

Action Guide: Put the information John shared into action now. Click here to download the Action Guide.
Useful links:

• Order Big Bet Leadership on John’s website or Amazon
  
• Visit John’s website
  
• Connect with John on LinkedIn
  
• Listen to episode 448 on Amazon’s Working Backwards approach with Colin Bryar
  

Innovation Quote

“The greatest danger for most of us lies not in setting our aim too high and falling short but in setting our aim too low and achieving our mark.” – Michelangelo

Thanks!

Thank you for taking the journey to product mastery and learning with me from the successes and failures of product innovators, managers, and developers. If you enjoyed the discussion, help out a fellow product manager by sharing it using the social media buttons you see below.