Insight Partners’ Product Center of Excellence, in collaboration with ProduxLabs, recently hosted its inaugural "Product Operations Summit" in New York City. It convened over 30 Product Leaders to discuss best practices for getting the visibility that product leaders need to achieve sustainable growth in the scale-up phase. The joint Insight and ProduxLabs team, leveraged their significant experience across all stages of growth to help Insight’s portfolio product leaders level-up their product operations. The summit had an overwhelmingly positive response from attendees. Product Operations is a strong theme across all companies, especially important as company complexity increases with more customers, more products and in more geographies.
The day was jam-packed with informative sessions, including:
- Getting the Metrics that Matter: An Overview of Product Operations
- Why Insight and Your Board Love Product Operations
- Why Product Leaders Need Product Operations: An Illustrative Case Study
- Metrics that Matter: How to Create Your Revenue Baseline
- Metrics that Matter: How to Create Your Cost Baseline
Below is a summary and key takeaways the product leaders got from the summit sessions.
Getting the Metrics that Matter
Product operations is the glue that helps you make decisions, it informs strategy and helps surface data to make smarter decisions in real time. It can be leveraged to enable more efficient R&D and reach growth targets using metrics that matter.
Knowledge of product operations is now becoming key to effective product leadership, as it pulls valuable inputs together across the organizational customer support, engineering, sales, product, market and customer research, finance, R+D processes, etc. to help the entire company think strategically.
The session was led by Melissa Perri, CEO of ProduxLabs and an established thought leader in the product space, and Tami Reiss, SVP of ProduxLabs and CPO-in-residence at Insight Partners with 12+ years of experience as a Product Leader.
- Companies tend to only look at key data when it’s time to present to the board. With product operations, data is more accessible on a consistent basis, you can lead the product team to be less reactive and more proactive with growth strategies.
- Executive product leaders look at how revenue and costs play together towards profitable growth on a regular cadence.
- Data helps Product Leaders gut check and also make pivotal decisions with confidence and have others feel secure in following your lead.
- By operationalizing Product, fellow executives will appreciate the transparency, predictability, and data-driven decision making.
- Setting up Product Operations is an iterative process, not one-and-done — start somewhere then continuously improve upon it.
“I learned that we need staff in product ops org that can roll with the punches and embrace chaos, but have people skills to lobby people in other teams to want to work with them. It’s about people and process, not tools.” - Steve Gage, Advisor at Bynder
Why Insight Partners and Your Board Love Product Operations
The time allocated to discuss product with the board and investors is limited, so make sure it’s an engaging and exciting highlight of the quarterly meeting. The board wants to advise you, evangelize your company to customers and partners, and, often, invest further in your business. They want to walk away with confidence that the company is heading in the right direction under your product leadership. The data-driven insights, metrics, and KPIs generated and tracked by the Product Operations team have the power to both ground the Board and let you tell a confidence-inspiring story about the product strategy. Use Product Operations to underpin your most important messages: why the areas you’re focused on are the best uses of resources, what is going to help differentiate and sell the product, and when you expect to monetize new products and enhancements.
This conversation was facilitated by Shelley Perry, Operating Partner at Insight with over 20 years of product leadership experience across software companies of all sizes and industries.
- Insights from Product Ops foster incredibly productive board discussions around product strategy and build confidence in you as a leader.
- To maximize the value of board meetings, show that every R+D dollar is being put to good use with high ROI.
- The most important thing is to create a baseline of truth, and then monitor and share progress toward strategic outcomes.
- At the board level, correlation across functions is key to showing every exec is working together towards common goals. Product should echo and build on finance, sales, and marketing messages which are most often presented first.
- The board meeting is forcing the execs to take time and invest in longer term strategy. Your company is changing every quarter, and this is about the journey the org is taking together to decide where you’re going. Take time and have the data to guide you.
“It was great to understand Insight's perspective on the role of Product Ops, with actionable examples that we can take back to our teams.” - Ralph Choclac, VP of Product at Insightful Science
Why Product Leaders need Product Operations
Product Operations can provide the necessary visibility into key data to help product leaders support their hypotheses, and give credibility in strategy and board conversations.
Cheryl Michael, Chief Product Officer of Central Reach, the SaaS leader in Innovative Practice Management & EHR Technology for Behavioral Therapists, shared her real-life experience in implementing Product Operations. She has over 18 years of experience in the Healthcare Industry driving leading-edge solutions to the Provider market. In this talk, Cheryl provided a perspective on how product ops helped her level-up the product organization she leads to make more evidence-based strategic decisions.
- Correlating data to drive strategic decision-making must include a perspective on portfolio performance, customer segmentation (i.e., where money is coming from and where money is churning), where R&D investment is going, for example:
- How much it costs to keep the lights on?
- What is the innovation spend?
- What potential revenue and cost levers should be analyzed (e.g., where costs are rising, and what is driving future growth)?
- Product leaders are different than less experienced product managers because they have become strategic evidence-based visionaries that empower their teams to drive outcomes through product operations.
- Be selective about the data brought to strategic conversations, ensure that it helps answer questions that are critical to align strategy to your company’s growth story.
- Over time, product operations dashboards can empower product managers to be mini-CEOs of their product lines, while allowing product leaders to drive outcomes across their portfolio.
Metrics that Matter: How to Create Your Revenue Baseline
Companies in scale-up mode are unique because they experience rapid growth, change quickly, and have more rigorous targets, but still face significant risk. Understanding revenue and its drivers is critical because top line numbers serve as a primary consideration for your company valuation. Product Operations helps baseline a true understanding of the product portfolio performance, provides timely visibility, identifies areas for growth, and enables optimization. With Product Operations and the right revenue metrics, you become a more effective product leader that can monitor, measure, and evolve the product strategy efficiently, according to Marissa Fong, a Director of Product at ProduxLabs, who led the session.
- A Product Leader’s goals should be to understand growth drivers and laggards by product, customer segment, and cohort to understand the highest value levers to pull.
- To understand potential growth drivers, look at metrics across revenue, retention, user engagement & satisfaction, and market potential.
- Whether it’s weekly, monthly, or quarterly, review key metrics as frequently as your systems and processes allow. Often people have monthly revenue targets, so those views are particularly important.
- Be thoughtful when looking at retention. When retention matters, identify at-risk customers and what to do to address that potential churn. Weigh the impact of that churn against other opportunities. What kind of customers are leaving and what is the cost of delivering what they need vs pursuing other growth vectors?
Metrics that Matter: How to Create Your Cost Baseline
Scale-up companies experiencing rapid growth face many challenges around visibility into costs and what developers are working on. It is critical to create an aligned understanding of how Product & Tech costs are allocated and aligned to strategy. Lack of understanding around profitability by product, opacity around who is working on what, and many possible paths to growth all make it very difficult for scale-ups to baseline costs.
Shaun Verma and Walker Szurek, product analysts at ProduxLabs with significant experience working with Insight’s portfolio companies to enable product operations and evidence-based product strategy. Verma and Szurek shared their best practices framework around Cost Allocation, based on experience working with 50+ companies across different phases and industries, that aims to create shared understanding and alignment
- Cost allocation should be holistic, and include all product-related costs that may lie in COGS (e.g., Hosting, 3rd party licenses), Operating Expenses (i.e., R&D Labor spend), and other indirect costs outside the R&D org (e.g., customer support, onboarding)
- Cost allocation should be done by purpose (i.e., Operations, Retention, Onboarding, Sales Debt, Innovation)
- Cost allocation is different from your R&D Labor/resource allocation, and as a product leader you should be aware of and plan for both
- Exercises to baseline cost allocation can be top-down (high-level estimates) or bottom-up (work management tracking); best practice for long-term sustainability is setting up a bottoms-up reference architecture that collates all the necessary pieces of data and automatically feeds into dashboards
"Enjoyed the real examples of how other organizations faced this challenge, walking through the exercise, as well as the networking opportunity. I also liked that various cases were discussed (pre-/post m&a, different stages, etc).” - Prasanth Ramanand, Senior Director of Product at VTS
Additional Product Operations Resources:
A webinar outlining the value of Product Ops.
Baselining Top-Line Revenue metrics, and tying it to Product Strategy:
B2B SaaS Top-Line Metrics: Getting More out of Revenue Measurements
Product Strategy & ARR: What's the Relationship?
Baselining your Cost Allocation for strategic discussions:
Product Leader, Are R&D Costs on the Agenda of Your Next Strategic Discussion?