Ever run into this deductive reasoning?
- Customers like our existing products and our company
- We are building a new product that reflects the priorities of a company executive
- Therefore, customers will like our new product
It’s a clear violation of the First Law of Product: Customers decide what products they like, not companies.
Inside-out thinking is a situation where the wrong reasons are applied to decide which products are to be developed:
- That market is so big, let’s build something for it
- My intuition says this is the next big thing
- This new product will position our company for what is important to us
Those reasons are actually not entirely out of the question for success either. The things that define truly inside-out thinking are (i) an impulse guided by a “we need” , not a “the customer needs” mentality; and (ii) skipping customer validation or ignoring troubling feedback from customers during validation. When you see those two dynamics at play, you’ve left the realm of sophisticated decision-making. You’re in the land of gambling with shareholders’ money. Sure, some inside-out products will succeed. But that’s analogous to saying that some lottery ticket holders win too. It’s a sucker’s bet.
Inside-out thinking is a pervasive thing. I came across this table in Gerry McGovern’s book, The Stranger’s Long Neck. McGovern surveyed SMB users of a website Microsoft runs – Pinpoint – that helps find IT solutions built on Microsoft technologies. The SMBs were asked what their top tasks were when they visited Pinpoint. McGovern then did something interesting: he asked the Microsoft team what they thought users’ top tasks were.
The table below outlines the results:
| Customer | Microsoft |
| Internet security | Customer relationship management |
| Backup and recovery | Internet marketing |
| Security | Network management |
| Desktop support | Sales/lead generation |
| Data/document management | Billing |
That’s a stark difference between what users value and what Microsoft thought they did. Or perhaps what Microsoft wished users valued. As McGovern notes, “And just like every other organization on the planet, what Microsoft wants is not always what the customer wants.”
This isn’t to pick on Microsoft; it really is the case at companies everywhere. Microsoft just happens to have been open enough to share their own experience here.
You can recognize it when it happens. Here are the Top 3 signs of inside-out thinking:
- The spreadsheet says it will be big!
- I don’t need customer validation, they don’t know what they want anyway
- The Board/CEO/other senior executive is pressuring us to do this
Inside-out thinking is poor decision-making, it’s a bet with terrible odds, and wastes resources. Tough to understand how we can be so methodical with other operations in the organization and still go seat-of-the-pants in this area.
I agree with a number of the risks you cited. I’ve seen inside-out thinking at many companies I’ve worked with. In my early career, I mostly saw the aftermath: “Hey – we really tanked last quarter! What was the number on the bus that just hit us?”
Often, inside-out thinking begins with a charismatic executive who takes a sometimes-brilliant idea (his or hers, usually), and then sells it to staff, who, in turn, embrace the idea because the internal sales job was excellent and nobody had the nerve to challenge the charismatic executive, or question a single assumption. “Not enough oxygen in the room,” we now say. It happens with such frequency that I’ve adopted a term for it: hubris risk.
But when I read your First Law of Product, I couldn’t help thinking of the famous quote from Henry Ford: “If I asked people what they wanted, they would have told me ‘a faster horse.'” And this from a well-known technology pioneer: “It’s really hard to design products by focus groups. A lot of times, people don’t know what they want until you show it to them.” Of course, you don’t have to be a user of Apple products to know who said that, and to connect with the truth in the statement.
I know why these statements get elevated to business gospel. Some companies research a product introduction to the point where you want to tear you hair out. “If only someone would just make a bleeping decision, and quit analyzing this to death!” I’ll take intelligent failure over an unattainable demand for 100% certainty any day of the week. If you are in business and can’t afford to take risks (I know, it’s a euphemism for gambling) then you shouldn’t be in business.
So in my view, there really isn’t a ‘right way’ (outside-in) or a ‘wrong way’ (inside-out). You can point to successes – and failures – for either approach. In business, though, people tend to glum onto a “success story” like Steve Jobs (inside-out) and insist he has (or had) it completely correct. Or they look at a “Law,” which, in fact, is not a law, but in the right context, an arguably excellent idea.
First off Andrew, let me say hi to a fellow Double Hoo! Great to connect here.
“Hubris risk” is a good term. And I too have seen it too many times. It’s frustrating, because you can see the train wreck coming but its momentum is too fast to halt.
I will dispute that the First Law of Product is just an idea. Trying to think of how many successes where companies have crammed a product down people’s throats and just kept doing it. Seems like a crime is being committed in that case! Rather, people will volunteer to buy or use a product. That’s the acid test of success. Not the charismatic presentation that said it just *has* to be successful.
I separate the customers’ jobs-to-be-done from the possible ways to satisfy them. In my mind, here’s how Henry Ford’s quote would be recast:
“If I asked people what they wanted, they’d have said (i) minimize time to get someplace; (ii) minimize costs associated with transit.”
What I’m doing there is showing that just asking for feature requests isn’t the best way to understand the jobs-to-be-done. I also completely strip out any product element from the statement. Keep the focus on what the wants and needs are, not what features are desired.
Steve Jobs did understand that. Here’s his quote to that effect: “You've got to start with the customer experience and work backwards for the technology.”
http://www.feld.com/wp/archives/2011/09/start-with-customer-experience.html
The executives who fancy themselves as mini-Steve Jobs often seem oblivious to what the customers are actually trying to get done.
I don’t dispute that over-analysis can happen. Agree that it’s better to make a timely decision than dither on forever. As long as the analysis – and decision – are tied to an understanding of what the customer really is seeking to get done.