Product Excellence vs. Process Excellence: Q&A with Peter Getchell
Pete Getchell has over 20-years’ experience leading clients from vision definition, to planning, to delivery of improved operations through process excellence. He is currently working with some of the world’s fastest growing brands, so we sat down with him to hear what challenges these types of clients are facing.
To start us off, tell us a little bit about the clients you are currently working with.
I have several clients who have been able to scale and grow to $500M, but now their new goal is to get to $2B, as an example. Using a very strong product mentality, these companies have been highly successful in disrupting the market and breaking into the economy. There’s a real push to gain customers through a novel experience and exceptional value delivery. The culture in these organizations is highly iterative and very agile. The engineering teams build features very quickly, release them, see how they are adopted, and adjust. This product excellence has been the driving force up to the $500M mark. But often the operational side had been duct-taped together and is now struggling because it can’t scale to reach $2B or $5B. They use the “swivel chair approach” in connecting people through a transaction’s lifecycle to make up for friction along the way—in getting invoices out, in applying cash, in paying sales commission, in running finance operations, or in paying taxes, for example. And now the elbow grease they had been using to make up for operational hiccups no longer works. It’s a real challenge that multiple clients are facing right now because their operational friction is constraining innovation in the marketplace.
Why do you think scaling operations of product-first companies is so challenging?
The challenge is that some components necessary to scale a company seem counter-culture in a product-first environment. Product mentality enables superior innovation through a very interactive and highly reactive culture, with a nimble advancement of features and functionality that results in successful customer acquisition. Product excellence is a differentiator in gaining customers, and the culture of product-first agility has driven their early milestone successes. Product-first companies tend to rebel against things that are seemingly characteristic of the old-world order. Remember, these companies are disruptive by nature. Following the paths forged by billion-dollar companies of the ’80s and ’90s is exactly what not to do today.
But when you move into transforming the operations of the business, you can no longer think solely about the product and the customer’s interaction with it. You have to think about process. You have to manage all the touchpoints with the customer, including what the customer expects as part of their purchase, like accurate billing, bundle discounts, seamless payments, or charging correct tax. This requires seeing the big picture (an end-to-end perspective), as opposed to focusing on individual points of the customer experiences (a point-in-time perspective). For successful scaling, you have to think Product Plus Process to achieve velocity.
The biggest recent challenge I’ve had with high growth clients is helping them understand that you need both product and process excellence to continue to scale. It’s not either/or because product excellence and process excellence are not mutually exclusive. We’re not making a choice between them. We’re enabling product excellence with process excellence.
What do you mean by “Product Plus Process to achieve velocity”?
When you are first starting out, you can get to a certain level of success with minimal investment in process excellence. You swivel chair the transaction down the lifecycle, you hero-up when there is a bump, and you incrementally make improvements. The trouble is that when you have friction in the operations, the customer experience suffers. As customers move from buying just one product to buying multiple products or packages, and engage across the entire company, every piece of the operational experience has to have as big a “wow” factor as the product experience.
With scale, it’s much harder to recover from making a mistake in operations, and it can be a real velocity killer. When a $100M revenue company with thousands of clients makes a product-wide mistake in billing or provisioning, a few heroes could save the day and the average Joe in the market wouldn’t know about it. But with, say, three to four million transactions a month and hundreds of thousands of customers, mistakes in operations become a lot more public and take much longer to resolve because of the sheer scale. If there is friction in operations, the “let’s launch it and see what happens” approach carries much greater consequences. However, when product-first companies apply their culture of customer focus to internal processes—lead-to-renewal, sales operations, finance, billing, etc.—the velocity is achieved, and business results accelerate. At Navint, we call this Innovate to Operate™.
What does it mean to be good at Product Plus Process?
Being good at Product Plus Process means knowing that business services have to be connected in order to provide end-to-end value. The value is only realized when we understand what done looks like and that we can only achieve maximum value as single entity connected across the business. This is process excellence, in contrast to product excellence. A product excellence viewpoint says, “Do not burden my innovation with bureaucracy. I don’t want to wait until you figure everything out for me to release this cool product feature to our customers.”
Yet it’s essential to figure out beforehand how we are going to price these new features, bundle the offering, recognize revenue, pay commissions, etc., for these cool new products. The business operations are an ecosystem of interconnected parts along the complete customer journey with your product. While you can delay a product feature, you don’t have the option to not close the books, not pay taxes, not pay commissions, etc. The operational lens is a different reality, but it doesn’t have to slow down product innovation. Conversely, you can’t cheat process excellence for the sake of product methods and expect to scale. Product excellence and process excellence must live closer together today than they ever have.
This whole concept of product excellence plus process excellence equals a differentiated business. Having just one isn’t enough.
What advice would you give to product-first companies looking to add process improvement?
I think one important piece of advice is to not think of process excellence as a behemoth initiative that takes years to show results. We can be just as agile in process renovation as we are in product innovation. We can start with the areas where we know we have pain, or will have pain, and identify some quick wins. When fixing those top pain areas, use our five habits of attaining frictionless growth as a guide. Make sure you focus on defining the interaction among business services. In other words, who listens to whom and for what, such as the “billing service” listens to the “sales commitment service” for when to calculate charges but listens to the “product catalog service” for the calculation rules. This often will lead to discovery of improvements in adjacent service areas, which can drive the next sprint of improvements. As you learn how to develop expertise in process excellence, you can incrementally achieve the benefits. This Innovate to Operate™ mentality is what enables you to scale to your next billion dollars.
For more information about Navint’s work in process excellence, contact firstname.lastname@example.org.