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Thinking differently about product and management, every week.
Me

Catarina Pinto @catarinappinto

Product manager, passionate by the intersection of business and tech, multi-culturality, innovation, and empathic leadership.


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Tell me what to do - German doctors, BlackBerries, and Insulin

Sitting on the patient chair, I watched the images of the MRI of my knee. The doctor, a German guy that looked experienced, scrolled without a sound, maybe in the expectation that I would know what I was looking at. Besides that it was my knee, with a patella, a femur and the two bones from the lower leg whose names I keep forgetting, I was clueless. And then, the magic words: “ So, what should we do? “

That was it. No further information. I asked what was the options… How could I know?? I did not study medicine!!!

 

Unfortunately, several products today are still created following this “tell me what to do” fallacy. Product managers and developers expect customers to come up with the answers - to detail not only their needs but also prescribe the solution. And when the customer delivers the list of features they want, they go and deliver, no questions asked. Some customers may end up being right and satisfied, yes. But they probably, as I, did not study medicine.

In the mid-2000s, BlackBerry was the trademark of businesspeople. The company had established a solid foothold and continued to provide customers with desired features such as a physical keyboard and secure email access. However, unlike BlackBerry, Apple did not rely on customer feedback to figure out their needs - they understood them (and technology) on a deeper level. Apple recognized that customers wanted more than just email - they wanted a sleek design, improved experience, and access to apps. Unfortunately, BlackBerry failed to innovate before Apple and, more importantly, failed to understand their customers. By relying solely on sales and market presence numbers (which only dropped enough too late), BlackBerry failed to deliver what the customer wanted. Today, it is just a memory.

Many diabetic patients require insulin injections, which can be an unpleasant experience, particularly for those with a fear of needles. In search of a more convenient solution, companies like Pfizer (2007, Exubera) and Sanofi (2016, Afrezza) invested heavily in inhaled insulin to meet customer requests. The idea was simple: no needles required. However, Pfizer took a $2.8 billion hit, and Sanofi withdrew from a $295 million contract for Afrezza. Why did these seemingly perfect solutions fail? While the inhaled insulin products did not require needles, they had significant drawbacks. In other words, they did not meet basic requirements. They decreased lung function in patients, were difficult to use (patients needed to take 5 to 10 times more insulin), and had inconsistent efficacy. Additionally, the high development costs were transferred to customers, who had to pay 3 to 4 times more than for the injected solution. Ultimately, customers chose the more reliable option, still preferring the painful experience.

Both stories demonstrate that understanding customers goes beyond simply asking them questions and listening to their answers. Often, people do not fully understand the capabilities of technology (nor should they need to) or what they truly want or value until they are exposed to different options. To truly understand customers, product managers need to have a deep understanding of their thought processes. This involves not only listening to what customers say, but also asking questions with a curious and inquisitive mindset. Why is the person saying this? What are they really trying to solve? Is there a better option? Why are these challenges present today? - are all questions that should be asked by product managers.

a horse with a phoneWe are solution designers, and designers start by questioning the world, by researching, by using empathy to listen and understand people. We must know the customer - that is the process. Otherwise, we will only deliver on requests, and will be forever stuck in a world of faster horses.

  

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It only takes one fool - NVIDIA

DANCING FOOLS

There he is, dancing, alone. Such a fool. Everybody is looking at him. Following the rhythm of the music, the fool enjoys himself… Lunatic.

She looks at him. Maybe he is not that crazy. And she likes the music. Maybe she joins… Will she? She stops for a moment and takes a chance. And there are two: the fool and the follower.

And the others that enjoy the music start thinking: shall I join?

In a matter of moments, it is not crazy anymore, it is normal. The fool is the leader, there is a movement. And everybody dances.

NVIDIA was the fool. Not once, but three times. The CEO, Jensen Huang, has bet the company in gaming, crypto, and AI. NVIDIA faced a couple of near death experiences. But then it became the leader. When the AI market started to bloom, NVIDIA had a complete end-to-end solution ready for scaling, and in 2022, they captured 80% of the AI chip market. Jolted by ChatGPT, AI is expected to hit $200-$300B by 2030 and NVIDIA will keep on riding the wave while others stare from the shore. When should we expect another big bet?

THE STORY OF NVIDIA

NVIDIA was funded in 1993 by three engineers who realized that video games could benefit from faster calculations done in parallel outside the CPU. Despite the promising vision, the company entered a competitive low-margin undifferentiated market with a premium and complex product. Not facing enough demand, NVIDIA fired all but 35 of its staff just two years later.

To turn around, the company simplified its product, and invested in prototyping and testing, being able to deliver a new graphics chip at unprecedented rates - every 6 to 8 months. It also decided to outsource manufacturing (a low margin business) to TSMC (a taiwanese semiconductor manufacturer), focusing solely on design and marketing of its GPUs.

By 1999, NVIDIA went public. The stock price bumped 64% on the offering date, but its small revenues of $160M still made the company a small player in the semiconductor business. While revenues rose until 2005, reaching $2.4B in 2005, they dropped back to 7-8% a year in the following decade.

In 2006, NVIDIA decided to be the fool again. It launched the GeForce G80 with a new architecture - a higher number of simpler cores that could run in parallel at double clock-speed, able to perform any calculation required at any moment. While an interesting product, there was no usage for it in gaming and the increase in cost was substantial.

But NVIDIA was not targeting gaming. Instead, they aimed for scientists and programmers, universities, AI. The company sponsored conferences and workshops, promoting their new CUDA parallel programming model next to researchers at top schools.

The first follower came in 2012. Alex Krizhevsky, PhD student at the University of Toronto, who along Ilya Sutskever and Geoffrey Hinton used the graphics card to train AlexNet. It would win the ImageNet competition (a key competition in AI research), performing 41% better than competition. The moment bumped NVIDIA into AI leadership, and AlexNet was bought by Google.

So when big tech firms were ready to invest heavily into AI, NVIDIA had a multi-year lead and an end-to-end platform ready to scale. In 2017, their data centre business had a total annual revenue of $830M. In 2022, this number was $15B.

 

NVIDIA is clearly a fool. First with semiconductors, then with crypto, and now with AI. The company has been able to pinpoint and invest ahead of everyone in growth markets for the chip business. NVIDIA opportunistically bets on markets by design, not chance. Today, NVIDIA is on the trillion dollar group, and is the eighth largest company in the world by market cap. What would be the next market? Will the company foresee the next big thing, yet again?

 

 

 

 


Note: The company had near-death experiences, at least in market value term, in 2002 and 2008, losing more than 80% of its market value. In 2018, as the crypto craze passed and miners were reselling their chips, the company lost again more than 50% of its market value.

  

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Monkey Business [On perpetuating outdated standards]

Why do societies maintain rules whose reasons for existence are not valid anymore?

Why do we continue to optimize products for outdated standards?

Why are our systems still built on assumptions that no longer make sense?

 

Monkey business 🍌

One day, a group of researchers placed five monkeys in a cage with a banana hanging from the ceiling and a step ladder leading up to it. As expected, the fastest monkey began climbing the ladder toward the banana. Suddenly, the researchers sprayed the lead monkey with very cold water, followed by the other monkeys.

After the monkeys had warmed up, another monkey attempted to climb the ladder, but again the researchers sprayed all monkeys with freezing water.

Later on, a third monkey tried to climb the ladder. This time, the other monkeys started beating him, preventing him from reaching the banana.

The researchers then replaced one of the monkeys with a new one. As expected, the new monkey saw the banana and attempted to climb the ladder, but the other monkeys attacked him for no apparent reason. The researchers continued to replace the old monkeys with new ones, and every time a newcomer attempted to climb the ladder, there was a beating spree - even when all the monkeys were new and none was exposed to the freezing water.

In the end, after the researchers were gone, the group of new monkeys had two rules: (1) Do not attempt to climb the ladder. (2) If rule 1 is broken, beat that monkey to prevent him from reaching the ladder. Why? Nobody knew. But the rules had been established.

Moving on to space. When the NASA’s space shuttle was designed, its solid rocket boosters needed to be transported to the launchpad. Specifically, they needed to pass through a tunnel in a train car on railroad tracks. Well, the spacing such tracks in America was based on UK standards for the tramway, which were in turn based on the dimensions of wagons. These dimensions were designed to fit into the ruts of the road, which were based on the width of roman chariots. Interestingly, chariot wheels were designed to accommodate two horses between them.

In other words, the constraints on the dimensions of the space shuttle result from the the width of two horse butts!

Eliminating outdated standards in 5 steps

Humans loves comfort, which usually comes with a sense of (perceived) control. Although everyone says that “growth happens outside your comfort zone”, change is unpredictable. Sticking to the status quo, otherwise, offers low risk and stable returns.

This stickiness fosters the perpetuation of outdated standards and misunderstood assumptions that no longer fit our evolved world. But how can we get out of this situation?

(1) Question the process

View the process with a curiosity mindset. Why are we doing things this way? Ask questions about the why behind what you are doing and challenge assumptions. Often, people won't know why a process is designed that way.

(2) Delete

Consider the impact of removing a feature or step. Why is it still there? What are the underlying assumptions? Can we simplify or reorganize for greater efficiency? Simplicity leads to easier development and maintenance.

(3) Write down your ideas

Writing exposes inconsistencies in thought. Analyze the struggles you feel when writing: Do you fully understand what you are describing? If not, why? Is there a step missing, are you unsure about parts of the process?

(4) Get (ruthless) feedback

Receiving feedback from others can be a valuable thought experience, but also tough. Honest feedback will make you rethink, rewrite, and revise your thoughts. It will increase the probability that underlying assumptions and standards are brought to the surface.

(5) Be ready for trouble

Even if you are willing to question things around you and modify processes, others might not be. Humans are reluctant to change and will fight back. Having support from leadership and inspiring your team to adopt new standards are essential for success.

 

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This story gained popularity through a book Competing For The Future (1996) by Gary Hamel and C. K. Prahalad, and a TED talk by Eddie Obeng. It is not sure if this is just a story or a real experiment was conducted.

 

  

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Nobody Asked

The only time to buy these is on a day with no 'y' in it. Warren Buffet

With millions of active Prime members and documented successes in the hardware product category (Kindle), entering the smartphone market would be a logical next step for Amazon. This was specially relevant for the company given the high fees of app stores (as high as 30% for iOS) that were degrading the thin profit margin of its mobile sales.

The Fire phone was presented to the public in June 2014. It was designed to be a product with killer tech features that targeted the top of the market. Its positioning was so clear that Bezos even compared a photo taken with the Fire Phone to the same one captured by an iPhone and a Samsung phone side by side during the product announcement event!

The “beautiful phone” had industry leading brightness (the screen was readable under any lighting conditions), amazing sound (from its dual stereo speakers and accompanying earbuds incapable of tangling), and was able to take really crisp photos (due to an optical image stabilisation achieved with tiny electrical motors that protected against shaky hands). In the case of any issues, customer support would be in the screen in 15 sec or less - the Mayday Service, - and when the urge to buy a product was uncontrollable, customers could scan any product with Firefly and be redirected to Amazon.com. On top there was still its headline feature - Dynamic Perspective - which allowed users to see in 3D without the need of glasses.

The pricing point started at $699 or $199 with a two-year contract with AT&T. However, in just a few months, Amazon cut the contract price to 99 cents!

Why? Amazon entered a saturated market with a product that lacked basic requirements, portrayed less-than-impressive (and costly) delight features, and obligated customers to switch to a newly created far-from-mature app ecosystem. Yes, Dynamic Perspective was “cool” in some games, but that was it. It also relied on expensive hardware (four camera lenses) and an eye tracking algorithm which drained the phone’s battery. And the price was just too high.

Three months later, Amazon’s CFO declared the product would be discontinued. The phone led to substantial losses, as expressed in the Quarterly report: “During the three months ended September 30, 2014, we recorded charges estimated at $170 million primarily related to Fire phone inventory valuation and supplier commitment costs. The remaining amount of Fire phone inventory (…) was $83 million as of September 30, 2014.”

How many people here have a Fire phone? Yeah, no, none of you do.”

Jeff Bezos, Nov 2019, address at the Smithsonian’s National Portrait Gallery, Washington D.C.

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The Problem Solver Fallacy πŸ€”

Engineers and scientists love solving problems, especially when new and exciting technology is involved. However, the real issue arises when the problem they solve is not the right one. It is not uncommon to hear about startups or products that went through years of R&D development, only to fail upon release.

Why does this happen? Often, the love for technology blinds us to the truth of what a customer wants. Product managers are accountable for returning the focus to what matters: delivering value that customers are willing to pay for:

1. Get close to your customers

A phone with 1000 awesome features will not be a market hit if its battery only lasts a couple of hours. It's important to get the basics right! Understand what customers require, value, and what challenges they face

2. Question what you hear...

a) from your customers

Ford summarized this perfectly: "If I had asked people what they wanted, they would have said faster horses". That's why understanding your customers goes beyond listening. Observe people’s behavior and interaction with your product.

b) from your team and leadership

Several tech features that failed in Amazon were from Bezos himself. Technology enthusiasts can get excited with technology. To prevent that unuseful features get added, always ask why. If the answer does not begin with a customer benefit, be mindful of adding that feature.

3. Explicitly express the value to the customer

For each feature you add, write down explicitly the value it delivers to the customer. Be also aware that even though a feature delivers value, your customer might not be willing to pay for it.

4. Experiment with proxy low-cost features

When developing expensive features with uncertain value, it is helpful to identify simpler ones that give insight about customers. With that knowledge, it is easier to decide whether to invest in their full version. Landing pages are great examples of simple ways to assess customer interest at low cost.

 

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Nine Meals to Anarchy

Those of us who are well fed (…) ought not to forget that necessity makes the root of crime (…) the only barrier between us and anarchy is the last nine meals we’ve had.

Alfred Henry Lewis, 1986

 

The 9th meal: The Boeing Drama

Fearing that American Airlines would switch its fleet to Airbus, Boeing rushed a 5-year manufacturing plan for its new aircraft - the 737 Max - in 2011. As the “normal” certification process would take up to 9 years, Boeing decided for an easier certificate type. The company claimed their new aircraft was not new, but instead almost a copy of the original 737.

However, the 737 Max included bigger fuel-efficient engines, which required a longer and heavier airframe and a wider wingspan. As any visible changes would violate the certification, the engines were mounted further forward on the wings, shifting the centre of gravity of the machine. To correct the problem, Boeing developed a software patch (MCAS) that listened to two sensors in the wings and pushed down the plane’s nose to restore its angle of attack when needed. With the issue solved, the Max flew for the first time in January 2016. The MCAS was hidden from pilots and airlines, and not mentioned in the flight manual.

In October 2018, the sensors of the Lion Air flight 610 that took off from Jakarta were malfunctioning. The airplane dove sharply 22 times before crashing during its short 13 minute flight. Less than half a year later, the Ethiopian Airlines flight 302 crashed 6 minutes after taking off. A total of 346 people died. Post-incident investigations of the Boeing case discovered that engineers had alerted for this danger and some even claimed to be “hesitant about putting my family on a Boeing airplane”.

Crashes Everywhere πŸ’₯

In todays’ world, it is common to be pushed to get things done at light speed. Planning and extensive testing are often deprioritized, which enhances the probability of mistakes that could have been prevented. Even with the best intentions, pressure can take its toll: in 1983, sunlight disrupted the reading of a soviet satellite, alerting incorrectly about a US nuclear attack, which almost started a World War. The 5 hour crash of all Facebook apps in 2021 resulted from a command ran by mistake which disconnected all its data centres, costing the company $65M, a 4.8% drop in stock price, and $6B in Zuckerberg’s fortune. In 2020, COVID-19 became the textbook example of how unexpected events can shake our systems to the point of anarchy (remember not finding toilet paper at the supermarket?).

While there are certainly unexpected events that lead to product failures, there are several things product managers can do to decrease their impact. What?, you ask.

How to create a failure proof product?

Product Failures

(1) Analyze the Unhappy Path

When your product works as expected, everyone is happy - that’s your happy path. However, everyone knows this hardly happens. The bumps in the road, the crashes, the need to reset by unplugging a device… that’s normal - that’s your unhappy path.

Analyzing the Unhappy path starts by listing all the steps that a customer goes through (their journey) and all the background processes of your product. For each step, brainstorm all possible failures that might occur. The brainstorm can be elevated by observing how customers use your product (or a prototype) - specially noting the “weird” things people do you were not expecting. Finally, evaluate the impact of each problem based on their likelihood and consequences.

(2) Define what to do

Based on the above analysis, define how to handle each issue:

  • Eliminate - Problems with high likelihood and/or high impact might need to be addressed immediately. This might mean you need to redesign or redevelop parts of the product.
  • Protect - When you cannot solve the problem, you might want to protect the core:
    • Increase robustness - Make your product adapt to variations: while life is better at 25-30ºC (personal preference πŸ™‚), humans regulate their temperature to adapt to colder and warmer environments
    • Add redundancy - If a plane engine fails, there is another. We have two kidneys. Databases are commonly backed up.
    • Add barriers - Our internal organs are not exposed - they are covered by skin and protected by an immune system.
  • Monitor - Track the performance of the product and alert the user when something is not right. This gives extra time for proper reaction.
  • Announce - Some features will be out of scope. And that’s ok. However, a customer might still take your non-water-proof watch into water. Advert the user explicitely not to do it 😊

(3) Prepare for failure

Despite all the work, failures still happen, and you should be ready for them.

  • Start emergency procedures - If there is a serious issue, you might want to put your product into a coma. Define which areas are instrumental and lock or destroy access. A backup system also ensures the product can regain its normal functions after the storm.
  • Implement post-traumatic growth mechanisms - Traumas can be handled in two ways - stress or growth. Growth in products can be implemented through a series of mechanisms that detect the “weak” and “strong” components of the system (the ones that led to failure and the ones that maintained operations or excelled). Kill the weak links and strengthen the good ones (if done automatically by the system, even better).
  • Empower customer support and on-call teams - Ritz-Carlton employees are empowered to spend up to $2000 to solve customer problems without requesting permission. This demonstrates trust, speeds problem solving, and delights customers.

Final thoughts 

All products are different, and the tips above might apply perfectly to some products and fail for others. It is important to evaluate which strategies make sense and adapt to the product in question.

  

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Here’s to the crazy ones

Because the people who are crazy enough to think they can change the world, are the ones who do.

Think Different, Apple, 1997

 

In 1997, Apple was on the verge of bankruptcy. 12 years after being fired from his own company, Jobs returned to Apple, taking it from a $2.3B valuation in 1997 into a $300B valuation in 2011 (year of his death)*. How did he accomplish this?

The turnaround

Jobs’ strategy relied on 7 product pillars: Core Values (Why), Customer (Who), Product Portfolio (What), Ways of Working (How to develop), Team engagement (Internal communication), Operations and Distribution (How to deploy), and Awareness (External Communication):

Product Pillars

 

(1) Embrace the core values. Upon his return, Jobs defined very clearly what Apple stood for: “We believe people with passion can change the world for the better”. The core values were repeated and embraced. They preserved Apple’s essence by highlighting what needed to go.

(2) Identify the customer. Jobs identified two target niches: customers aligned with the core values on the home consumer and professional segments. By knowing it’s customer, Apple was able to create memorable experiences that people were willing to pay for.

(3) Focus the product portfolio. Jobs killed 70% of Apple’s product line, reducing it to 4 products: a laptop and a desktop for consumers and for professionals. The smaller portfolio allowed Apple to focus resources on developing outstanding products catered to its customers.

(4) Implement ways of working aligned with core values. Jobs pushed for cost cutting as much as he pushed for innovation. He reorganized the company under a single P&L and gave functional decision making power to experts (while keeping product-market fit decisions at the top).

He also insisted on the highest standards. Jobs’ father, carpenter by profession, said that the back of a fence was as important to get right as the side exposed to the world. Under this principle, Jobs required top quality in everything (even in components that customers would never see!).

These standards were communicated to the whole company, setting clear guiding principles. The effort paid off with the creation of great products like the iPod (2001), iTunes (2003), and the iPhone (2007).

(5) Engage the team. Jobs’ message to employees was as passionate as it was clear: these are our values, our strategy, our products, and how we will get others excited about us. This was essential to revamp moral internally. This consistency reassured employees about the company’s leadership and its strategy, getting them excited to jump on board.

(6) Streamline operations and distribution. Jobs cut product complexity (through product standardization), regained quality control (ending licensing agreements), and simplified manufacturing (with a build-to-order strategy powered by an online store). This simplification not only reduced costs but also increased received quality.

(7) Create awareness on differentiation. When marketing the new Apple, Jobs did not mention technology or competition. He focused (again) on the core values. The ad campaign Think Different depicted geniuses from the 20th century who changed the world (like Apple was doing). Apple knew its purpose and advertised it in a compelling way, transmitting that if you wanted to change the world, you needed an Apple product.

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The Think Different Campaign

It honors those people who have changed the world. Some of them are living, some of them are not. But the ones that aren’t, as you’ll see, you know that if they have ever used a computer, it would have been a Mac

Steve Jobs, August 1997

Think Different Campaign

Here's to the crazy ones. The misfits. The rebels. The troublemakers. The round pegs in the square holes.

The ones who see things differently.

They're not fond of rules.And they have no respect for the status quo.

You can quote them, disagree with them, glorify or vilify them. But the only thing you can't do is ignore them.

Because they change things.

They push the human race forward.

While some may see them as the crazy ones, we see genius.

Because the people who are crazy enough to think they can change the world, are the ones who do.

© 1997 Apple Computer, Inc.

 

*the company hit a $3T market cap in January 2022, being the first US company to achieve that feat