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Episode 84

84: Building Empowered Product Teams ft. Marty Cagan

Author, Silicon Valley Product Group Partner, and former product leader at eBay Marty Cagan shares his views on empowered product teams and the leadership required to make these teams possible in our latest episode. Learn why it’s important for product teams to serve customers first, how to encourage accountability on your teams, and the main reason to partner with a digital product agency.


George: Welcome back to another episode of people or product. My name is George Brooks and on today's episode, I got the pleasure to talk to Marty Kagan. Marty's a partner at Silicon Valley Product Group, but previously was an engineer at HP labs, a VP of Product at Netscape, a senior vice president of product and design at eBay.

He's done it all. And to add to that he's written two books, one called "Inspired: How to Create Tech Products Customers Love." And the more recently in 2021, he's launched "Empowered: Ordinary People, Extraordinary Products." We talked about a lot, because he has covered a lot in his journey and in in his books.

But I think that the key takeaways that I heard today were really focusing on the difference between customer problems and business problems and how truly empowered teams really focus in onto moving the needle of those business problems, not just building the features that the stakeholders want or the boss wants.

And then finally, how to actually lead with context and not control. I think you're gonna love this conversation. So let's jump right in.

Marty. Thanks so much for joining us today. I thought I'd throw it straight to you. I'd love to hear a little bit about your story. So tell me a bit about how you got into this crazy world of product and of where you are now.

Marty Cagan: Sure. George yeah It's been a long journey. I've been doing it literally since right outta college.

And I've worked exclusively on track product companies the whole time, which is yeah, very long. Love it long. I started the first 10 years as a developer. And that's what I study in school. Like computer science and lots of product people obviously got into it from that path. There are lots of paths.

We'll take you there, the, I was the classic finally several years into writing software [00:02:00] finally asked the question who decided we should build this product and how did we decide we should build this product? So do you take your head out from heads down just focused on engineering and you realize there's a lot of other decisions in play and I want to understand more of that.

And I wasn't willing to let go of engineering for several years, but I was very I did work hard to learn the product side and there were People that were fabulous and coached me on that. And then ever since I've been interested, I, in fact, I'm most interested in product teams.

That's always been my favorite topic, product teams. How do designers and engineers and product managers work together to solve hard problems? That's to me, the most fun part of our industry and yeah, my favorite thing to. So everything I focus on is around that. I write mostly about product management and product leadership, [00:03:00] because those are usually the weakest areas.

Not because I'm not interested in the, it's just that product design and engineering. There's a lot of great stuff that's been written. There are a lot of thought leaders in that. I feel like I have very little to add on that side. But on the product management side, especially, there's just not nearly as much written about that.

And I think a lot of the stuff that is written about it seems to be describing a world that's very different than what I see in the best product companies. And so I'm like I'm gonna write about.

George: I couldn't agree more. There was a tweet that I saw a while back from somebody who I think was, had come out of one of the big global consultants.

And his point was I'll get it wrong. But the general idea was why is it that consultants keep talking about this idealistic archetypal world? As if let me tell you what it perfectly looks like, but is never the reality. I guess maybe that kind of leads us a [00:04:00] little bit into now.

You've written three books. The original, Inspired, I think was back in 2008. Is that right? Okay. And then a rewrite, an updated version of that in 2018. So you had a good 10-year expanse of time to learn more and think more things. And I've read that one and I really enjoyed Inspired, but then you just recently released your newest book empowered.

So tell me a little bit about that process of getting to this newest book empowered and what's the thesis, what's your position?

Marty Cagan: Sure. In truth, when I wrote the first edition of inspired, the product industry was so much smaller too. It was just 2008. Yeah. Yeah. 2008. It was so much smaller.

I felt like I almost knew the whole community. And over those 10 years, it just exploded. And a lot of the technologies that I was just introducing in 2008, things like lean startup technologies, agile technologies were like, yeah, we've been doing this for five years. So yeah. That context really did change.

And one of the things that happened [00:05:00] in truth, the first edition didn't really get very far out of the Silicon Valley bubble. It was mostly read there and that was my world. But with the second edition, tech had spread to the world. Everywhere and everywhere, which for me is cool.

Cuz I like meeting teams in different parts of the world. I like to understand the cultural differences. I like to understand how they view the role of product. It's just interesting. But anyway, what happened with the second edition, is it just spread way beyond what I expected or had seen before.

And one of the things that caught me by surprise was that, in, in Inspired, it really talks about how product teams solve hard problems. Yeah. In ways customers love work for the business. That's the essence of good product. But what I started to hear. From teams all over in places. They'd say "we wanna work this way."

We understand it. We see the value, but they would say, "but our management won't let us" I would hear "that won't last." Yeah. And I'm like, what [00:06:00] do you mean? They won't let you? They, you mean they won't let you work? Amazon works. They don't wanna make as much money as Amazon makes?

I don't get that. And so I started talking more to these leaders and the CEOs and understanding what was different. And I realized it wasn't just the practices of good teams. Also, we needed to share the practices of leaders because these leaders were really the problem. And they really are the problem, man

I don't mean intentionally of course. Most of them have never, ever seen what good looks like. Yeah. They've never worked at a good product company. They've never seen those teams. They're like, what the heck? All they know is what they learned in some old financial institution

George: The business school didn't teach it this way.

Marty Cagan: No, that's exactly right. A lot of 'em that's where they think they learned in an MBA program, which of course is so not really what we do. And so I realized we need to share the techniques, not just of the [00:07:00] teams, but also of the leaders. And so that became, that was like literally three years ago, I had that realization.

And then I started on it's a long process to write a book and a lot of work. And it finally came out a couple months ago, so I'm glad that and that's really the difference empowered is for leaders. Yeah. And inspired is for teams.

George: I resonate so much with this. I own a small product development firm.

That's what I do. So I'm a leader in this space, although we are also working with organizations that are doing this work, which I'll get to later, cuz I have some questions about how you view working with outside teams. But I really want to think about the fact that this is not a small book.

There is a lot in this, and you can tell you've taken the time to really think through it. When you're talking about product teams, product leadership, it's complex. There is a lot to cover there that is really difficult to put in a book rather than maybe sitting down and trying to walk a leader through it.

But I [00:08:00] guess let's get to the basic question. What is an empowered team?

Marty Cagan: Yeah. And you're right, by the way it is, I had spent 15 years walking people through it. It's hard, much harder to write about it in a general way. And and yes, it starts with that foundation, which is really the difference between a feature team.

Basically just there to implement features on a roadmap, which is what most product companies that are not following best practices do. And then, an empowered product team, which is just the term I use for how the teams are set up at the best product companies. That, there isn't really a label out there.

Spotify calls 'em Squads, but the truth is Squads applies to both kinds of teams. Yeah.

George: Cause they're still working cross-functional a lot of times, but that's right. Maybe not in an empowered way. So how do you define that as being different?

Marty Cagan: Because you're right. They look the same. They have a product manager, a designer, and a somewhere between two and 10 engineers, that's a typical product team or squad, [00:09:00] but where it gets different is if you look inside.

The first difference is really their purpose. In a feature team, they are literally there to serve the business. In an empowered product team, they are there to serve customers in ways that work for the business. And that, that might sound like just a little phrase, but that is everything follows from that.

It is a fundamental difference, but literally in most feature team companies, they will tell they will literally think of the customer. The stakeholder as the customer, instead of the real customer. And we're like, no, that is not true stakeholders. You don't ignore them, but they are your partners. You're collaborating with them.

But the purpose is to serve customers. And that's another, that's like such a striking difference between, say a team at Amazon or a team at Netflix. And a team in some big bank somewhere , that is very fundamental difference. So just their purpose, their reason for existing is different.

And then how that plays [00:10:00] out lots of ways. The first way it plays out is if it's a feature team, just building features on a roadmap for a bunch of stakeholders, then they're given features and projects to build it's all output. It's do this. It's really about how

George: you can do it. Yep. How many lines of code can you write?

How many features can you ship?

Marty Cagan: That's Right. And of course, If it doesn't solve underlying problems, whose fault is that? You can't hold the team accountable cuz they didn't decide those things. They were doing what they were told. Yeah. You get a lot of feature finger pointing and frankly, it's not hard to understand why only 20% or so of the things teams build and feature teams actually move the needle.

So in an empowered product team, on the other hand, it's actually much harder assignment instead of being given features to build which essentially, you're being told the solution. You're given problems to solve. Customer problems, business problems, sometimes both. And you are told, look, you've got the, you're working with the technology.

You [00:11:00] are talking to our customers every week. You should be in the best position to figure out the best way to solve this. If you're in an empowered team, you are. And that's literally what it means to be empowered. You have, you are allowed to figure out the best way to solve the problem the company needs you to solve.

George: So leadership's not responsible to hand you the solution. To say, Hey, here's the idea that we came up with in a boardroom someplace, and please go build this thing because we know everything. And you are only hands. You're actually saying it. You're moving that decision, making power, that ability to have influence, to, to move the needle.

Further down to the teams that are actually writing the code, designing the screens.

Marty Cagan: That is exactly right. In fact at Netflix, they have a phrase for this, which is really a mantra through the company, which is “lead with context, not control.” In other words, Don't tell your teams what to do, tell them the context, tell them what you [00:12:00] need them to accomplish.

What the strategy is, what the business constraints are, what the relationships are with partners, and then let the teams figure it out. It's just. This is probably the fundamental principle and the part that really is critical out of all this. There's some obvious benefits, like motivation, things like that.

Oh yeah. But the thing that people. I really want them to understand. And at the very end of Empowered, I want cuz I threw so much in that book. There's a 400 pages. There's a lot in there, but I wanted people. The most important thing I titled the section, the most important thing is this, which is if your company depends on innovation, that will almost always come from the engineers on the team.

Doesn't come from customers. Doesn't come from the executives. Doesn't even come from the product manager designer. Most of the time it comes from the engineers and unless the engineers are able to contribute to [00:13:00] what the solution is, not just how to code it. Innovation just doesn't happen.

George: I would make argument that what company isn't in, shouldn't be innovating right now.

Marty Cagan: Know it's you either realize that or you're on a slow death path probably.

George: You become relevant and obsolete very quickly.

Marty Cagan: George, every company says that, right? But how many of them actually treat their engineers the way they need to, if they're gonna get this engineer, this innovation, it takes a level of intentionality that is really uncomfortable.

George: I think at least when the, the clients that we work with or even ourselves in order to say, I trust you I'm gonna give you the context. I'm gonna make it as clear as possible. What we think a problem might be. And even you're probably gonna see problems that we don't see.

But I have to let go. That's a really scary place to be as a leader. I think.

Marty Cagan: It is. And it's actually much harder to be a leader in an empowered organization than it is in a command and control [00:14:00] organization. It's much easier just to say, here's the features that team wants. In fact, some companies are so bad.

What they do is they just let the stakeholders fight it out. They let 'em vote on what features they want. And they're like, whatever we'll build, whatever crap you want. Just tell us. Yeah, it's your problem. We're just here to build.

George: So you took a big portion of this book and dedicated it towards coaching.

Tell me why so much of the book is dedicated towards coaching, and maybe it's getting at what we're talking about here of how the difficulty of actually doing this. What does that look like?

Marty Cagan: Yeah, it is in fact that's the biggest single topic in the whole book. It's and it's, I would argue the most important partly it ties right back to this concept of lead with context, not control.

When you're coaching, you're providing that context. You're not telling them how to do their job, but you're showing them, okay. Here's what you need to understand about the legal constraints here or here's what you need to understand about the decision process for this particular issue, whatever it is.

So that's a big role, [00:15:00] but also it gets back to this point that people aren't born knowing how to be good product people. So true, good engineers, good designers, good product manager. They're just not, and it's really not taught in academic programs. No, there's some exceptions with engineers and with designers, but with product managers, definitely not taught.

So coaching is really how we teach this. . This is how this knowledge moves from strong leaders to strong people, which make strong teams. And that's really In fact, that's how I learned this stuff was managers that took the time to coach me. I didn't even realize at the time how lucky I was, but I mentioned, I started my first career as the developer and that was at HP labs.

And for the full 10 years, Every single day, there was at least one manager assigned to help me get better at my job. And I thought that was normal. cuz I didn't had never worked anywhere else. What a gift. It is a gift. [00:16:00] And of course You talked to teams at Google, you talked, that's what they're, that's what makes the machine work.

They treat it as a major responsibility

George: And it is a, and then the output or the outcome instead of output the outcome it is truly where innovation starts to happen. People feel empowered. They feel confident to be able to take on these challenges in a way that the person that was just spoon.

Doesn't ever have to pick it up and carry the load. They don't ever have to learn what that muscle feels like. I think that's a really, I've always been a big fan of Google's apprenticeship program for product managers, which really ended up spinning out some of the top, CEOs in Silicon valley.

And it was really about product people. Okay. So I I wanna take us onto the next thing. This makes sense for me. I think it's it. It's much easier when you have a small organization or a startup, right? Because you're in that the early stages of really forming the norms and the processes and the defaults and the roles of your organization, people wearing lots of hats, cuz so everybody has to lift things up.

They [00:17:00] all have to pick things up. What does it look like when you step into a larger organization that has established hierarchies, has established norms, and you start having this conversation about here's what it's actually gonna take for you to change to actually work this.

Marty Cagan: Yeah it really gets to their origin story.

If the people that started that company came from a strong product company, then almost certainly they've instituted this culture from the beginning. And and it grows, obviously, if you look at Amazon, if you look at, look at apple, these companies are 30 years old. Google. Yeah.

They've been able because it, they really started with that. And of course, many companies started way before this and they did not have this way of working. Yeah. And they fundamentally have to transform if they want to compete. Especially when one of the major companies decides to go after them.

Now unfortunately, one of the problems, this is an anti pattern [00:18:00] and this one really frustrates me, but I have met many very strong startup growth stage companies. Yeah. That were founded by people that totally get this. And they've built this great start to a company and then they get some big funding and then their board tries to get them to take on a CEO.

That's like a professional manager. And it literally, I see them go from. It's terrible. Oh no. And it's not because a lot of times, by the time it happens they didn't even realize what was going on. But what happened was that leader that they brought in wasn't from Amazon were from, they were often from some marque name, but not in tech.

And the result is they have no idea what we're talking about. They're used to seeing command and control and. You start to see the good people leave. You start to see motivation go down and innovation come to a grinding halt. [00:19:00] So I really hate that. Anti-pattern cuz it's such a shame. And so many people don't realize what they're starting in motion when they when they make that higher.

But to your question one way or another, however it got there. I spend a lot of time with the senior leaders about, okay. If you really wanna transform, we need to talk about all the work that's in front of you, cuz it's hard. Yeah. Because the techniques are not, what's hard. It's the cultural change.

George: Yeah. Cuz it's not gonna be just simply saying put process in place. It's gonna be literally think a different.

Marty Cagan: It is. And a lot of time it means remove process that they have in place too. yeah. Because they're overprocessed

George: Well, you'd actually, you only spend a short, a bit of time on the book it's mentioned throughout, but there's a, there's one chapter that's around accountability.

And I don't wanna park there for just a second because I know a lot of leaders and even we experienced this we're we have an incredibly autonomous product managers and product teams, and [00:20:00] they are empowered to do a lot of the work that they wanna. But then there's this question of where and how do you keep people accountable and what are you keeping them accountable to?

How do you think about accountability in a product team?

Marty Cagan: Sure. You're gonna see what makes this tricky is it gets very related to culture. Yeah. And what kind of culture the leaders wanna really instill in the company, but a. Pur a big aspect of empowered teams is accountability. You can't cuz every CEO, I know one of the frustrations they have with feature teams is there's no way to hold them accountable.

Yeah. Because they didn't. Cues or even have a say in what they're doing, so you can say you're too slow or your designs are bad or whatever, but it's just finger pointing. No real accountability. And cuz you can go to the stakeholder that requested the feature, but then they say but the team did a bad job, do it.

So who's wrong. And anyway, it's just a goes nowhere fast, but on an empowered team, you're able to say, all right, here's the [00:21:00] problem. You. The way it works is the leaders are, they are able to say, this is the problem we need you to solve. The team has to look at that problem and then come back and say what they think they can do.

Now, that's just a basic of empowerment, right? That you, if you tell them, oh, here's the problem. And. I need you to get our churn rate from 6% to 2%, by the end of the quarter, they're just gonna say we're just being set up to fail. Yeah. They need to be able to look at it and say, in this quarter we think we can get it from 6% to 5%, something like that.

Now the leaders also have to tell the team how aggressive they want them to be. How do they want them to go big, like 10 X improvement? Or do they want them to be conservative and say, Just low lying fruit. We'll be very happy with a 10% boost. Yeah. That's that's part of the context actually that the team needs, but let's say that the team is told by the leaders.

Look, we just need to be able to count on [00:22:00] 10% here. If you are confident we can do that, we'll be thrilled. But then let's say the team, they say they're confident, but at the end of the quarter, they haven't done it. That's where you have an accountability discussion now. There are different ways.

I know companies that address this, some of 'em it's. Very and I wanna be clear, this is very, this is not common, but there are some companies that are pretty brutal on accountability. Yeah, of course. On the other hand, most of them I think are too lax. They're like, oh.

George: Yeah. And I'm we didn't really need to hit that thing that we were trying to go after.

Marty Cagan: And it's like I'm sure you did your best. It's no. To me, I like to treat it like a site outage. If we have a site outage, we all, it's all hands on deck. We fix the issue and then we have a postmortem right. Where we're not trying to blame. What we're trying to do is figure out what went wrong so that we can avoid it going forward.

Yeah. I like to do the same exact thing when somebody misses on their commitments. I [00:23:00] like to say, let's get you together with some peers especially peers that were depending on you. And let's you tell us. So you said that you were very confident you would get a 10% improvement. What happened?

And a lot of times they'll say we ran into an obstacle and then they'll say, Why didn't you tell us we could have helped, or maybe if us go even important, I know it's that's what usually happens. Something happens and they don't raise the flag early enough, but whatever the point is, the teams can look at that together and say, all right if that starts to happen again, what do we need to do?

One of the most common things I've found is that teams are not on top of their progress. They need to be tracking that progress every week. If you wait a month. Things get outta hand too fast. Life happens. That's normal. yeah. For every team, there's always stuff that comes up, but it's really about how you deal with [00:24:00] that.

But this is what I argue is best practice. For accountability it's in between. It's not nothing and it's not termination. it's let's learn and how to do this better.

George: I was listening to another leader and what he was talking about is that what he measures things on. And it's what you were talking about based on their culture.

Now they have an incredibly innovative culture. They were basically kept accountable to how much they were willing to experiment to try. The level of effort to actually try to move the needle. It was the people that didn't stay at the company. And we've even talked about this at Crema is you don't really belong at Crema.

If you aren't willing to put in the effort to grow and learn and constantly improve. If you don't want to constantly improve, then there are places that you can go check in from eight to five and get your paycheck and go home. And that's totally. But if you want to grow and learn and adapt and become something bigger and actually [00:25:00] solve some really cool problems together, then a place like grandma or a place like an empowered product team is a great place for you.

So that's more so what we keep people accountable to is their willingness to actually step up and try something. It's when they stop trying and then start pointing that's when we usually, like you said, you. Wait a minute, this, you know what we're here to do. So it, I love that space between

Marty Cagan: It might be worth mentioning cause this is a common topic.

I wanna draw the distinction here between coaching and accountability. Yeah. So what you are describing, making sure that the person understands that it's part of their job to constantly push themselves to, and one of the ways we describe what you said is you want people to think like owners, not like employees.

Exactly. This is all good, but you heard, one of the big purposes. Maybe the biggest of an empowered product team is accountable to outcomes. Yeah. And trying is not an [00:26:00] outcome. Oh good word. That's considered vanity metric. Yeah, that's good. So I know teams that propose to me, it's like we are becoming an empowered product team.

Our objective is 25 iterations per week in discovery.

That's just activity. That's right. It's activity. Now their argument is, but that's activity showing that we're trying. Yeah. And I agree. I, part of me is like awesome fit 25 iterations a week. That's what we want. Yeah.

But the other part of me is you can do a hundred iterations a week and still be terrible. Yeah. So if we are about. Results about outcomes, then we need to separate those things we do to improve ourselves from ultimately what we're accountable to, which is business results.

George: That's really good. And that's, again, we come back to, this is both complex and in heart, this that's, that is [00:27:00] hard to live in that balance.

One of the things that we talk a lot about is that nothing is really black and white. Everything's on a spectrum of growth, of learning of trying and actually producing. So I think that's another example of, Hey, it's great that you've got a hundred iterations. It's nothing less than that, but it also has to be, where you, where are we actually seeing those results?

When you've been talking to people about this idea of empowered teams, what's the biggest pushback you get or maybe the biggest challenge that people have moving into, actually. Working as a truly empowered team.

Marty Cagan: Yeah. And I do see this. I am often in two different worlds.

So for example I meet people in some of these old companies and they read about what an empowered team is. They hear about it, they hear the stories, they see the case studies and they're like, I don't believe this even exists. It's [00:28:00] mythical and I'm, and then it's funny because just in fact, just last week I was talking to two different people in San Francisco that are, very accomplished product people.

And they were at both independently asking me, cuz they had heard about how some of these teams work that I'm alluding to now. Yeah. And they were. Is that for real, do they really work that way? What is the matter with them? How could they work in a place like that? And I'm of course putting myself, I, I understand where they're coming from.

Sure. Cause I was there too in the past. Yeah. But I see both worlds and the thing that's funny is I can understand how both of them could doubt the existence of the other. The truth is they both exist. They really do. And they're not secrets either. They really aren't secrets. They're well documented.

It's just a lot of people have never had the opportunity to go witness the other one. [00:29:00] And so until you've tried it yeah, the thing that I don't understand, really, if I step way back is just looking at it from the profit motive. All the most successful and valuable companies in the world are working the way that, and they remarkably same way for each other.

What other data do you need? I know it's like, what is that? Not enough to motivate you to at least try. But people are always scared of what they don't know. The devil, that's true. The devil you don't, they complain about how awful the technology investments are, but they don't necessarily wanna change.

Cuz they're scared.

George: Going back to something we talked about at the beginning where you said that it can, the appearance can look very similar, right? So again if you're purely just saying I put cross-functional teams together, why aren't they acting like an empowered team? The difference of intentionality about how you're coaching these people, how you're actually giving autonomy to them, how you're positioning the context correctly [00:30:00] versus just saying, build a thing I want.

And I've put you I've ordered you correctly. I think there's a lot of bait and switch, especially in recruiting. So that's something we hear a lot is that somebody will come we're in a hiring mode right now, which is both hard and good and we're just getting to that point.

We're about 50 people. So the culture is changing as we're growing. And one of the things that we hear a lot. Is it really like your website says, is it really like the job description says, is it really like your YouTube videos look like, and it is really hard to convince somebody, yes, we actually practice what we preach, but you won't know it until you experience it.

We had a developer that started, this has been a couple years ago and he came to me and he goes, this is actually a terrible analogy. He goes, I'm like a beaten dog, like a dog that I gotten from the shelter that, what I can be the sweetest dog in the world. And I can do things the right way, but I've just been taught.

For a long time that [00:31:00] everybody would tell me they were gonna be nice to me. Everybody told me they were gonna empower me, but they never did. And so it, he said it took me Georgia. It took me six months before I realized you actually do this. And I think that happens a lot. You probably see that on a regular basis.

There's a lot of. The bait and switch and people joining teams that were promised that.

Marty Cagan: oh, absolutely. And it's not some, it's not hard for everybody to say things like we care about our customers and we're, it's just, it's just words, we hear it all the time. I think people are getting better at figuring out

what to ask who to talk to. Yeah. So that they can figure these out. I'm asked this what's probably the single most common question I get is when I interview for a job, how do I tell if this is a company that's really gonna value what I can do, or if it's just, they want another cog in a wheel.


George: Yep. And that's, I think you getting back to where are people gonna have the opportunity to flourish? I think that's truly the thing that people are, that's what they want. And then I recently put out a thing that said you, with the 18 to 24 [00:32:00] months turnaround time or tenure in organizations, it doesn't have to be that.

No one, I don't know who wrote that rule. But if someone, if somebody says, no, you just expect 18 to 24 months, then you're probably running teams where people don't wanna work. And they're probably not being empowered.

Marty Cagan: Yeah, that there's that old saying, which is so true that you join a company, but you leave a manager.

That's right. And that's, what's really, and most of the time that's, what's going on, their manager is doing nothing to help them develop in their career. They're not providing them what they implied during the interview. Yeah, so yeah.

George: Classic problem. Okay. I wanna take it to something that's a little selfish we're and we're, we'll wrap up with this being kinda one of the last questions, and then we'll, I'll throw it to you, but I wanna take it to something that's a little bit selfish because we're an agency, right?

We're a product firm. And over the years, we've tried to ask this question, like, why would you work with an agency? Should you even work with an agency? In your book, you mentioned a couple times that working with [00:33:00] agencies is really risky for it just being well,

great, that's your mercenary. That's your feature team, but just understand you gotta treat 'em that way. I'm curious. And I want honesty. What do you think about agencies, product firms, outsourced resources, that model, what does that look like when you're trying to create an empowered.

Marty Cagan: Yeah.

It's a totally fair question. But let's talk about it from two different sides. Yeah. We'll talk about it from your side, in other words, the agency, and, but let's first talk about it from your client. So the most important thing, I try to tell the clients, which is who I work with.

I work with the clients but I tell them, look, first thing you need to decide, are we talking a core competency of your company here, or are we talking something extra? If your company is about X, but you need just a brochure website or you need a little utility or something like that.

It's not even the best use of your people to be doing that. That's what agencies are for. Sure. [00:34:00] This is what really made Accenture. They took all that stuff from all the big companies and what, they got very good at delivering that stuff. Where companies get into trouble is if they use I'll use Accenture, because they're the biggest yeah.

George: They they've bought every other agency, so that's right.

Marty Cagan: But, they get into trouble using Accenture when they're trying to build their core of their business. Interesting. Because now it's a very different situation. So for example, would Tesla ever use Accenture to build the software for controlling a car or autonomous driving?

George: No, they're gonna hire a bunch of engineers, a bunch of designers.

Marty Cagan: Yeah, because this is the core competency. This is the core of what makes a Tesla amazing where Boeing got into trouble with the 737 Max, is they forgot that basic rule and they took flight control software, probably nothing more important to a commercial airliner [00:35:00] than flight control software.

And they used an agency for that. And of course, I, I think last thing I saw 400 people had died. So I don't know. It's terrible. Yeah. It's terrible. And that's criminal and it's not because of the agency. Yeah. That's Boeing screw up. They should have never done that. They should have had a team, a hundred percent focused on the safest, most fuel efficient flight control software in the world.

George: Dedicated to thinking only about that all the time.

Marty Cagan: And constantly improving it just like Tesla does, for example, for their software. So that's the client side. Yeah. And if you really want innovation, not only do you need those in those engineers, the way we talked about, but those engineers need time to really go deep.

So the worst thing in the world from the client's point of view is every six months you get new people. Which as, if you use an agency like in India or China, it's you're lucky if you get 'em for six months. Oh, if that,

George: yeah.

Marty Cagan: [00:36:00] So your chance of innovation, your chance of any sense of empowerment.

In fact, even you're, you'd be lucky if you even had a decent feature team out of that, I agree it's much more likely gonna be run. Like what we call a delivery team, which is even worse than what we've been talking about. So that's why I try to tell the clients that look, if this is the core of your business, you need to go all in you need to build these competencies yourself.

And one of the common things I hear, but we don't have people that know that technology, your engineers wanna learn this technology. You need people to learn that. So step up now, what a course is going on. Really what's going on in those companies is those clients don't understand the role technology needs to play that's right.

They think of it like a cost center and because they think of it as a cost center, they say you know what? Cost a loaded cost is a hundred thousand [00:37:00] dollars for one of these developers. I just outsource that. That's how they view it. Yep. And of course they're like, we know this is not what we're talking about, the good companies that understand the necessary role of technology as the core enabler for the business.

They don't view it as a cost center. They view it as the core of their business. That's right. And it's a profit center. It is the line of business at its core. That's the client perspective. Yeah, of course now.

George: And I would totally agree with that. A hundred percent.

Marty Cagan: From the agency perspective, and I actually have a lot of friends at agencies. I send a lot of business towards agencies because when a company is, when they tell me that they need help with something, but it's not their core competency. I'm like don't dilute your own people on that. Give that to a good firm. So now here's the challenge from the agency point of view.

They often view you as a mercenary, very. They're like, if you don't wanna build it, Accenture will build anything. [00:38:00] They'll say yes to everything. They will. They'll just charge us like crazy. But. They're like, you do exactly

George: what I ask and that's right. Yeah, exactly.

Marty Cagan: So from the agency's perspective, most of the agencies don't wanna just build crap.

They wanna build something that's helpful. That really helps their clients.

George: They're still creatives. They're they would just be like the people you're hiring they're designers or developers. Yeah,

Marty Cagan: absolutely. Yeah. And in fact, a lot of 'em are really pure form creators. They do this because that's what they wanna do.

They just, they love it. Love the craft. They love the craft design engineering product. There's a long history of great product people coming from this environment. Of course, now the, I always try to tell the agency people, cuz at least all the ones I meet, they don't wanna work like Accenture. They wanna be a true partner, not lip service.

They wanna be a true partner. That's right. I'm sure that's where you're coming from. And of course the key as I, I know, you know this already, but the key is trust, [00:39:00] right? They have to trust you as a partner, because to go from George, just build this damn feature to George, can you help us solve this problem?

That is a huge way. Different conversation. Yeah, totally different. And by the way, it has a huge impact to the contract itself. Yep. Because if you're gonna help solve that problem, I don't know. Anybody can give a. Estimate of what that's gonna really be. Yeah. Yeah. And, O only a few mistakes and you're out of business, that's right. If you screw up, . If something ends up taking three times as long that

George: is the problem works. The, we expendable in that way.

Marty Cagan: Yeah. Yeah. So the only safe thing to do from the agency point of view typically is, look, we'll do we'll work, however you like, but you gotta pay us on time and people, but.

That's of course tough for the company, cuz they're like we don't have infinite budget. You know that the theoretical agile show us every week. See if it's [00:40:00] good. That's no, we need to have some clarity on that. So from the client really wants to pay for an outcome. And the agency really wants to deliver an outcome , but it's hard to have that relationship without a really strong foundation of trust.

And I try to encourage the client and the agency to create a relationship that is a a retainer style relationship that's right. So that you are their partner long term. And part of this comes because the clients view this as a project, not a product and so they think, yeah okay.

Three months, George. We're done. We'll be all happy. It's not how it

George: works. Of course. It's a finite game in that way. Yeah, absolutely. No I think you, you hit the nail in the head that's exactly. It's exactly the advice I give to other agencies, honestly cuz there's a lot of upcoming product agencies we're gonna see more and more of them show up because either they don't like the The, the bait and switch that they've experienced inside of the big corporations and they want the variety and the work or whatever [00:41:00] that might be.

And so people are starting these shops, we've been at it for 11 years. So we're okay, we know it's hard and we know that the first that you're absolutely right. The first thing is trust. It is our number one value. Um, And it's one of our core values is trust. And, but creating trust is not easy.

Marty Cagan: You've been around 11 years. So you probably have a set of clients that really have learned, they can depend on you for this that's right. It's not like a, they're not risking their whole career. If they give you the latitude to do some work.

George: That's right. That's right. No, that's super helpful.

I appreciate you speaking into it. And again, that's a little bit selfish, but I, so was encouraged by your. Your ethos or your kind of the way that you think about empowered teams. And of course, I'm trying to do that inside my org organization. But to do that as an agency where we're trying to partner with people to say there is a possibility that in some way we can be empowered together.

And that's, that is it's gonna be more difficult. Then quite transparently if you just hired people and spent the time and the, the effort to go ahead and create that culture for yourself, but maybe [00:42:00] we can help you to do that for a period of time or for maybe on a particular part of your product, your business your product.

That is that is not. Core to who you are. And again, that's why most of the work that we do is, creating staffing solutions or recruiting platforms, those types of things that are an element of the business, but maybe not the core driver to the business. So that's that's really good word.

Well, Marty, this has been super helpful. And like I said, I could nerd out with you on the, on every chapter, every header in this book for, I think an hour or longer each topic. But we don't have time for that. So I wanna throw it back to you. Where can people learn more about you your organization, your work, the book where can people find you?

Marty Cagan: Yeah we're very small. There's only six of us. We're. Long time friends, all of which are head of products. And svg.com, Silicon valley product group.com. We publish all articles constantly for free on there. We're trying to give back a bit and on Twitter at [00:43:00] Cagan C a G a N, and.

Yeah, LinkedIn, all the normal places, except not Facebook.

George: I, not much of Facebook anymore, myself either. But honestly, if you're not following Marni on Twitter, you have to his, your tweets are fantastic. And I think that's where we got connected. So thank you so much for joining me today.

And thank you for writing the books. I know this was a labor of love. And so I appreciate what you're putting out in the world. It really does mean.

Marty Cagan: Thanks very much, Georgia. Thanks for inviting me.

This episode of people of product was produced by Larissa McCarty, with support from Gabby Caton, Julie Branson and Alexa Alfonso. Our hosts are George Brooks and Daniel Linhart. People of product is brought to you by Crema a digital product agency. We believe that creativity, technology, and culture can help individuals and organizations thrive.

Show notes

Marty Cagan is the Founder of Silicon Valley Product Group

Book links:

Empowered by Marty Cagan

Inspired (2018 Edition) by Marty Cagan

People of Product is hosted by George Brooks and Dan Linhart.

The show is edited by Larissa McCarty.

Brought to you by Crema.

Crema is a digital product agency that works with partners from top innovative brands to funded startups. Our team of creative thinkers and doers simplify the complex to discover the right solutions faster.


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