Product Ownership Capabilities Series - Lead to Value
In this episode of the Scrum.org Community Podcast, PSTs Paul Kuijten, and Fredrik Wendt join Dave to discuss the "lead to value" capability in Professional Product Ownership. They emphasize the importance of contextual awareness, understanding market dynamics, and aligning product strategies with business goals. They highlight the challenges of defining products, the impact of organizational capabilities, and the necessity of considering financial aspects and pricing strategies. The conversation also touches on the iterative nature of product definition and the need for long-term decision-making to avoid accumulating technical and business debt. A key theme in this discussion is the importance of leading teams towards value creation and the practical application of Product Ownership principles.
Transcript
Dave West: 0:20
and welcome to the scrum.org community podcast. I'm your host, Dave West, here@scrum.org CEO. Here@scrum.org even today's podcast is focused on their capabilities and skills of professional product ownership. The professional product ownership capabilities and skills provide a view of what we believe are important skills and I guess capabilities for product ownership, they describe the things that product led organization needs to think about when improving their capabilities. To talk about this very interesting subject, I'm joined by two amazing PSTs, Paul kaijun and Frederick went they've been heavily involved in its development and the rollout of this capability model. Welcome to the podcast, Paul and Frederick.
Unknown: 1:13
Thank you. Thank you all.
Dave West: 1:14
It's great to have you here. This is actually the third podcast on this subject in the first podcast, and if I get this wrong, remind me Paul and Frederick in the first podcast, we discussed the overall model. The second podcast, we talked about engage with vision. And today we're going to deep dive into lead to value, one of the three main areas on the of the model. I think that's right. So lead to value Paul, that that sounds, it sounds like a management book. Can you? Can you really does, doesn't it should be a, should be a management book. Can you describe this capability for our audience?
Paul Kuijten: 2:00
Yeah. So, so an important part of product ownership is you're the one that need to go out there. You're the one who needs to point to where the value is. And that's a daunting task, I think, to be doing that, and that's what we call lead to value. So, but to be able to point to where the value is, you need to be very aware of your surroundings. So a lot of the things that we consider leading to value is, is all about contextual awareness. So that's one bit of it and the other. And then being able to verbalize what it is that you find, being able to express what it is that you find. So to be aware of your context, be able to express what you find. And then finally, you need to be able to rally those around you in the pursuit of that value. So that's, that's what lead the value is about. And then, yeah, there's different areas that we consider underneath that. Okay,
Dave West: 3:09
well, let's, I understand this, you know. So ultimately, the word value is super important. And I was really intrigued by the you talk about, the context to the environment, the situation determines value. And I think that that, to me, resonated because value is very situational and contextual, and that's one of the reasons why it's so damn hard right to describe. You know, why is that? Why is that valuable? Is it the Nutri you know, if you eat something, what? Why are they eating that hot dog as opposed to that other hot dog? What's, where's the value? Is it, you know, they're the same, potentially, in terms of nutrients, they taste very similar. They for they're the easy to, oh no. Well, it's about the, you know, the environment that they know that brand, the timing, the machine, the person that selling it value is So contextual, which is interesting. So that's one element, and then the other element is actually, once you have this understanding, to be able to communicate and lead people on this journey to value, is that does? Is that the essence of this capability?
Paul Kuijten: 4:25
Yeah, that's that's really what it's about. And so we talk a lot of contextual awareness in terms of the market, your competitors, the ecosystem that provides value, because often you're not doing it with your own only with your own product. You know, you're part of a bigger system. So that's that's like outside. But then there's also the inside, you know, your organization, that you have to work with, the capabilities of that organization, the extent to which you can use that organization as a. Are you generating machine? So those are some of the aspects around, yeah, I
Dave West: 5:07
think that that's also very interesting as well, because what I've discovered now people often say to me, Well, why don't you do that? You know@scrum.org, we have an amazing set of products, an amazing community of trainers and amazing access. You know, well over 1.2 million people come to our website every month. We have also, then when we do that, and sometimes it isn't as straightforward as, does it conform to the mission? Does it? Can you economically do it? It's, is it a cultural fit? Does it? Is it, you know, does it make sense? Is, does your business model support it? Does it? You know, where is it, in terms of its evolution, in terms of a technology, or whatever? There's many elements that determine if something is the most valuable. I'm not saying it's not valuable, but the most valuable to focus on Frederick use you talk about value. You've You've helped me over the nine years that I've known. You spend a lot of time reframing my backlog, or messing up my backlog, as it's also known as, and thinking more about outcomes and value. What's your take on this?
Fredrik Wendt: 6:15
I think it's exactly that it says lead to value. So we have to define the value, just like Paul and you are talking about, there are so many contexts. In the webcast we did a couple of months ago, we talked about, it's like selling a C a pirate ship or whatever, you know, but I think in real life, you have multiple C's that you're trying to navigate at the same time. Paul talked talked about the external ones, where we look at market users and those kind of things, what's happening around us, outside of our company, and then there's the internal and there are multiple oceans in that as well. Like, what is our technical capability of actually delivering stuff? How do we improve that compared to our competitors? Is that something we need to build and improve in order to realize the value we're pointing towards. So it's making all of this very practical. Is this area, when I think about lead to value, providing enough leadership, and, you know, opportunities to understand all of these contexts, so it becomes practical, yeah,
Dave West: 7:22
so people can actually do stuff. So Paul, all right, so we've got this broad description of lead to value. What are the elements that comprise it? What are the sub capabilities that organizations need to wrestle with? Yeah,
Paul Kuijten: 7:39
so a big part of it is, since we're all talking about product ownership, product led these kinds of things. Then, then, of course, you know, it sort of starts with, hey, what product do I want in the first place? What is, what is the vehicle that that we could be using to generate value for our customers or users. So that's sort of where it starts. And then, so that's one of the elements in the lead to value the and then immediately you cannot really do that if you don't understand the market. So you need to have an understanding of the market, the customers and users within that market, what are, what are they after? What kind of outcomes could you be generating for them? So if you talk in EBM terms, you need, you need to be able to spot those satisfaction gaps that are out there that you can start addressing with your with your product. So if you find those outcomes, that's when you could start deciding on, hey, can we segment some of those outcomes, and can we base our products on that? Is that going to be one product that we have to use for that is that a suite of products. So that's really where it starts, I think. And then after that, you're gonna have to take into account a ton of constraints. And I think you two were talking about it previously, there's there's constraints that you have to deal with. It's like it, does it fit with our culture? Does it fit with who we want to be as a company? Does it fit with the capabilities that I have? Does it fit with the way I'm currently structured so that so then you start taking into account those constraints again, and maybe you need to lift some of those constraints. Maybe you need to strengthen some of the capabilities, and that's where we put in another element on the lead to value, which is called work with the organization. So that's really all about. Can you play to the organization's strengths? Or, you know, if you don't have the strengths you need, can you amplify some of these things you need to? Or improve some of these things you need. So that's, that's basically what it's about. Another important element in it is about strategy. So, so, so it's really about you have a product strategy for your single product, but there's a a wider strategy element at play as well, which we then refer to as business strategy, and you need to be aligned with that. So your product strategy needs to be in line with business strategy. And yeah, how can you describe a strategy? How can you translate that into goals and roadmaps that we talked about in engage with vision. So that's basically the the main elements in lead to value. Okay,
Dave West: 10:52
so let me say we got understand the market, work with the organization, execute and influence and connect with the business strategy, develop and maintain the product strategy, and define the product. And obviously, that product, you know, it might not be new products. It might be existing capabilities in your organization that you're chopping up in a product driven sort of way with it's not just for sort of, like new things, is that, is that right?
Fredrik Wendt: 11:24
Yeah, absolutely. And segmenting your offering is a way to define your product,
Dave West: 11:31
yeah. So one thing about defining a product, and I'd love your take on this. So in the 2020, Scrum scrum guide, we actually defined product for the first time, and that was, you know, described this sort of, hey, it has a boundary, has customers, has a users, has, you know, known stakeholders, has value, has obviously cost, dependencies, etc, in organizations. Do you find that actually defining the product is actually kind of hard for most organizations.
Paul Kuijten: 12:04
Yes, for sure, good.
Dave West: 12:07
It's not just me. Then I'm so glad, because I thought I was just saying the wrong words, okay, good.
Paul Kuijten: 12:15
Yeah, there's, there's, there's good news, Dave, you're free to define whatever product you want, and that's also what makes it, what makes it so scary? Yeah, it's not there's, there's no rules for there's, there's a way you come you ideally come about defining your product. But there's no like, Okay, this could be a product and this could not, you know, and what, what we encounter is, there's a million ways people go about defining their products with a lot of improvement opportunities, but that, you know, there's companies that call their channel the product. So they call
Dave West: 12:54
it sounds it sounds awful, though, interestingly, we might be one of those companies, because we definitely think of PST, professional scrum trainers as a product sometimes. And then we get confused, is is it a channel for our products? Is it a product itself? Well, obviously it has some elements of product, so is the actual product. And then we get very confused, and have to sit down, but the it's funny, we we're fortunate that a gentleman called Dow Fernandez used to be a CIO at Fidelity and Tia, and he introduced the product way of thinking to Tia and worked on it at fidelity. And he talks a lot about that this process is very this defining products is very iterative, and and it seems to be and a little bit messy. And organizations don't like that. They like get, they get very freaked out by the sort of messiness, the fact that these product boundaries can change depending on, you know, how things work, yeah, and
Paul Kuijten: 13:59
also, yeah, there's, a ton of stuff going into that. If you look at banking, for instance, I said, you know some some companies called channel a product bankings were very banks were very good at that. So, like, five to 10 years ago, it was all about the channels. And the channels were the products, basically, and how they organized themselves. That shifted a bit again. So there is shifting a bit more towards the core products. So they're organizing themselves around mortgages again, or they're organizing themselves around loans again. So, so it's like a thing that's perpetually in motion. I think, yeah, there is, yeah.
Dave West: 14:41
And so why do you think that these things can change so much? Do you think it's fundamentally the product is a construct? I mean, it doesn't really exist. It's an abstraction by by all of us to describe the value that we're delivering to customers in a. Way that allows us to align our organization and fund it, etc. Frederick, I'd be really interested. Why does it change? What do you see it changes?
Fredrik Wendt: 15:12
Because things change. I'll make it clear.
Dave West: 15:15
Yeah. Okay, thanks. I
Fredrik Wendt: 15:17
used, I used to own a Volvo, right? I have a car and talking to Volvo, just look inside that company. What is their product? Is it transportation, or is it that actually, that you own something that you can be proud of, you can actually buy a physical product. It helps, in this regard, sometimes that the product is actually physical, right? You know what you're Yeah, you look at your product, the thing you bought, and I'm thinking of it as a user or a customer. But that is not the only way to think of it. Right when I enter the car, I'm now listening to music from Spotify or title or Apple Music, but it's still coming through my product of Volvo, so and so that's one thing. You know, we are changing our products constantly, and we're collaborating with other partners, which is why you want to think about the ecosystem as one part of this lead to value. But the other part is also that society is changing. Most people here in Sweden, they start they don't own their cars anymore. They rent them, or they lease them, or they have some kind of subscription. I lived in Gothenburg for over 15 years, and we were in the we had this service where I got new cars every 18 months. They've just changed all the cars, and they make sure they were very well. Someone else took care of the car. I just decided to and now I want to travel, and I could pick whatever was necessary at the time. If I wanted to go to Ikea to get a new furniture, I would get a big car. If I was just doing weekly grocery shopping, I would get a small car. So for me, that product was a subscription. I just paid a monthly fee, a little extra if I needed extra stuff, but I didn't own a car, so the product and the society is changing. That's what I'm saying. Most products change in how we think of them as a society. We're getting more into a subscription based world.
Dave West: 17:14
And I think what you're highlighting, which is important is the orientation around the customer for a product. So defining a product needs to have a clear customer, even if that customer is internal, even if that customer is just another part of your organization. Because it's if you understand that customer in the case, you know, customers in Sweden seem to be very different. In America, buying a car is a huge status symbol. It's, you know, we live in a very spread out society, you know. And so cars, freeways, you know, the American dream, are all sort of connected, but so defining. You know, people buy cars here. They don't buy transportation, particularly my age. You know, the sort of like 40 to 50 year olds, I think the younger generation have a different view of a product. So orienting around that, I think, is really important. And then I think the other thing that you said, which I think is interesting is the capabilities your organization. This is an abstraction, a useful abstraction to enable us to align people, tools, money, etc, on this capability that we're providing to customers that how that has some impact on where the boundaries are as well. Surely
Fredrik Wendt: 18:29
it has a huge impact, right? If we're delivering, you know, Volvo, the car is something you buy once you know your exchange of money, and then you're done, we are going to organize differently compared to if you have this subscription setup, right? So how you'd phrase your product is not just a customer thinking perspective. It's an internal perspective as well. And that's why it comes so hard. You're trying to balance all of these perspectives at the same time and make you know, find a feasible way of running a business as well.
Paul Kuijten: 19:00
Now that's really interesting that you mentioned subscription, because I forgot to mention one more element in the lead to value bit, which is pricing strategies and tactics and managing the financial aspects of product. So, so, so, yeah, you know a product is also about the way the value capture is being done, for instance. So it's such a wide area, it's baffling, really,
Dave West: 19:28
it is baffling. I mean, the financial aspects is really interesting, because there's two elements. Obviously, if you're building internal products, there is a cost, there's a benefit, there's a value you aren't necessarily, you know, going to swipe and getting money for it, or whatever it is, a little bit more transient, a little bit more disconnected, you know, from value. But it one thing that that this approach, this product mindset, you're talking. About product ownership. Now, ownership, you can't be a product subscriber, by the way, Frederick, you have to own it. And the reason why, one of the key reasons why Ken loved that word ownership so much was because it emphasized the fact that you're making decisions that aren't short term, they're long term, and the total cost of ownership. That's one thing Daryl Fernandez used when he was at fidelity, and I was working as an analyst, and he was introducing or working with product model. There one thing that he one element of the entire story, was around total cost of ownership. Because one of the problems that many organizations face is the project culture. You don't really worry about that. You basically introduce all sorts of stuff. And why not? Because, on time, on budget, getting it delivered to your customers, you know, is the most important thing. And then you start accumulating technical debt. You start accumulating business debt, meaning it gets harder to use. The product becomes less valuable.
Paul Kuijten: 21:07
You start introducing the introducing dependencies, you know, and and really that it to be more product led, will will simplify actually knowing what cost what? Because a lot of organizations have no clue. It's like, okay, you know, we have this, this thing running in the basement. How do we allocate those costs across, across our product portfolio? And they don't do it, no, and I
Dave West: 21:38
think that's really, really interesting. And, you know, but that, but that's one of the problems with the problems with the product mindset and this product operating model, because that means organizations have to see those costs. And imagine if I'm an executive that's going to be here five to eight years, you know, or, I mean, in Europe, it's little bit longer. Here, it's three to five years. In America, the you're like, Ah, well, yeah, do I really want to see all of those costs and those issues? How about we just deliver this stuff and not worry about the future so much? But that that is one of what, one very challenging element of this, this way of thinking about the world, I think so.
Fredrik Wendt: 22:21
And speaking about financials and managing, you know, the financial part of your product. A couple of years ago, I met this person called biarte buxnes. He worked in the finance department at what was then called stat oil, you know, the Norwegian oil company. They're called equinor These days, yes, yeah. So I met him because I heard about this thing called Beyond Budgeting. And it Beyond Budgeting is a it's a thing of its own, but it's about one thing that really stuck with me, is thinking about what's driving your decision making, especially your value decision making. He came from a position a company where they they build oil drilling rigs, and, you know, all of that, those have a lifespan of 50 years or even longer. And in he, I remember, he had told the story of when one day a person walked up and said, Hey, we have this idea for an app that's going to help our customers do XYZ. It would take like, three, four or five weeks of a good team and bjar to just realize the shit we are about to push this small, very valuable idea that we can realize in a short time span through the same project model that we use to build oil rig. You know, rigs for 50 years. So one of the things that really stuck with me is this idea, what is driving your decision making? Is it just yearly budgets, or is it, you know, opportunities, options, real needs? So I think that making this leading to value tangible also means, you know, thinking about how you make decisions. Are those based on, you know, what you want them to be, or is it just because, hey, we have a fiscal year, we need to make new blah, blah, blah. No, it should be about value. Define the value. Enable your organizations to rally around those values. Look at them, see what do we want to target next? Make it practical.
Dave West: 24:21
I think that is a very different mindset. It's thinking about basically your organization's portfolio capabilities, or those, which we're calling products that have customers and have value, etc. And it's basically thinking about that holistically and that over time. Obviously, new ones come in. Old ones get end of life. I mean, end of life in products. From my experience of working in, you know, many large organizations, it requires an act of God. They just, they don't, they don't die. You they sort of exist forever. And thinking about it as that portfolio and manage. Changing each product differently in respect to that, but in a broader sort of investment strategy, or portfolio investment strategy, and because if we did that, it would simplify a lot of the decisions we're making. Which is, which is, which is in which is, which is awesome. Thank you for sharing your thoughts on this really interesting topic. You know, I think that the idea of lead to value as a key capability of product ownership is is super important. Is something that I wrestle with as a product owner in my own organization, the financial elements notwithstanding, recently I've learned a lot more about that. As the market has has gone down a little bit, which, which is, which is interesting, but I definitely feel that I've learned something. And obviously there's a lot more details on the website. Thank you all. Thank you Frederick, spending the time today. Thank you. Thank you.
Fredrik Wendt: 26:07
Happy to be here.
Dave West: 26:09
Okay, well, and thank you listeners for listening to today's scrum.org, community Podcast. Today, we talked a lot about one of the core capabilities of the professional product ownership, capabilities and skills model that was lead to value, you know. And sometimes that leading can be very challenging. I say from personal experience or lead slowly to value is often the phrase that I use to describe my own use of it. Hopefully you're a little bit better than me. If you liked what you heard today, please subscribe, share with friends, and, of course, come back and listen to some more. I am very lucky chat, because I get to listen to and talk to lots of different types of people, a variety of guests talking about everything in the area of professional Scrum, product thinking, and, of course, agile. Thank you for your time. Scrum on you.