The 4 Levels of Product Leadership Growth
Read on my website / Read time: 5 minutes
20 years ago, I learned a hard lesson.
That a product will never grow past the growth of the product leader.
A product goes through 4 levels of product growth.
And if we, as product leaders, don't grow past these 4 levels, WE will be the ones holding it back.
The levels are:
If you're a leader, it's absolutely crucial you know what level you're at.
Because that will define where your primary energy needs to lie.
And if you're an individual contributor who has been hired to lead a product, it's just as important to know where you're coming in at and what it's going to take to be successful.
- At level 1, the first $100K is made from skills - being excellent at what you do.
- At level 2, the first $1M is made from hiring - building an awesome team.
- At level 3, the first $10M is made from systems - having the right operations in place.
- At level 4, the first $100M is made from people - coaching and growing them as leaders.
I've made mistakes at every one of these levels.
So, today, I'm going to share 14 simple business rules that have helped me grow products to that $100M level.
Let's get into them.
The $100K level (Skills)...
1. Find Paying Customers.
It's way too early to worry about team structures, process, or perfecting your marketing message or sales funnel.
The product doesn't actually exist until you get Paying Customer 1.
Getting that first customer - and the first several customers - always involves personal involvement by the product leader.
You are THE salesperson for the product.
2. Get to Revenue.
Often times, I find product teams working on things that may sound good for the business, but they don't make money.
A lot of busy work creating processes and fancy systems, optimizing team operating models, instrumenting metrics, finding and configuring tools, etc.
All of these will become important later, but none of them help with the #1 priority at this stage, which is getting paying customers.
This type of busy work just ends up costing money, resources, energy, and time - all of which are too precious to waste at this stage.
What we need to be doing is whatever gets us to sell the right product. Anything other than revenue is a waste of time at this stage.
Here's how I think about solving internal business problems at this stage:
- If a problem in the business can be solved with money, then it's not a real problem.
- If you can pay someone to solve your problem, then you have to get better at making money to solve those problems.
Getting to the $1M level (Team)...
3. Don't Reinvent the Wheel. Model, Then Modify.
A lot of first time product innovators make this huge mistake: They try to make everything up as they go.
In the name of being "innovative", they ignore tried and true practices.
It's like learning to become a marathon runner: You don't start by trying to run 26.1 miles - you start by first learning how to run the 5K so you can understand how to put together the workouts and recovery.
If you don't understand WHY certain things are done a certain way, then you're not going to succeed.
Don't re-invent the wheel. Instead, find a blueprint that's worked before to give you that foundation and adapt it as necessary.
Else, adding innovation on a sloppy foundation will only fail.
4. Profit Solves All Problems.
A lot of product people I meet confuse revenue with profit.
The #1 goal for any product is to make money. That means it must cost us less to deliver it to customers than customers are willing to pay for it.
Profit isn't what we sell the product for. What we sell it for is the top-line number, called revenue. Profit is what's left over after everyone in the business and all the bills are paid.
A product may be generating revenue, but if that revenue can't cover the expense of delivering that product to customers by a healthy margin, there won't be a business.
Can't pay for the lights, the rent, the snack machine, your paycheck, none of it.
Bills can't be paid with top-line revenue. Only with profit.
Profit also allows for reinvestment back into the product and the business to fuel future growth.
That's why product management needs to focus on gross margin. It's the percentage of revenue that's retained after direct product expenses have been subtracted.
Accelerating margin velocity is a key responsibility for product management.
5. Hire For The Soul, Train For The Role.
In the early stages of a product's growth, a different type of attitude and mindset is required than that for an established product. Getting this right is critical to the success of any product.
I realized that early on that having the right team members was crucial to getting to $1M+.
At one company, I had a fairly large PM team, and they were all fantastic in their own right.
But, the truth was, not all of them were going to be a fit for the new product that we were launching.
I've interviewed seasoned product managers who have managed multi-million dollar products and worked at famous tech companies. I often didn't hire any of them for a product at this stage of its lifecycle. They would have been a poor fit.
Instead, I hired folks who were entrepreneurial and willing to do what it takes to get the job done.
We can train skills. It's much harder to train attitude and work ethic.
Getting to the $10M level (Systems)...
6. Create Systems.
Now is when you start to create repeatable systems.
Systems for:
- Gathering customer insights.
- Request intake and triage.
- Roadmap planning and reviews.
- Product development.
- Product launches.
- Go-to-market.
- Emergencies and escalations.
- Team operations.
I like to keep these as lean as possible, though. It's easy to create complicated processes that optimize for every eventuality. It's easy to spend money on tools.
I have 2 philosophies at this stage:
One is to maximize for impact vs. optimize for operational efficiency.
What's the absolute necessary must-have we need to have in place to get the job done?
For example, at one startup, we used a Google Sheet for our roadmap. All feedback, requests, and requirements were put in a simple Jira board. They worked perfectly.
Sure, a PM tool would probably have been nice. Fancy integrations with Salesforce would have been cool. But Google Sheets and Jira got the job done.
The second is: Delegate and Empower.
For example, I'd allocate money from our budget for things like training, tools, equipment, and travel, and then I'd empower the team to decide what they wanted to spend the money on.
This way, the team could operate within that budget and didn't have to come to me asking for approvals on every little decision. I wasn't a bottleneck.
And for me, I could make the decision once at the beginning of the year or quarter, and then didn't have to make it again, saving me a lot of time.
Another example: If I had a Senior PM who was ready to be promoted to Director, I'd set them up to manage one or more of the processes above. This got them ready for the next level, while giving me back loads of time.
7. Scale Principles, Not Process (A.k.a., Don't Prematurely Scale)
I see many teams start talking about scaling at this point. Product management folks love to dive in to optimize workflows and operations, get new tools, and create fancy multi-step diagrams.
The intent is good. The outcome is waste. Because the time and energy spent solving for $100M problems at the $10M level can be better spent growing the business - which is where the energy should lie.
Adding this stuff can feel good, it can feel like growth, but it's not. It's vanity. And can result in actually slowing things down just when you really need to put your foot on the accelerator.
At the same time, you can't survive on no systems at all. So, as a leader, one of my philosophies is Principles vs. Process.
The thing is, everyone knows and is capable of devising a process, playbook, or checklist.
So, as leaders, we need to go one level above and think about what's the principle that drives the outcome. What's the philosophy around the work. Then teach that.
Teaching people how to think in principles is far more scalable because then they'll have a framework to look at their work that applies to multiple different areas.
8. Hire and Train To Buy Back Time.
When I first became a product leader, I thought my job was to keep all the plates spinning. It almost killed me.
As a product grows beyond the initial $1M to the $10M mark, the demands on a product leader's time grow exponentially.
So, the #1 thing product leaders need to do for themselves at this stage is to buy back their time.
What I didn't realize then was that if my product was profitable, I should have considering re-investing some of that profit to actually get me and my team time out of our calendars.
Most product leaders simply add capacity. Another engineering team? Get another PM. Backlog too big? Get a junior person. Something not working? Make the process bigger or add people. One too many spreadsheets? Buy an expensive tool. (A lot of engineering leaders I meet think this way.)
This only meant that I had more people and more activities to manage, which actually increased the demands on my time.
Worse, I didn't learn to let go and empower my team to run things.
So, here's the big idea:
Your first set of hires should be to buy back the largest portions of your time that don't contribute toward the product's success.
For example, look at your calendar and inbox and identify the things that don't actually contribute to growing the product. Are there things that are taking your energy that you don't want to do? Consider transferring those to somebody else.
The same goes for hiring a PM.
A PM is an expensive hire. Do you really need an experienced Sr PM? Maybe not, because you still need to be heavily involved in the product strategy, go-to-market, etc. So consider hiring a junior PM or analyst instead to whom you can offload the more tactical work. This has the added benefit of helping that person grow into a more senior role over time.
9. Establish the Right Culture.
I realized that early on I had to establish the right culture that would help propel the product to $10M+.
Otherwise, you may wake up one day and realize you don't actually enjoy working with the team you've brought on.
So it's vital for a product leader to sell the vision they're after:
- Here's what we're going after.
- Here's what it's going to take.
- Here are the kinds of people that will be needed to support that vision.
If someone isn't aligned with that vision, then they shouldn't be a part of it. Find them a different role.
Many product leaders are scared to do this because they don't want to scare their teams or don't want to be held accountable.
But the truth is, as product leaders, we have to sell the vision. And if the vision isn't big enough for our team's goals and dreams to fit inside of, they won't be motivated to give it their all and they'll find somebody else where that is true.
So, establishing the right culture is critical. That sets the foundation for performance and for hiring the right set of folks with the right sets of skills, attitude, and commitment.
10. What You Measure Grows.
Most product people I meet fall in one of two camps:
They either like to live in this fun land of "innovation"...
Or they're way in the weeds of operational perfection.
The "innovative" ones are so focused on the creative and "differentiation" that they're inevitably surprised when they hit the chasm of the technology adoption curve.
The "operational perfection" PMs love to talk about metrics and measure everything. But here's the thing: Not everything needs to be measured.
To get to the $10M level, we need to measure the right set of things.
For example, one product director I spoke with was proud of the fact that his team had upped user satisfaction to 90%+, but was disappointed that the company was reducing the budget for the product the next year.
When I asked him how much money the product was making, he said they had added 20% more users in the last year, but he couldn't tell me:
- How much revenue those users had generated.
- How profitable those users were.
- What it cost to acquire those customers.
- How profitable his current users were.
- How user dissatisfaction was affecting churn and lifetime value.
This tells me that he's not focused on the right set of metrics.
His execs are. They celebrated the user satisfaction boost, looked at the numbers, and decided the company was better off investing in other areas.
Here's the truth: What you measure is what you improve.
The reality of product success is based on tracking the right things - if they go up, revenue goes up, and we win.
So make sure you're measuring the right things.
Figure out the 3-7 metrics that are most important at this stage for the success of the product.
Any other metrics should be sub-level ones in support of those.
11. Make Progress Visible.
Following on from above, once you've identified the right set of metrics, make them visible.
Put them up where everyone can see them. Have the spreadsheet at full access. Talk about them at every team meeting.
What this does is bring attention to them - it brings sunlight, so they can grow. This also allows you to fix things before they become an issue.
Getting to the $100M level (People)...
12. Teach. Don't Tell.
The path to $100 million will only happen if you build leaders.
In my first leadership role, I ran around telling people what to do. Then I'd check that they got the work done. Then I'd tell them what to do next.
Sounds logical on the surface. I've had bosses who did that. But it's not smart. Because what I ended up doing is creating a bunch of people who sat back waiting to be told what to do. So, if I didn't show up that day, because I was busy in meetings, traveling, or sick, nothing moved forward.
I was a bottleneck. It was a transactional form of management. And it has a definite ceiling.
The big idea I learned is this:
Your ability to scale depends on your ability to transform people.
Here's how you do it:
- Start with outcomes, where you're clear about the vision - where you want to go and why.
- Lay out the plan for how you see this thing getting done and what will make it feel complete.
- Then talk about the measurement you're going to use to track progress. If people don't know how you're going to measure success, then how can they make better decisions day-to-day to improve their activities?
- If I saw someone was off course, I would make a note of it and use our 1:1s to coach them up so I could teach them how to think about overcoming that problem. This way, the more I coached them, the greater their ability to solve the problem on their own.
This transformational style of leadership had the effect of completely transforming my team's productivity and, as a result, my business.
The goal is to build the people and then the people build the business.
I would also use our team meetings to provide leadership training. During the week, I'd make note of things I'd seen, read, or heard that, if implemented for us, would contribute toward the team's and our product's success. Then, at every team meeting, I'd have a chance to coach and upgrade the team so they could get better week over week.
This works because:
- It removes the emotional shrapnel you might feel when you're frustrated with your team not performing.
- By sharing what you may have learned from a book, a training, a seminar, a coach, or a mentor, it codifies your own thinking.
- It allows you to transfer to them what you've paid other people to teach you, so your team can feel like they're learning.
- When your team feels like you're investing in them, they will show up excited, eager to use these new skills you've taught them.
13. Dream For Your Team.
Recently, I was speaking with a VP PM and I asked them to tell me specifically what their team members wanted to achieve in their life over the next 5 years.
And they said, well, they want to be promoted and make more money.
No. That's not what they want.
Financial goals are simple. The real driver is always an emotional one. That's what we, as leaders, need to tap into.
The question is: What are their personal goals?
What are their dreams? What do they want to achieve in their life? What kind of impact do they want to make outside of work?
See, as leaders, if we can't describe what our direct reports' dreams and goals are, we can't lead them.
Our goal is to figure out where our team members' want to go, find the intersection with where the business is going, and connect those dots.
If you report to me and I can get us clear on that, we can connect emotionally, and then everything else gets so much easier, because you'll be intrinsically motivated to push yourself forward.
We need to connect their work to both the company's goals and their own personal goals, and map that out for them.
That way they'll be motivated to do the work, to learn, and to grow, so that they can get ready to be in a position to lead others some day.
14. How You Lead Becomes The Flywheel For Success.
By exhibiting the above behaviors, you are modeling good leadership to your team. That way, if they become leaders, they will have a powerful example to follow, which will increase the likelihood of them developing the next generation of effective leaders. And so on.
If you're a product leader who has other leaders as direct reports or senior level PMs aspiring for leadership roles, one of the best things you can do is to invite them to ask their teams if everybody on their team knows what everybody else wants to do and where they want to end up, personal and professional.
This will help them feel like a cohesive unit, building and creating their future together. And that will make things so much easier for you.
Takeaway
These rules will save you years of mistakes.
And if you need help, book 30 minutes with me (it's free) and let's discuss your leadership challenges.
