The key to any successful startup is close collaboration between product and engineering. This sounds easy, but can be incredibly difficult. Both groups may have conflicting goals and different definitions of success that have to be reconciled. Engineering might want to build a product that is perfectly scalable for the future with the best developer experience. Product might want to quickly validate their ideas, and put features out that will entice customers to pay for the product. Another example that’s common to see is an engineering-led “engineering roadmap” and a product-led “product roadmap” and for the two to be completely independent of each other, leading to confusion for product engineering. These two mindsets put two parts of your organization at odds. The easy path is to skip the difficult conversations and operate within silos, coming together infrequently to deliver a release. We believe that aligning these two disparate organizations into cohesive team units removes organizational friction and improves time to value.
How did you get into the bottleneck?
At the beginning of a startup’s journey, aligning is natural because you are a small team working closely together, and likely the product and tech leaders had close personal relationships before the company was founded. The initial startup idea is very strong and as it quickly gains traction, what to work on next is obvious to all groups. As the company grows, however, skill-based verticals begin to appear with more layers of management, and these managers don’t always put the effort in to create an effective working relationship with their peers. Instead, they focus on urgent tasks, like keeping the application running or preparing for a funding round. At the same time, the startup faces a critical juncture where the company needs to to decide how to best invest in the product, and needs a holistic strategy for doing so.
Well-run startups are already working in cross-functional product teams. Some functions will naturally work well together because they fall under the same vertical hierarchy. An example would be development and testing — well integrated in startups, but often siloed in traditional enterprise IT. However, in the scaleups we work with, we find that product and technical teams are quite separated. This happens when employees align more with their function in an Activity Oriented organization rather than with an Outcome Oriented team, and it happens at every level: Product managers are not aligned with tech leads and engineering managers; directors not aligned with directors; VPs not aligned with VPs; CTOs not aligned with CPOs.
Ultimately, the bottleneck will be felt by reduced organizational performance as it chokes the creation of customer and business value. Startups will see it manifest in organizational tension, disruptive exceptions, unchecked technical debt, and velocity loss. Fortunately, there are some key signs to look for that indicate friction between your product and engineering organizations. In this article we will describe these signs, as well as solutions to lower the communication barriers, build a balanced investment portfolio, maximize return on investment, and minimize risk over the long term.
Signs you are approaching a scaling bottleneck
Finger pointing across functions
Figure 1: Friction across a typical hierarchical structure
Team members align themselves with their management structure or functional leadership as their primary identity, instead of their business or customer value stream, making it easier for teams to assume an “us” versus “them” posture.
At its worst the “us vs them” posture can become truly toxic, with little respect for each other. We have seen this manifest when product leaders throw requirements over the wall, and treat the engineering team as a feature factory. They might abruptly cancel projects when the project doesn’t hit its outcomes, without any prior indication the project wasn’t meeting its KPIs. Or conversely, the engineering team continually lets down the product team by missing delivery dates, without warning that this might happen. The end outcome is both sides losing trust in each other.
Engineers often stuck due to lack of product context
When product managers pass off features and requirements without reviewing them with the engineers (usually within the constructs of a tool like Jira), critical business and customer context can be lost. If engineers operate without context, then when design or development decisions need to be made, they must pause and track down the product manager, rather than make informed decisions themselves. Or worse, they made the decision anyway and build software based on an incorrect understanding of the product vision, causing time delays or unused software. This friction disrupts flow and introduces undue waste in your delivery value stream.
When engineers and architects operate with minimal context, the full scope of a change can be overlooked or misunderstood. Requirements or user stories lack depth without context. Customer personas can be ignored, business rules not taken into consideration, technical integration points or cross-functional requirements missed. This often leads to last minute additions or unintended disruptions to the business or customer experience.
Work slipping between the cracks
Tasks slipping between the cracks, team members thinking someone else will be responsible for an activity, team members nudging each other out of the way because they think the other team member is operating in their space, or worse, team members saying “that’s not my job” – these are all signs of unclear roles and responsibilities, poor communication and collaboration, and friction.
Technical debt negotiation breakdown
Technical debt is a common byproduct of modern software development with many root causes that we have discussed previously. When product and engineering organizations aren’t communicating or collaborating effectively during product planning, we tend to see an imbalanced investment mix. This can mean the product backlog leans more heavily towards new feature development and not enough attention is directed toward paying down technical debt.
- Higher frequency of incidents and higher production support costs
- Developer burnout through trying to churn out features while working around friction
- An extensive feature list of low quality features that customers quickly abandon
Teams communicating but not collaborating
Teams that meet regularly to discuss their work are communicating. Teams that openly seek and provide input while actively working are collaborating. Having regular status meetings where teams give updates on different components doesn’t mean a team is collaborative. Collaboration happens when teams actively try to understand each other and openly seek and provide input while working.
How do you get out of the bottleneck?
Eliminating the wall between Product and Engineering is essential to establishing high performing product teams. Cross-functional teams must communicate and collaborate effectively and they must be able to negotiate amongst themselves on how best to reach their goals. These are strategies Thoughtworks has applied to overcome this bottleneck when working with our scaleup clients.
Identify and reinforce your “First Team”
At its most basic, a product team is a group of individuals who come together in a joint action around a common goal to create business and customer value. Each team contributes to that value creation in their own unique way or with their unique scope. As leaders, it’s important to identify and reinforce a team dynamic around the creation of value rather than an organizational reporting structure. This cross-functional product team becomes a team member’s “first team”. As a leader, when you define your team as your group of direct reports, you are enabling a tribal concept that contributes to an “us vs. them” dynamic.
The First Team mindset was defined by Patrick Lencioni and referenced in many of his works including The Advantage and The Five Dysfunctions Of A Team: A Leadership Fable, and while it’s typically used in relation with the establishment of cross-functional leadership teams as the primary accountability team rather than organizational reports, the same concept is applicable here for product teams.
Simply changing your organization’s language, without changing its behaviors isn’t going to have a measurable impact on your scaling woes. Still, it’s a simple place to start and it addresses the organizational friction and larger cultural issues that lie at the root of your performance issues.
Changing the language
The more hands-on an organization is willing to be in breaking silos, the more likely it is they will be effectively be breaking some of the implicit ‘versus’ states that have enabled them.
Taking a hands-on approach to moderating the language used in your organization is a simple first step to breaking down barriers and reducing friction.
- Referring to your organizational group of practitioners as anything other than “team” – such as squad, pod, or whatever term fits your organization’s culture is a small change that can have a strong impact.
- Naming your cross-functional product delivery teams, ideally with the name of their product or value stream, is another simple change that helps these multi-disciplined individuals adopt a new team identity separate from their organizational reporting context.
- Drop “us” and “them” from the professional vocabulary. Coming up with alternative terms but keeping the same context of ‘that group over there – which isn’t this group’ is cheating. We filter ourselves and our language in a professional environment regularly and this language needs to be added to the ‘not allowed’ list.
Change the behavior
Those of us trying to change our organizations’ culture need to define the things we want to do, the ways we want to behave and want each other to behave, to provide training and then to do what is necessary to reinforce those behaviors. The culture will change as a result.
Changing an organization’s culture when it isn’t delivering the desired results is hard. Many books have been written on the subject. By defining and communicating the expected behaviors of your teams and their respective team members up front, you set the underlying tone for the culture you are striving to create.
- Leaders should set a principle and expectation of a blameless culture. When something goes wrong, it’s a wonderful learning opportunity, to be studied and used to continuously improve. An example of this is the concept of a blameless post-mortem.
- Set expectations and regularly inspect adoption of desired behaviors. Hold team members accountable to these behaviors and refuse to tolerate exceptions.
- Orient “team” constructs around value streams instead of functions. Differentiate “teams” as groups who deliver common value from Communities of Practices or Centers of Excellence which are typically formed to deepen or deliver specific competencies such as Product Management or Quality Assurance.
- Acknowledge that some personality types are less compatible than others. Shift talented people around to find the optimal team synergy.
Define and communicate how your scaleup delivers value
A company is, in many ways, just one large team with one shared goal — the success of the organization. When product and engineering don’t have a shared understanding of that goal, it’s hard for them to come to a collaborative agreement on how to achieve it. To avoid this source of friction, executives must clearly articulate and disseminate the overall value their organization provides to its customers, investors, and society. Leaders are responsible for describing how each product and service in your portfolio contributes to delivering that value. Management must ensure that every team member understands how the work that they do day in and day out creates value to the organization and its customers.
The goal is to create a shared mental model of how the business creates value. The best way to do this is highly dependent on the nature of your business. We have found certain kinds of assets to be both common and useful across our scaleup clients:
Assets that describe customer and user value
These should describe the value your product and services create, who they create it for, and the ways you measure that value. Examples include:
- Business Model Canvas/Lean Canvas
- User Journeys
- Service blueprints
- Empathy maps
- Job forces diagrams
- Product overviews (one-pagers, etc)
Assets that describe your economic model
These should describe the value your company receives from customers, the cost of creating that value, and the ways in which you measure that value. Examples include:
- Business flywheels
- Value stream maps
- Wardley maps
- Retention/churn models
- Customer acquisition models
- Customer lifetime value models
- Projected balance sheets and income statements
Assets that describe your strategy
These should describe why you’ve chosen to serve these customers in this way, the evidence you used to make that decision, and the highest leverage ways you can increase the value you create and the value you receive in return.
- Target customer profiles
- Issue trees
- Impact maps
- Opportunity/solution trees
- Hierarchy diagrams
- Causal loop diagrams
- Other bespoke frameworks and models
Once you have these assets, it’s important to constantly refer to them in presentations, in meetings, when making decsions, and most importantly, when there is conflict. Communicate when you change them, and what made you make those changes. Solicit updates from the organization. In short, make them part of your normal operations and don’t let them become wallpaper or another cubicle pinup.
A simple heuristic that we’ve found to understand how successful you’ve been in this communication is to pick a random individual contributor and ask them to answer the questions answered by these assets. The better they can do this without referring to the assets, the better they will be at incorporating this thinking into their work. If they don’t even know that the assets exist, then you still have a good deal of work to do.
The alignment and focus these assets create allow for better deployment of organizational resources, which enables scaling. Additionally, they redirect the natural tension between product and engineering. Instead of unproductive interpersonal friction, you can use creating and updating these assets as a venue for true collaboration and healthy disagreement about ideas that strengthen the company.
Create multidisciplinary stream-aligned teams
When a company is just starting out, it often only has one value stream. But once it grows, it needs to break apart its products and services into multiple value streams so that individual teams can assume full ownership of various products or pieces of products. The best way to do this decomposition is beyond the scope of this article (we personally are big fans of Team Topologies as a way to think through it), but some key things to consider are:
- Could this value stream and the products and services it comprises exist as a separate company (even if it wouldn’t be a highly successful one)?
- Can you align your value streams to a specific way that your company creates value, or to a specific customer or user that the company creates value for?
- How do your different value streams interact with each other?
After defining your value streams, it’s time to bring multi-disciplined team members together around them — because value creation is a team sport. Ask the leaders of these value streams to create similar but more detailed versions of the assets we discussed above, and then determine what skills and capabilities are routinely needed to deliver and evolve the value of the product(s) and/or service(s) in the value streams from start to finish.
Pool those individuals together into an Outcome Oriented team, rather than coordinating work across Activity Oriented or functional teams. In Agile IT Organization Design, Sriram Narayam states, “The more process and indirection there is, the greater the friction for effective collaboration. By contrast, people within a team don’t have to schedule meetings to collaborate with each other. They collaborate continuously and get into huddles (informal, ad hoc meetings—virtual or face to face) on demand.” While this model helps reduce latency within outcome-oriented team, it also reduces the friction among multidisciplinary team members.
Keep in mind that as your company grows, you may need to have “teams of teams”, with multiple teams aligned around one value stream and a team of cross-functional leaders for that value stream as well. As the complexity of your value creation increases, so too does the criticality of maintaining common purpose across your product delivery teams.
Product managers and software engineers have a shared responsibility to understand the needs of the customer so that they can define and prioritize the work. There isn’t an ideal mix of product people to engineers; every product is going to have a different ratio. The important part is to know that both are responsible for understanding, prioritizing and creating value.
As the product evolves, the needs of the team will evolve as well. Take regular inventory of the team’s capabilities and empower the stream-aligned teams to advocate for their own needs. Ensure that the teams are fully resourced with the staff, skills, information, and authority to deliver efficiently without unnecessary dependencies on external resources. Fully sourced, empowered and autonomous product teams operating as a single entity, regardless of each individual’s reporting structure, dramatically reducing cross-discipline friction.
Establish team working agreements at all levels
Ensure every team member knows what role they’re playing
The best teams are those that have negotiated the best ways of working for themselves. It’s important for organizations to have established sensible defaults to guide less mature teams on how to work effectively as a team. Even with established defaults, it’s important that teams have autonomy to decide which member will take on which responsibilities. This measure of autonomy leads to greater accountability and a higher level of intrinsic motivation. As new teams form, codify this working agreement in the team’s common knowledge repository. During retrospectives, revisit this team working agreement as the team learns more about each team member’s strengths and weaknesses and reassign the responsibilities accordingly. This team working agreement becomes both the social contract of the team, and also a unique “responsibility fingerprint” that no other team has. As new team members join or rotate through the team, having a referenceable team working agreement accelerates integration and reduces time to value during onboarding.
Team working agreements frequently contain:
- Team Name: What is the unique identifier for the team?
- Team Mission: Why does this specific team exist? What value is it expected to deliver?
- Team Metrics: How will the team measure success? Include value creation metrics, not just activity metrics.
- Team Responsibilities: What work needs to be done to ensure success and which team members are agreeing to own those work items? Organizations can seed this work with typical activities and recommendations for team responsibility allocations, but team members are free to renegotiate amongst themselves.
- Team Skills: What skills are needed on this particular team to ensure success?
- Team Norms: Guidelines, principles, ceremonies, and/or sensible defaults for team members to align on how team members are expected to behave, interact, and make decisions.
Leaders form their own teams
Figure 2: Cross-functional collaboration at all levels
Working agreements are a useful tool for cross functional teams, but they are also a great tool for aligning cross functional leaders.
These three holistic view leaders—the head of product, the head of design, and the head of technology—are obviously very valuable individually, but in combination you can see their real power.
Executive leaders have a responsibility at a macro level to align on corporate and product strategies and the subsequent measures of success. If executives are not aligned on such measures as “desired investment mix across products”, teams expected to deliver to these measures are not being set up for success.
Functional line managers in a digital product organization may no longer direct the day to day efforts of the stream-aligned team – that responsibility falls to the team and the product manager on that team – but they still have tremendous value. Functional managers are responsible for ensuring that they are providing a healthy bench of skilled players to staff those teams. It’s critical that these direct managers are aligned on the roles and responsibilities of product team members to avoid conflict within the product teams.
…team members must prioritize the results of the team over their individual or departmental needs
Negotiate a balanced product investment mix
Figure 3: A balanced investment mix sweet spot
The diagram above explains the sweet spot of a balanced investment mix, where we have traded off technical vs product investment. Over investing with a product feature heavy backlog likely indicates an underinvestment in technical debt and runway, leading to under-engineered solutions, whereas over investing with a technology heavy backlog likely indicates an underinvestment in customer valued features and over-engineered solutions. It’s very hard to know when the balance is perfect. It’s likely to change over time as your company grows and pivots.
An example of under-engineering we often encounter is when a product has problems with availability. This issue means the development team has to spend time fighting fires, which reduces focus and affects their productivity. While this might be sustainable when you are small, if your customer usage spikes (in hypergrowth), the team becomes overloaded, and customer experience is affected. That debt repayment will always come due when your business can least afford it.
A different imbalance results if the technical team does too much early optimization, and they end up over-engineering. An example of this is overfitted architectures that are built to handle hundreds of thousands of users when the company only has ten. When the startup pivots, a lot of that work ends up being thrown away. There is always a balance to strike between building the product to be scalable in the future vs building what you need right now to survive.
The important thing is to be able to spot when this mix is imbalanced, and be able to correct it. A continuous improvement process is incredibly important. If a team (at product team level or a management team) is aware of their shared goal, then a cross-functional group can assess the balance regularly, and use data as a guide. Some data will be quantifiable, and some will be more subjective. Information you can use to guide you includes:
- Collecting individual opinions – does an engineer feel productive and motivated? Does a product manager think the team is efficient?
- Productivity metrics – How fast can we test and build a new feature?
- View of current state and near-term future state – Are we overcomplicating build out for the sake of future scalability?
- Product growth – Do we know how we are progressing towards a product’s goal? Are there enough analytics, user testing and customer feedback to confirm that our product investments are paying off?
- Trends – As we build more features or increase users, how are metrics trending? For example, look at metrics like the build time, the lead tiime to deploy to production, and the amount of incidents. As complexity increases, technical investment should bring them under control, and reduce toil for developers.
An experienced technologist that has scaled a technical platform is highly valuable. They can interpret the data, using their intuition to spot potential future problems, while taking a pragmatic point of view.
Account for cross-functional requirements
A good product isn’t just a product with the latest features.
- It must be built to be performant, reliable and stable.
- It should be cost efficient – the cost of operating the product shouldn’t exceed the revenue that the product generates.
- The underlying architecture of the product should enable future feature development to occur quickly and efficiently.
- It should have in mind client expansion and be able to scale, without too much rework.
- It shouldn’t put private customer or business data at risk.
These and many other qualities of a product fall under the umbrella of cross-functional requirements. Failing to account for these requirements in the interest of getting new features out the door creates compounding problems.
Some problems are more obvious because you can observe them. They’re noticeable when a customer complains. Others are only going to be noticeable over the long term. Martin Fowler talks about the importance of keeping internal quality high – doing refactoring, creating automated tests, decoupling your architecture. Early stage companies tend to skip this, for short term productivity increases. This might be the right decision, but once they think about adding more teams internal quality has to be addressed, or long term value creation is forfeited.
Balancing the backlog
Creating a balanced backlog starts with trust, as it’s fundamentally a negotiation between product and engineering. We recommended that every product leader works to build a close, collaborative relationship with their technical counterparts, and vice-versa. There will and should be many difficult discussions as you work to find balance. A startup has very limited resources, and often has to make hard trade-offs between improving the developer experience and building new features.
Productive negotiation depends on transparency, the ability to share detailed information, and the desire to see the situation from the other person’s perspective. If a product manager understands the technical architecture and strategy, they can suggest ideas that are easier to build. If a technical person understands the reasoning and research behind a product strategy, they can suggest alternative solutions that the product person hasn’t thought of, e.g. utilizing ML/AI to solve a problem.
When negotiating a backlog, startups often find it challenging to understand the relative impact between potential investments — and because usage and revenue metrics are easy to obtain and well understood, work that will impact those is often prioritized, which pulls the investment mix out of balance. To counteract this, we recommend finding metrics that allow you to measure the impact of technical investment as well. Each situation is different, but there are a number of research-supported, de facto standards shown to improve long-term productivity that you can use as a starting point.
- Focus on DevOps and DX outcome-driven metrics. Reading maximizing developer effectiveness is a good starting point.
- In the Thoughtworks Scaleup Studio, we have a number of sensible defaults, that come from a study of what practices and technologies that successful scaleups are using. This includes continuous delivery, domain-oriented microservices, prudent use of technical debt, building experimentation processes and infrastructure.
- Set a non-negotiable quality bar and keeping to it. For example, each language has a set of good practices that we can easily check our work against, automatically.
Product vs Engineering collaboration approach as you grow
The startup itself is one team.
Preliminary working aggreements and assets to describe mission statement.
Investment mix is heavily oriented towards product investment. Often building to improve knowledge and not a working product (e.g. throwaway prototypes).
Experiments with different economic models.
The company starts to split off into sub-teams, still thinks of itself as “one big team.”
Working agreements become more concrete
Customer value assets are refined and used in onboarding and orientation. Economic model becomes clearer, but still flexible.
Hire your first non-founder product and engineering leaders.
Investment mix is still heavily product-oriented, focused on creating a durable product — key foundational investments to support scale.
Too large to operate as “one big team”, decomposes into stream-aligned teams.
Cross-functional teams of leaders are created for middle management. First platform engineering teams created.
No longer searching for new markets. Investment mix doubles down on the value your products create.
Customer value, business strategy and economic model assets are now quite concrete, very slow to change, and designed for distribution.
Each product and sub-product creates its own value statements and assets as needed.
Leaders have to actively work against becoming siloed along functional lines.
Team structure starts to change to optimize for maximum autonomy and agency.
Structures to support skill development and consistency across functional groups emerge.
Multiple teams created to make work on stream aligned teams more efficient (platform engineering, product ops, design ops, etc).
Investment mix in core products becomes more focused on technical investment, including an investment in developer experience.
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